Posted Jun 18, 2009 07:10 pm CDT
In a move that is sending shudders through the global BigLaw community, Rio Tinto has hired a team of Indian attorneys in an effort to cut by 20 percent its annual legal budget of about $100 million.
The international mining company is represented by firms such as Linklaters and Baker & McKenzie. It expects to pay about one-seventh of what elite London-based law firms charge to have its team of 12 Delhi-based attorneys handle contract review, drafting and legal research matters, according to the London Times and Legal Week.
Rio Tinto has hired the Indian legal team through CPA Global.
“Why is the arrangement with CPA so significant? Primarily because it is evidence of a profound change in the legal world,” the London Times explains in another article today about Rio Tinto’s seismic shift in representation.
Although outsourcing legal work to India is far from a novel concept, Rio Tinto is bypassing law firms and outsourcing legal work directly. Plus, not just legal processing but substantive legal work is being handled by the Indian attorneys it retained through CPA. Thus, the Rio Tinto move represents “a fundamentally new way of working,” the Times article explains.
While BigLaw firms aren’t happy about the sea change, they will have no alternative but to cooperate with the Indian attorneys, the article predicts. Otherwise, they stand to lose an even bigger chunk of legal work than they already have.
As discussed in numerous ABAJournal.com posts, many BigLaw firms have been tightening their belts and even laying off attorneys and staff in recent months. While the dismal economy is part of the problem, a seeming paradigm shift in the way law is practiced also may be requiring them to focus more intensively on providing corporate legal services in the most economical manner possible.
Related earlier coverage:
ABAJournal.com (2008): “As Big Banks Send Work to India, World Financial Centers Lose Steam”
ABAJournal.com (2008): “D.C. Area Law Firm Sues Over Outsourced Legal Work, Alleges Privilege Issue”
ABAJournal.com (2008): “ABA Ethics Group OKs Outsourcing, But Nixes At Least Some Fee Markups”
ABAJournal (2008): “A Qualified Yes”