Carillion blend legal in-sourcing and out-sourcing services in innovative new market offering

The issue of how to avoid having to pay top-dollar fees for commoditised legal work has been an issue of concern for clients for some years now.  Although lawyers can and do often stress the benefits of having highly qualified experts dealing with a case, the reality is that in many areas of law and commerce a lot of the more straight-forward work which has traditionally been done by lawyers can be done more cheaply and more efficiently elsewhere.  Why pay £300 per hour for a junior lawyer in a private firm to draft something that can be provided much more cheaply through competent technicians in low cost locations? CPA was one of the first companies to recognise that large clients might want to insist on some of their legal work being outsourced by their lawyers to cheaper providers, and made a significant fortune out of that market.  Carillion, the FTSE 250 construction group, was one of the early adopters of CPA’s services and encouraged Carillion’s legal panel members to use CPA in order to achieve cost savings.

However, Carillion, has now gone much further than this, and has taken its own interesting hybrid approach to the issue.  Firstly, it has in-sourced a lot of its routine legal work setting up its own Carillion Advisory Services with 60 paralegals doing much of the relatively standardised work on Carillion’s own business needs.  That in itself is nothing unusual – plenty of large businesses have their own in house legal department -  but CAS is also offering legal aid advice to third party clients, and Carillion is now requiring the 12 law firms on its panel of advisors to use CAS for the commoditised elements of the work they are undertaking for the group, in order to minimise costs.

And in a step further still, it is being reported that at least one of the panel firms, Clarkslegal, is now offering CAS services to some of its other clients as a lower cost resource.   So essentially, Carillion has spawned its own legal services outsourcing business, which will now have a wide range of third party clients, as well as handling the company’s own basic legal needs.

At present, the business is not offering legal services which are regulated, but this is not ruled out for the future.  This would see CAS converted into an alternative business structure (ABS).

From my perspective, I think that in having its own in-house team of legal executives, Carillion will probably be able to drive efficiency savings for itself and for third parties to which it offers similar services.  A lot of construction and property related work is relatively commoditised and lends itself well to this approach.  Furthermore, as Carillion’s 12 firm panel of Carillion legal advisers includes some big hitters, including Slaughter and May, Linklaters, Ashurst, Addleshaw Goddard, DLA Piper and Pinsent Masons, CAS should get its venture off to a flying start by effectively requiring them to unbundle their work and refer some of it to CAS.  Who knows where this could lead if CAS proves itself adept at working the model. 

For me, the only slightly discordant note in the offering is the legal aid services, which seem to be to be a very different kettle of fish from commercial advice and document preparation.  I suspect that this offering is more a hangover from the development roots of the CAS team (which became part of the Carillion Group through acquisition) rather than a cue to its future direction.