Knowledge Services

Legal Departments need to delve deeper into the "Process" aspects of the legal activities handled by them. Due to increasing pressure on Legal departments, to increase efficiencies and decrease cost it has become necessary for them to analyze their current processes and ascertain the gaps. The methodology that can be followed is:
− Interviewing: Detailed discussion with various stakeholders to understand current processes, criticality/importance of certain activities, existing process documentation, performance metrics, knowledge sharing, industry perspectives etc.
− Data & information collection: Collate all information gathered by various stakeholders and evaluate current challenges/pain points faced by the Legal department. The next step is also to Identify and review key dependencies, hand-offs and controls.
− Process Map creation: Prepare detailed as-is process maps and validate these process  maps with the Legal Department
− Final Analysis and Recommendation and Validation of Hypothesis: Recommendation where applicable for process reengineering, improvement and consolidation (centralization, automation, elimination, outsourcing) and preparation of strategy for addressing challenges faced by legal department.
 Create detailed To-be Process maps (with proposed handoffs and controls) based on recommendations and strategy which should be  validated by the Legal Department.
 Evaluate outsourcing potential of certain activities and support the same along with proposed roadmap and implementation plan.

 

Posted by Arti Dhananjay Joshi at 8:58 AM | Permalink | Comments (0) | TrackBacks (0)

Every corporate legal department is looking into implementing new tools and methodologies, to curtail costs involved in E-discovery. One strategic approach to save cost would be to store the relevant corporate data with a  third party cloud provider. 

In a cloud computing scenario, Company X's data would be stored by a third party cloud provider and if there is a discovery request, the data can always be extracted. However, there are challenges when hosting data on the cloud:
1. The role of the third party cloud provider and whether they need to comply with the obligations under litigation hold.
2. Applicability of privacy laws of different jurisdictions, due to the virtual nature of the cloud. 
3. Issues relating to preservation of metadata, the admissibility of ESI on cloud as evidence etc. 

Some of these legal concerns could be addressed by expressly negotiating specific clauses in the contract for services with the cloud provider, which could describe in detail the obligations of the provider with respect to preservation and production of the data hosted on the cloud. However, the companies need to formulate policies for data on cloud in advance, as any failure in production and preservation of ESI could lead to sanctions from court. As cloud computing becomes more prevalent, it would be interesting to see how  e-discovery and cloud computing can go hand in hand.

Posted by Biji Johnson at 6:42 AM | Permalink | Comments (0) | TrackBacks (0)

 
 Shorter SLAs are the norm in LPO industry. Except for a very few deals, LPOs have not yet entered the realm where 3 to 5 year SLAs are the norm rather than the exception. Though in post-recession era, cost prediction has replaced cost reduction as the mantra of buyers of LPO services, a perceived disregard for the niceties of long term relationships is still seen in the market. While long term and solid relationships will mean assured business and success to vendors, the lack of it is synonymous uncertainty, a luxury that smaller LPO players cannot afford.

 Investment in LPO training is substantial given the fact that Indian legal education places less emphasis on skill-development, and is more focused on law students reproducing statutory provisions and case laws (change is setting in, though slow). As building legal knowledge and skill sets takes much more time and effort than building processing skills required in BPO employees, substantial costs will be incurred on training. The attrition rate of 23% necessitates significant investment in continuous training.

 Overall resource utilization in small LPOs is quite low although we do not have the data readily available to substantiate the statement. LPOs consider this data to be more confidential than their client lists. Chances are that we are more likely to be shocked by the percentage of non-utilization (if and when made available) than being pleasantly surprised since it relates to an industry that is reeling under an attrition rate of 23% and with very few LPO players being able to ensure continuous workflow.
 
 With the kind of "competitive bid for talent" that is prevalent in the LPO industry, the employee salaries in LPOs are expected to remain high which would in turn strain the cost arbitrage which is the life blood of LPOs and the smaller players will be the worst hit.

 Smaller and niche players may not have the ability to scale up when large scale spill over work gets off-shored.

 A considerable percentage of new LPO employees are often unproductive or cannot be billed at good billing rates till they acquire certain degree of expertise which may take anywhere from 3-6 months.

 While small projects are relatively easy to come by, LPOs need significant investments in marketing to clinch large contracts at attractive billing rates. Clients are more comfortable talking to sales teams that comprise of lawyers/professionals who are qualified within their respective jurisdictions and who talk the same "language" than general salesmen. The larger players with their financial muscle and significant marketing infrastructure are better placed than their smaller counterparts to take on these emerging challenges.

 Mushrooming of LPOs means that the rates that were considered possible at some time are still remaining elusive due to the eagerness of the LPOs to attract business. But equally important is the message underlying the saying that, "cost can get you in business, but cannot keep you in business".

 All these factors have already led to and are likely to lead more in the coming days to a race to acquire capabilities and clients which will drive inorganic growth wherein smaller players are likely to get absorbed by the larger ones.

Posted by Vincent Puthan Purackal Devasia at 4:31 AM | Permalink | Comments (0) | TrackBacks (0)

Acknowledge receiving deliverables. Encourage your off shoring team by sending an e-mail a day telling them how important these contracts are. Make it interesting for them. They will never know the pain you went through working on a deal/negotiation and they will never know the inside story. I once got an e-mail from my client that I later shared with my team where she told me how she and her team didn't sleep for 3 days because they were trying to hammer out details of the liability clause of a particular agreement. She said that when they finally struck the deal, they were so pleased that she treated her staff to half a day off! Your vendor's team is not full of robots. They thrive on inspiration from their client as much as their project manager.

Posted by Pakhi Bagai at 2:20 PM | Permalink | Comments (0) | TrackBacks (0)

The main source of Contract management activities are the administrative terms of the agreement itself.  Such administrative terms that usually appear in the agreement can include service level measurement, financial terms and responsibility, milestones for deliverables, acceptance testing, invoicing and payment terms including penalties that will be levied incase of delayed payments, proof of insurance, resources to be used, legal notices etc.
In most instances, it would be prudent for the contract manager to set up administrative processes as per the contractual obligations captured in the agreement, in order to keep track of the various activities.  Many other activities such as approvals of invoices, security process for premises, internal approvals for various contract related activities are internal to a company and are usually not addressed in the agreements.
Secondly, there may be other contract management activities which may already exist outside the agreement as standard operating procedures (SOP) of one or both of the parties.  
Thirdly, there are activities for managing contracts which are imposed by third parties such as namely compliance & regulatory agencies.  The Sarbanes Oxley ("SOX") reporting of financial data from contracts (in USA) is an example of an extra-contractual process which the contract managers is responsible for and has to comply with.

Posted by Anita Mary Thussu at 11:26 AM | Permalink | Comments (0) | TrackBacks (0)

A June 19, 2010, statement from the People's Bank of China (PBoC) suggested that China will reform the Yuan (RMB) exchange rate and enhance the RMB's exchange rate flexibility in view of "the recent economic situation and financial market developments at home and abroad." The statement represents a departure from a two-year period during which the RMB was effectively pegged to the dollar. PBoC statements of recent months have included references to the fact that the stable exchange rate was one of the anti-crisis policies introduced in 2008 to help support economic recovery and thus would eventually be removed. Though we don't expect the Yuan to appreciate more than 3% in a year's time, there can be several implications to this move.

 

What does this mean to the Global Markets?

 Imports getting cheaper for China means increasing demand from the rest of the World (see chart below). Mature economies, who are about to embark on a program of a meaningful and sustained fiscal tightening, this demand lift from China can be useful.

 This gives the EUR a little more scope to devalue vis-à-vis the Yuan, without tampering with the cross with USD.

 China being the world's largest buyer of key base metals like copper and aluminum (consuming about 40% of the total global supply), a stronger Yuan would translate into even higher imports, thus pushing the commodity prices northwards. This, however, would be a short-term move, as the potential slow down of the Chinese economy will offset the above.

 This obviously brings in a lot of joy for China's competitors and trading partners, who have long complained that the Yuan gave Chinese exporters an unfair advantage, fostering global imbalances.

 

The following graph captures the % change in Chinese imports during July 2005-08, during which the Yuan was allowed to appreciate.

Source: DOTS, IMF

.. and for China?

 A more flexible currency would give China more freedom to decide on monetary policy and reduce inflationary pressures by lowering import costs. China's inflation jumped to a 19 month high of 3.1%YoY in May.

 Beijing based computer maker Lenovo Group Ltd. and Shanghai based China Eastern Airlines Corp says that they would gain from lower imports costs. Textiles makers, on the other hand, would stand to lose most and some may face bankruptcy with profit margins as low as 3%.

 The PBoC probably aims at lowering dependence of growth on exports (other than investment) and pass it on to domestic consumption, led by higher purchasing power of consumers (as imports become cheaper and inflation gets checked). This structural change in the Chinese growth story, we believe, is key for the country's sustainable growth process.

Posted by Rajarshi Majumdar at 6:19 AM | Permalink | Comments (0) | TrackBacks (0)

Contract Management Goals 

Large organizations having high volume of transactions with several trading partners, face an eternal challenge of tracking contractual compliances. They invest their time, money and resources in a wide range of activities which culminate in the so called "Contract Management exercise". Traditionally teams looking after contract management, whether it be the legal department or the sourcing & procurement dept, would rely on tracking mechanisms built out of Microsoft excel sheets and access databases; but with time this evolved and organizations adopted and implemented popular contract management software tools which were easily available in the market. By adopting the CMS, the organization tried to ease out the pains of contract management.

The entire aim of the contract management exercise is to ensure that each party performs according to their intended agreement. This can be achieved by adopting some basic practices listed below -

a)     Convey important information about the critical contractual terms and requirements to the project team members. This can be done through a training session which highlights the scope / deliverables/ milestones/ penalties/ change control processes/ IP and confidentiality clauses amongst others.

b)    Track changes to the signed document as the relationship grows and evolves during the contract period ( or its extension) - to capture any changes to the agreement by means of change orders/ processes outlined in the contract and ensure that this information is passed on to the project team.

c)     Create visibility of the executed contracts by providing a centralized repository (provided through digitized contracts present in the CMS).

d)    Ensure compliance of the various terms in a contract which will eventually help mitigate risks

 

Adopting the above listed practises will enable the contract manager to reduce the risks and enable efficiency in the long run.

Posted by Anita Mary Thussu at 9:41 AM | Permalink | Comments (0) | TrackBacks (0)