In what is arguably a sign of things to come, mining giant Rio Tinto is outsourcing legal work to India in a bid to slash its annual legal costs by 20%.
In a deal with outsourcing firm CPA Global, Rio Tinto has formed a 12-person team of low-cost lawyers in India to work on tasks such as contract and document review, drafting and legal research.
Rio's external legal advisors, Allens Arthur Robinson and Linklaters, will be required to pass on low-end work to these lawyers. Allens declined to comment on the move, but earlier last month Allens chief executive Michael Rose told the AFR that the downturn had meant that clients were now shifting focus from "absolute dollars to value" in legal fees.
Rio's London-based managing attorney Leah Cooper, said that the deal will amount to “tremendous savings” for the company. "We took a long hard look at our internal costs and the amount we were spending with outside counsel and saw an opportunity to make significant changes to the way we deliver legal services to the group,” he said. “Our internal team will be freed up to get involved in some of the more complex and challenging legal matters, which in the past might have been sent to outside counsel at significant cost.”
Earlier in May, Rio chief counsel Phil Edmands hinted at the company's plans. "We haven't been pushing for fixed quotes, but have been focusing on cutting out legal costs to suit our requirements," he said. "You don't always need a perfect product or something that has been engineered to the nth degree. You don’t always need a Rolls-Royce when a bicycle will do."
Rio reportedly has fees in excess US$625m associated in its US$15bn rights issue – US$420m of which is said to be paid to the banks managing the offering.
CPA Global's Asia Pacific manager, Eve Johnson is currently in Perth working with Rio on the deal.
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