Outsourcing in Legal Publishing – Anything (And Possibly Everything) Goes

Just over three decades ago, the Canadian Law Information Council was established by the federal and provincial governments in order to create a framework for online access to legal information in Canada. The idea was that a national council of all of the interested parties could work together to ensure that any development was in the best interest of Canadians.

At the time, there was a serious concern that online databases of Canadian legal information would be built and controlled from the United States, with the result that Canadians would have to go offshore to access their own laws in electronic formats. One of the stated objectives of the Council was to ensure that “All Canadian data bases and the network must be selected, located , operated and controlled in Canada”.

After considering the issue for several years, the Council disbanded, leaving to market forces the development of online services in Canada. This proved to be a happy outcome for everyone. In the intervening period of time, legal databases have come to be built and operated by many different providers, both in and outside Canada but primarily in Canada, by both Canadian and foreign controlled companies, as well as by governments and law societies. A highly competitive marketplace has developed with a healthy mix of free and commercial services.

Market conditions triggering new ways of reducing costs

Market conditions are now in the process of forcing a change in how legal information is produced for delivery online. A combination of increasingly intense competition in the market for online information combined with the downturn in the economy has forced the major commercial legal publishers to explore ways to significantly reduce their costs. They need to ensure that their profit margins are maintained at the same time as the commercial value of their primary law databases is declining.

The first big change underway is the scale of the outsourcing. The second is the movement of outsourcing off shore, not only to the United States, but also to India and other Southeast Asian countries. At this point, outsourcing by the major commercial publishers includes everything from housing databases on “global platforms” to the actual building and updating of legal databases. Following the current trend line, it will be just a matter of time before they are processing of all primary data and creating their value added content off shore.

Outsourcing is nothing new

Outsourcing in one form or another has been a common occurrence in legal publishing Canada for some time. Case summaries are prepared by Canadian lawyers on a freelance basis. Most manuscripts are edited by freelance production editors who work offsite and on a project by project basis. Printing is generally done by an outside supplier. Large builds of retrospective cases almost always happen offshore. More recently, LexisNexis Canada joined Carswell Thomson Reuters in locating its computer operations in the United States.

The most significant change is in the approach being taken to outsourcing. In the past, the publisher sought to identify selected activities that would be suitable for outsourcing when in house personnel were already working at full capacity. The premise was that while it would be preferable to do everything in house, the sheer volume of work made it necessary from time to time to outsource specific projects.

Today the opposite is true. The operating premise is that everything should be outsourced, unless there is a very good reason not to do so. As a result, the scale of the work being outsourced has increased dramatically to include all aspects of online delivery.

Active consideration is also being given to adding to the list the creation of value added content such as case summaries and case and statute citators. Concern about the possibility of lost business is the only constraint holding back some of the publishers. Many of the outsourcing activities that I have referred to are documented in local newspapers in the United States and on practicesource.com, the global blog that tracks developments in the legal publishing industry.

Excessive outsourcing

What is the effect of outsourcing more and more content. Some have suggested that quality will be reduced. Will it really make a difference to outsource case summary writing to lawyers educated in India? Likely not, but there are those who believe that it will result in lower standards. For that reason, some publishers have issued statements to the effect that value added content will continue to be produced in the domestic market (at least for now).

A publisher is a lot like a movie producer. The objective of a publisher is to make it all happen using whatever pattern of organization that seems most effective at any point in time. The structure within which a particular publishing house functions changes all the time. In the current climate, it is not inconceivable that the drive to reduce costs will see almost all of the traditional operations of a legal publishing company outsourced.

There is a threat to the publishing company in excessive outsourcing. The dismantling of the publishing team and the loss of the institutional memory of the publishing company that accompanies outsourcing means the loss of the elements required to continue to be competitive in the publishing game. Successful legal publishing houses have traditionally been led by and operated with a strong team of in house lawyers that direct the publishing program and take it in new directions as circumstances require. It remains to be seen what happens when legal publishing companies are run by persons untrained in and largely unfamiliar with either the law or with legal publishing, who have outsourced the core business and the expertise with it.

Opportunities for innovative outsourcing

Outsourcing should offer the publishers opportunities for innovation. One option worth exploring is “collaborative outsourcing” whereby competing publishers source selected content either from the same supplier, or from each other. Just as every publishing function is being considered for outsourcing, so too should publishers consider each other as possible partners in outsourcing the production of content that both publishers need. It would be innovative to consider this option seriously.

Another opportunity for innovation is “domestic outsourcing”. Some customers may be unhappy with the idea of off shoring, based on concerns about either reduced quality or about job losses in Canada. A cost benefit analysis that took into account all of the factors into consideration, including the loss of business to domestic suppliers as a consequence of off shoring, might show that outsourcing to domestic suppliers is the preferred option to outsourcing off shore. It would be innovative to consider this option seriously.

Impact of outsourcing

At this stage in the evolution of online access to legal information, increased outsourcing and off shoring by the major commercial publishers is not significant development in the greater scheme of things. Historic concerns about the movement of the online business offshore have been shown to be unfounded. The number of domestic based commercial players has increased and the growth and increasing sophistication of free services are having the effect of lessening the traditionally dominant position of the major commercial publishers.

As in the past, when the Canadian Law Information Council left the market to its own devices, letting things unfold as they will, may prove to be for the best.