Canadian Lawyer

40 A p r i l 2 0 1 4 w w w . C A N A D I A N L a w y e r m a g . c o m MTOptimize, signing up with Exi- gent, the South African-based LPO that opened in Canada just over a year ago. Exigent, which has 450 lawyers in countries like India and the Philippines and offices in England, Ireland, parts of Europe, Australia, New Zealand, the U.S., and now Vancouver and Toronto, wasn't the only global entity to arrive in Canada lately. U.S.-based Epiq Systems Inc. also opened a 35,000 square foot e-discovery centre in Toronto last fall. McCarthy Tétrault partner and nation- al leader, markets, Matthew Peters says MTOptimize is a broad range of legal services delivered by external LPO part- ners that can be ramped up or down as the client desires. He is, however, cautious about holding up LPO as a magic bullet. "Part of it is people have a hard time wrap- ping their heads around how legal services can be delivered more efficiently and what's happened over the last couple of years is that people just put this LPO tag on it, sort of like pixie dust," he says. "What that loses is that LPO, which is an alternative staffing service, is a good answer in many circum- stances but it is part of a bigger thinking and that's part of the discussion in the market that isn't happening. They throw out LPO as a term and think it solves every- thing. But you need an approach where you're thinking about how services are delivered and then having tools." And that is where the opportunity sits, counters Birer. There's a realization the traditional law firm business model has to change but so far many are on the fence, offering to provide the client with an LPO if asked but not participating directly in the relationship or managing the process. "It's something they will now accept from the client. But in the past there would be more resistance. They would just throw their hands in the air and say, 'Oh, this is a really bad idea.'" The ripple effect is also about to go beyond billable hours and rates; it is casting a shadow on staffing levels and may even exert downward pres- sure on new lawyers' salaries. "If you have young lawyers and students, sitting around looking for work, it becomes very difficult to justify sending work to an outsourcer," Birer observes. "The challenge may be to staff at a more effi- cient level and not push training costs on to the client." Certainly, the business of law doesn't begin and end at the marble lobbies of the big guns on Bay Street. Peters acknowledges there's a range of services out there and clients want value for their money. "If a firm like Cognition [LLP] can do something more effectively then they should be part of the solution," he says. "We're not the one-stop shop for everything." The advantage the big brand firm has is trust, he adds, and should be able to offer or facilitate a range of outsource services that have been investigated and are of a known quality. The subtle shift in the marketplace for LPOs hasn't gone unnoticed by professional services firms, which also see opportunity to diversify their port- folio of client services — to wit Deloitte knocking on Austin's door. "Previously people kept writing the story, 'is out- sourcing here?' but that story has come and gone," says Austin, now a partner at Deloitte. "We're seeing a tidal wave of downtown firms work with outsourc- ing to bring services to their clients. Previously, people were surprised we were seeing any adoption from the well- established big firms. Now, it's almost a must-have value add." Birer says despite the shifting land- scape, it's still early days. "There are still only a few players. Having said that though, they've solidified their position in the market and proven the value, the security, and reliability. But we still have a long way to go before more clients and law firms try these and see the benefits and not just see it as a threat to their business." Technology has changed everything. Work is no longer a place, it's a thing that can be done from anywhere. Legal services may not always come from a law firm and future global LPOs could just as easily be accounting houses like KPMG LLP following Deloitte's path or technology giants like Microsoft Corp. or IBM bringing their own software and hardware expertise to the table. "There's no way you need to have lawyers on Bay Street doing due diligence, for exam- ple," says David Holmes, the affable and colourful Brit CEO of Exigent. "Really, 80 per cent of it could be done on the moon." Austin agrees: "Previously it was just a small number of firms which had these big cases with centralized expertise. Now we do so many of these big cases for the big firms we have a level of experience you would never get at one firm. Our volume is such that we have close to 200 lawyers on active projects and in the fall we had 400 active lawyers on the roster," which ramps up and down according to demand. Holmes says expansion into Canada made sense because the market was ready, and the maturation curve will likely follow Australia's experience. He watched Britain adopt LPO as a back- office technology and then take it main- stream within a couple of years. "They then adopted extremely rapidly and within six months we had agreements with five of the top seven or eight law firms," he says, noting Toronto is North America's fourth largest city with a "part of it is people have a hard time wrapping their heads around how legal services can be delivered more efficiently and what's happened over the last couple of years is that people just put this lpo tag on it, sort of like pixie dust." MAtthew Peters, McCarthy tétrault LLP LEgaL rEport/legal pRocess ouTsouRcIng

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