This year’s announcements that Mallesons Stephen Jaques and Blake Dawson have signed legal process outsourcing agreements indicated the changing nature of the Australian legal profession and the significant part LPO will play in 2012 and beyond.

In October this year, Lawyers Weekly reported on Mallesons’ announcement that it will be using 200 trained lawyers in India for legal work after signing an LPO contract with Integreon.

As the first large law firm in Australia to sign a formal agreement with an international LPO provider, managing partner Tony O’Malley described it as a “watershed moment” for the Australian legal profession. “Large firms like Mallesons are conscious that if they don’t find ways to reduce the cost of their services to clients for certain work types, they will lose it,” said John Knox, the CEO of Advent Lawyers, which last year signed a strategic alliance with the New York and Mumbai-based LPO provider Pangea3.

While LPO has, for a number of years, been leading developments regarding the delivery of legal services internationally, including a number of the UK’s Magic Circle firms and some large law firms in the US, many Australian law firms have stood by and watched, reluctant to jump on the LPO bandwagon. For some industry members, while it makes business sense, LPO presents a threat to the development of Australia’s young lawyers.

“My personal opinion is that I’m uneasy about it. I can certainly see the sense of it from a commercial point of view. My worry would be the work that is normally done by younger people is not done here,” Law Council of Australia president Alexander Ward told Lawyers Weekly earlier this month.

For consultant and former Middletons chief executive John Chisholm, LPO is something the industry needs to get used to, and he says that firms which don’t embrace it do so “at your own peril”.

“There is an element of work that is commoditised. I don’t like the word, but it happens. Get used to it and learn to deal with it,” said Chisholm. “I think it’s a shame we’ve held on to some of this stuff for so long. Those firms that are embracing it and acknowledging it will do really well. But for the fi rms pretending it’s not happening … or that there’s no benefit to it, then good luck.”

In response to concerns about the effect outsourcing agreements will have on the recruitment and retention of young lawyers, Chisholm says the “smarter firms” will give their young lawyers “much more interesting work anyway, than some mind-numbing discovery”. “Firms are embracing it much more now. Mallesons and many other firms are doing it and again, there are certain areas of any industry that have become commoditised,” he says. “Much of this legal process outsourcing is much more effective than what we’re doing.”

Despite this reluctance amongst the industry, in 2011 more and more Australian firms started to take LPO more seriously.

Expecting two or three more announcements fro law firms using LPO in the first quarter of next year, Exigent director David Holmes told Lawyers Weekly that Australian firms are embracing the idea of LPO just as quickly as, or quicker than, UK firms.

"To be totally fair, I think the Australian market has paused and looked and learned - and then pushed the button," he said. “The speed at which Australian firms are moving [towards LPO] is probably quicker than a lot of UK firms. The [UK market] is a bit different, but it’s obviously driven by the fact that in a sense the market movers – the people who buy legal services – have probably got a clearer sense that they want this as part of the package.”

Holmes said while LPO will be the norm for firms in 2012 for processes like discovery, the differentiator next year will be how firms that have embraced LPO actually use it.

“In litigation now I don’t think there’s going to be a firm in Australia that can realistically say, ‘Well, we’re just going to do discovery the old way’. Clients now know that they don’t have to pay for discovery at $250 an hour. So there’s nowhere to go.”

The Malaysia Solution

Another big story this year was the High Court’s ruling that the Gillard Government’s Malaysian asylum seeker swap deal was unlawful. In a six to one judgment on 31 August (Justice Heydon dissenting), Chief Justice Robert French ordered that Immigration Minister Chris Bowen be restrained from sending asylum seekers to Malaysia due to the fact the deal was made “without power and is invalid”.

The High Court found that under s198A of the Migration Act 1958 (Cth), the Minister could not validly declare Malaysia as a country to which asylum seekers could be sent for processing, unless it was legally bound by international or domestic law to provide procedures for assessing asylum seekers’ need for protection; provide protection for asylum seekers while awaiting determination of their refugee status; and provide protection for those given refugee status until their voluntary return to their country of origin or resettlement in another country.

The Court held that the general powers of removal of “unlawful non-citizens” cannot be invoked if the country does not meet these requirements. It was thus held that because Malaysia is not legally bound to provide the access or protections the Migration Act requires, the deal is unlawful.