On the western edge of New Delhi, amid the glittering office developments of the suburb of Gurgaon, the newest part of Clifford Chance’s global empire is open for business. Unlike the firm’s other offices, however, this outpost is not practicing law, still a prohibited activity in India for overseas law firms.
Instead, the Clifford Chance office houses a group of Indian IT and accounting specialists, part of the Magic Circle firm’s back-office function. By moving these operations out of higher-cost offices in Europe and the United States, chief executive David Childs predicts, the firm will save £30 million ($60 million) during the next three years.
When it comes to outsourcing, the U.K. legal community still lags far behind many multinational corporations and major U.S. firms — but U.K. firms are beginning to catch on. Clifford Chance’s new Gurgaon facility makes it the first global firm to locate part of its support business in India. Two other Magic Circle firms — Allen & Overy and Linklaters — have already outsourced some back-office functions to Indian contractors, while Eversheds has outsourced a large chunk of its IT function to a U.K.-based specialist.
No major U.K. firms have gone so far as to outsource legal work, and not every British firm is convinced of the virtues of outsourcing even back-office functions.
Freshfields Bruckhaus Deringer has yet to make a move in that direction, although chief executive Ted Burke admits that outsourcing is something that the firm will have to look at. Slaughter and May is even less interested. “Clifford Chance operates a different business model from ours in the approach to international legal services,” says practice partner David Frank. “Their decision to outsource to India will be driven by economies of scale that are not relevant to us.”
Lawyers and consultants attribute the legal sector’s reticence to conservatism and concerns over confidentiality. But outsourcing companies such as Williams Lea are now targeting British law firms, confident that demand will grow. “Many of our other markets have reached a plateau, and we’ve noticed an upsurge in interest from the U.K. legal market,” says Tony Davies, business development director for Williams Lea’s legal division in the United Kingdom.