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The Hidden Cost of Outsourcing | Blog

4th June 2016 Paul Bartholomew

(Opinion) -- The Australian legal profession continues to undergo a dramatic transformation from the increasing trend to utilise offshore Legal Process Outsourcing (LPO).

The prolific use of LPO's in the market has ensured the benefits and disadvantages of outsourcing are well documented by industry commentators. Benefits include reduced costs, increased flexibility and shortened turnaround times such benefit must be balanced against increased data security risk, confidentiality and ethical issues that may arise.

The problem is when choosing to outsource the decision-making process only focuses on the impact at the client-lawyer level, which gives rise to the question: Are we giving enough thought to the long-term impact outsourcing is having on the Australian Legal Profession?

Let's begin by acknowledging that the group most affected by the increased use of LPO's are paralegals, graduates and junior lawyers. Services traditionally performed by paralegals and entry-level lawyers, low-level and quasi legal work such as document review, due diligence and legal research, are among the services most outsourced. This point has not been overlooked by the Australian Law Students' Association (ALSA).

In a position paper published in 2013, ALSA expressed their concern about the future prospects for law graduates (the Paper), highlighting that law student supply already far outweighs the demand for legal workers with the ratio being close to 1:3, with the major Australian firms routinely receiving 30-50 applications per graduate position being offered. If those figures were not concerning enough, bear in mind they do not include the ever increasing admissions across all universities following the Government pursuing deregulation in the education sector.

From an economic and business perspective this detrimental impact on graduates can be justified by citing reduced costs for firms in the form of lower wages, office space and training spending, reduced legal spend for clients, and easing the work loads of senior lawyers to focus on high value, technical work. What about the noneconomic costs a firm suffers as a result?

By outsourcing junior roles a firm loses the ability to train graduates into corporate thinking from the outset and foster a sense of loyalty to the firm. A smaller graduate pool means fewer lawyers in the market place networking and attracting clients to the firm, fewer lawyers to identify the future rising stars from and fewer lawyers within the firm's ranks for succession planning.

Some universities in Australia are already looking at trying to combat the problem the graduates are facing by changing how legal education is delivered. The thinking is that the learning of law students should be accelerated so they can hit the ground running.

Professor Warwick Gullett, Dean of University of Wollongong's Law School, is currently overseeing a review of the University's Bachelor of Law program and aims to increase the practical training component of the degree to ensure UOW graduates are employable.

However, it is arguable that outsourcing on its own is not the problem. The benefits of outsourcing far outweigh the disadvantages and as a business model it should be embraced. The problem is in most instances outsourcing means offshoring and for me, therein lies the problem. The traditional roles the graduates cut their teeth on are not just being lost, they are being lost overseas.

No amount of formal education can substitute what level lawyers learn coming in practice and working their way up from the ground. So is there an alternative solution? I am a firm believer the answer is yes, and it combines the best of both worlds. The answer is onshore outsourcing.

I am COO of Unison Outsourcing. Unison is an LPO that operates entirely onshore in regional New South Wales using Australian lawyers, paralegals, graduates and law students. Unison predominantly performs 'commoditised' legal work, the exact type of work that graduates and junior lawyers would traditionally perform in a traditional law firm.

At Unison we believe that when a customer aligns with us, we are doing more than just performing their commoditised style of work, we are also training the next generation of lawyers and potentially the customer's future recruits. Overtime many of our team members become intimately involved in the customer's business. We actively encourage secondments into the customer's operations where appropriate and we take great pride when a team member leaves to join our customer.

To run a business like Unison you do have to acknowledge many of your team members will use the time with your firm as a stepping stone on their career path. Instead of spending large amounts of resources trying to retain team members that are looking for the next challenge, we have embraced our role in training the next generation of up and coming lawyers.

We at Unison are proud of our modest efforts in this area but we believe that more should be done to challenge the current offshore trend and give support to the Australian legal profession. It is our hope that customers consider alternative options to offshoring by looking to New Law providers such as Unison for innovative delivery models that benefit the profession as well as the end client.

By Paul Bartholomew, chief operating officer, Unison Outsourcing.

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