Third-party LPOs aren't the only ones in the outsourcing game. Alex Aldridge speaks to Unilever about its decision to use Baker & McKenzie to do its low-cost work

Third-party legal process outsourcers (LPOs) often talk as if they hold the monopoly on the cheaper-than-usual delivery of commoditised legal services, but some law firms offer much the same service in-house – with, for example, Baker & McKenzie, Clifford Chance and Eversheds all running their own low-cost offshore operations in the Philippines, India and South Africa respectively.

Consumer giant Unilever's deal with Bakers to outsource virtually all of its intellectual property (IP) work to the firm's low-cost offshore operation in Manila didn't attract much attention when it was announced in 2007. But the arrangement – through which Unilever passes the trademark prosecution processing work from its huge 160,000 trademark portfolio directly in a pre-agreed format, while a small Bakers team in London handles more complex matters – seems just as innovative as the much written about tie-up between Rio Tinto and CPA Global, which has seen the mining giant sending low-level legal tasks to a team of CPA lawyers in India since last June.

Unilever head of trademarks Katrina Burchell, who was the driving force behind the deal, says she considered a wide variety of options in the original tender before deciding on Bakers.

"When we commenced the tender in November 2005 we looked at 27 potential providers, including some LPOs, although there were less of them around at that point. We also considered a host of law firms offering a variety of different solutions," she explains.

And the Unilever IP chief admits to being tempted by some of the non-law firm alternatives. "The advantage with a specialist outsourcing provider is that dealing with relatively routine or low-level tasks is their core business," she says. "With a law firm that's obviously not the case, and there is always the risk that the partners could change their mind about offering outsourcing services."

But the upside of using major law firms is, of course, their long-established reputations – as general counsel are fond of pointing out, no-one ever got sacked for instructing Slaughter and May.

out-in-frontThis played a part in Burchell's decision in May 2007 to go with Bakers, although she refuses to rule out using an outsourcing company in the future. What differentiated Bakers from other firms in the final reckoning was the fact that the firm's Manila base had been up and running since 2000, demonstrating, as Burchell puts it, "a commitment to outsourcing that went beyond any of its competitors at the time".

Still, there were some hiccups early on, though Bakers showed "huge amounts of goodwill to get things right". Burchell continues: "When a trusted brand puts its head above the parapet to offer something different, there is obviously a large incentive to demonstrate it can pull it off successfully."

Not that Bakers' Unilever relationship partner Paul Rawlinson was the only one with his neck on the line. "It was certainly a rollercoaster," recalls Burchell, "with significant resistance from various quarters within the company. But big changes don't happen unless someone is willing to take a risk."

The pressure was magnified by the fact that the arrangement led to a third of Unilever's in-house IP legal team being made redundant. "The people who went were largely paralegals and support staff, but it was obviously tough to have to let people go," says Burchell, adding that the 15 remaining lawyers saw their roles become much more managerial as their focus shifted from doing the work to dividing it up, supervising and analysing for risk-based advice.

One of the striking things about the risk that Burchell and Rawlinson took in setting up the project was that, at the time, there was no great economic incentive to do so. 2005-07 was, after all, the height of the market, with business booming for clients and law firms alike. So why bother?

"I suppose the driver was efficiency. Before the arrangement the IP department was like a sports car that was working fine – but I wanted space travel," responds Burchell. It was outsourcing projects embarked on by other departments in the company, like finance and human resources, that got her thinking along these lines, she continues. "At some point someone said something like, 'Well, I can't see that sort of thing working in legal', and that was like a red rag to a bull for me."

Fast forward to the present and the arrangement – which is carried out on a largely fixed-fee basis – has worked so well that it is being extended to cover the transactional IP aspects of projects Unilever is working on. "It's constantly under review," says Burchell. "My dream is to have a world-class trademark function that others aspire to follow."

———————————————————————————————————————————————–

In numbers

Bakers' Manila centre has 450 staff members offering clients intellectual property (IP) support as well as support on employment, competition and compliance projects, along with a number of other services.

Staff breakdown:

Management – 6%
IT – 22%
Marketing/business development/events – 15%
Finance and billing – 27%
IP (Global IP Support Centre) – 8%
Document support centre – 13%
Other – 9%

2009 figures:

  • The Global IP Support Centre team logged 50,000 hours (ie, 137 hours per day)
  • The document support centre logged 90,000 hours
  • Billing and finance logged 100,000 hours