Sector is expected to take off in next few years as firms look to cut costs
Slowly but surely, Ukraine is joining the ranks of law firms worldwide who are taking advantage of obtaining cheaper, basic legal services from third parties.
Legal services outsourcing is an increasingly common trend in the legal industry worldwide, growing in the U.K. alone from 5 percent in 2009 to 15 percent in 2011 of money spent on legal services.
Outsourcing is particularly favored by large law firms who, in seeking to reduce costs, engage third parties, often from smaller law firms or specialized organizations based in lower-wage countries such as India.
Globally, the outsourcing most often used in litigation is document review, contract management, debt recovery, e-discovery and research.
“As the number of wealthy Ukrainians will grow, the demand for such services will grow as well,” said Serhiy Piontkovsky, managing partner at Baker & McKenzie.
DLA Piper Ukraine is one of the nation’s bigger law firms to outsource legal work.
Serhiy Piontkovsky, managing partner at Baker & McKenzie.
It uses Ukrainian-based third-party law firms, or sub-contractors, for what Margarita Karpenko, managing partner with the Kyiv office of DLA Piper, calls “running work,” or simple documentation errands such as waiting in lines at various ministries and filing of documents related most often to business incorporation.
The main reason why DLA Piper uses sub-contractors is cost. “They are cheap,” Karpenko said, adding that DLA Piper pays high salaries to its lawyers and even paralegals.
DLA Piper’s own well-paid legal eagles can therefore be put to better use in puzzling out legal mindbenders instead of waiting in administrative queues for an official stamp.
Anna Vronskaya, from family firm Vronskiy, Vronskaya and Partners, also uses legal outsourcing, including the services of foreign law firms in Switzerland and the U.K.
“In most cases we use outsourcing for our private clients to ensure the best quality of legal services,” Vronskaya said, especially in cases of overseas litigation.
Concerns about client confidentiality are the biggest barrier to wider use of legal outsourcing. Many law firms continue to avoid outsourcing because of concerns that a third party or overseas-based provider may compromise the data security of the client.
Anna Vronskaya, from family firm Vronskiy, Vronskaya and Partners
For these reasons, DLA Piper’s Karpenko said, “we are doing our best to avoid outsourcing.” And when the firm does outsource, it attaches strict conditions and closely monitors the contractors. DLA Piper obtains client consent before engaging third parties and only uses one or two reliable sources in Kyiv.
A 2011 report on the practice released by consulting and advisory giant Deloitte, says that “in an effort to contain these [legal] costs, an increasing number of companies are beginning to explore legal process outsourcing as a possible solution.”
A spokesman for one of the world’s leading providers of legal services outsourcing, CPA Global, told the Kyiv Post by email that the company expects Eastern European countries, including Ukraine, “will become more comfortable with the concept and realize the benefits” as they internationalize their business.
However, the spokesman notes that the U.S., with its litigious marketplace, will remain the biggest user of such services in the foreseeable future.
Vronskaya expects the use of legal outsourcing for Ukrainian clients to grow, although she admitted it is really “not so big” at the moment. Baker and McKenzie’s Piontkovsky agreed, saying that “I believe that there is a future for this business segment in Ukraine, but it may take three to five years to develop.”
Kyiv Post staff writer Will Fitzgibbon can be reached at [email protected]
