Why spend huge amounts of in-house time, money and resources on paperwork when outsourcing firms in countries like India have specialist teams to do it for you?
As the UK’s construction industry faces the spectre of a double-dip recession, in-house lawyers at the larger construction firms are under pressure to prove their worth at board level. An in-house lawyer can enable corporate decision-making, while protecting the company’s brand, directors, and shareholders in the event of dispute. As such, the rise of legal process outsourcing (LPO) could be the key to demonstrating their worth.
Complicated case strategies can only be put together with the finesse that comes with experience. Likewise, preparing arguments for court requires an experienced lawyer.
These are roles the in-house counsel will always want to retain.
However, drafting commercial contracts, carrying out due diligence on contractors, managing compliance programmes and being involved in litigation can be a huge drain on in-house resources. LPO - driven by a philosophy to get more for less - has the potential to achieve better deals, to improve levels of success in disputes, and to reallocate internal resources to higher value matters.
What is LPO?
As much as 80% of a large construction firm’s overall legal budget is spent on commercial litigation, and 50-60% of the total cost of litigation is spent on reviewing documentation. Whether a company is involved in a dispute relating to contracts, professional negligence, sustainability issues or insurance, the sheer number of hard copy and electronic documents required for review can be overwhelming. Nevertheless, an eye for detail is necessary - not least in the most sensitive matters.
Legal process outsourcing firms that employ hundreds of lawyers have the scale and expertise to handle large, complex document reviews, and so commercial litigation, contract management and corporate deals work, which requires high-volume document review and drafting services, is increasingly flowing to India. Here the work is handled by
a qualified team of lawyers at a fraction of the price.
In the complex chain of construction disputes, where liability is passed on from head contractor to subcontractor and down again to sub-subcontractors, the resources of your in-house counsel are best spent on thinking up defence strategies instead of lengthy document reviews.
Work requiring high-volume document review and drafting services is flowing to India
Compared with employing the services of an unqualified paralegal, there is an argument for paying for the services of top-tier career lawyers in India who work within an environment focused on process and innovative technologies to drive efficiency and quality. It’s hard to achieve the same results with traditional onshore resources in the UK.
LPO providers are not in the market to replace the role of general counsel in construction firms. Their portfolio of services incorporates lean process tools and technology, as well as “Six Sigma”, a business management strategy originally developed by Motorola. Six Sigma seeks to improve the quality of work while minimising errors by identifying and removing what causes them. Traditionally embraced in the manufacturing industry, LPO providers have adapted the philosophy to legal work. These processes ensure consistency across the board, higher efficiencies, cost predictability and cost savings.
As the pool of work available to UK construction companies dries up, fears are growing that a wave of disputes and compensation claims
will emerge as firms fight tooth and nail for those elusive contracts. In 2008 in the commercial court, which hears many professional negligence claims relating to the construction sector, the number of cases rose by nearly 150% - and that figure could easily be surpassed if the economic climate does not improve any time soon.
Creating significant savings while achieving a more robust defence or prosecution in a continuing case will instantly put a construction business on a different level to the competition - placing it in a better position to win those all-important contracts.
David Perla is co-chief executive of legal outsourcing provider Pangea3