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The legal process outsourcing industry in India is growing at a remarkable pace and Mindcrest is one of the major leading players in this industry. Bar & Bench spoke to Ganesh Natarajan, a pioneering figure in LPO sector and the co-founder of one of the first Legal Outsourcing Company, Mindcrest. Mindcrest was founded in 2001, when the term LPO was not even known.
Prior to Mindcrest, Ganesh was a partner and led the India practice at McGuire Woods LLP, an international law firm of 900 attorneys. It was there that Ganesh met George Hefferan, and together with Rohan Dalal and Teju Deshpande, they founded Mindcrest.
Ganesh carries with him over 20 years of legal and business experience. Ganesh shares with us the initial years of setting up Mindcrest and the challenges faced. He talks about the various kinds of work undertaken at Mindcrest, technology used in LPO sector, the recent trends in LPO space and the various developments taking place at Mindcrest.
Bar & Bench: What drove your decision to step into LPO industry? You started Mindcrest at a time when we had not even heard about LPOs and you were one of the first to start.
Ganesh Natarajan: First of all when we started there was no such term as an LPO or even an LPO industry. Being a partner in a big law firm, I saw some of the inefficiencies of how law firms operate, how they bill etc. With the success of the IT industry, the thought was whether we could do the same by utilising Indian lawyers to service the US market in a more efficient manner without losing quality. So that was the genesis of why the four of us started Mindcrest. We started in 2001 and just celebrated our 10th anniversary. It was a long time ago.
Bar & Bench: Talk us through your initial years of setting up the company. Challenges you faced.
Ganesh Natarajan: The initial years were difficult. First of all we opened the office in late August 2001 and 9/11 happened right thereafter and that was a big blow because we were just getting started and everybody’s attention was completely diverted. The early years were difficult because we had to educate our client base of primarily in-house legal counsel on India in general. We had to do very basic educational work like do people speak English, what law schools are there, how is the legal education etc. The issue of confidentiality and data privacy also came up all the time. We adopted our own strict standards around confidentiality, business continuity and data privacy but ISO 27001 came later. We basically had to convince people that the work would be done effectively and well in India. Having said that, clearly the value proposition was two things; one was the cost issue and the other, and more importantly, was that we could provide work at the same or better quality. That resonated well with people. But early days were difficult and slow going.
Bar & Bench: How difficult was it to raise funds for your company?
Ganesh Natarajan: We did not really raise any outside financing till 2006-07. We basically funded it ourselves in the beginning. Our philosophy has always been let’s raise money only when we need it and if we can do without raising external capital, that is fine because it gives us more freedom and flexibility to operate.
Bar & Bench: What is the kind of work that was initially done at Mindcrest and which area of work has seen maximum increase? Do you work on contract basis or project basis?
Ganesh Natarajan: Initially we did a lot of legal research projects. We started with the idea of doing legal research. We felt that that was something very straightforward, finite and well-defined. Over the years that has changed. Our lines of businesses have evolved. One is litigation, other is corporate services and the third is legal content and publishing. Research is now a small part of corporate services that we provide.
We have long term contracts with companies and firms where we put certain amount of people and just do it on a long term basis. Lot of work is on project basis as well so we have a mix of both.
Bar & Bench: Who are your major clients? Have you started getting more work from law firms?
Ganesh Natarajan: Large Fortune 100 companies, Am Law 100 firms in the US and Magic Circle firms in the UK. Our client base is typically all over US, UK and Asia Pacific. Earlier, our mix was 80-85 percent work from corporations and only 15-20 percent from law firms but right now it’s about 50-50. Significant changes have taken place especially after the recession that has made law firms take a serious look at the LPO model.
Bar & Bench: Give us some insight on the technology used in LPO sector and also the technology developed in Mindcrest?
Ganesh Natarajan: We have a lot of proprietary tools for work flow technology that are internal to Mindcrest. For example suppose we get 40,000 contracts every year, how do we do this so that work flow is easy, the documents are parsed properly, sent to the right people and they are able to get right inputs into the documents at the right time, for all of that we have created our own internal work flow tools that help. Some of these work flow tools are also hooked into our clients’ technologies, their servers and their systems so that it is seamless. In terms of external technology, technically since we do work for large corporations and firms they have a whole set of their own tools and technologies that we have access to. They all give us access to their servers and technologies.
Bar & Bench: You have been involved with legal process outsourcing industry from the beginning. How do you feel legal process outsourcing will evolve? How has it evolved in your view thus far?
Ganesh Natarajan: There was a time when so many people jumped into this. It was almost like every month there were new firms or new people getting into this business. That has abated a little bit and some of the so-called fly by night operators have stepped back or have not been able to be successful. So what is really happening actually is that there are a few players who are credible, strong, good players and there are some niche players who really focus on certain areas. From a bigger picture point of view, there are some significant changes that are going on especially in US and UK in the legal profession itself. In the US what is happening is that companies are looking at the legal function as a key area to outsource. So that has resulted in significant changes because now they are forcing their law firms to come out with newer alternatives, and newer ways of providing legal services, which is why I mentioned law firms are now increasingly using people like us to provide some of these services as an option that they can provide to their clients.
Historically, law firms provided hourly quotes, but this trend is changing and law firms are increasingly being asked to provide fixed fee quotes. This changes the entire dynamics of how the law firms operate. They now need to control costs which they had not done before, efficiency becomes a bigger issue and therefore working with people like us helps them provide those services in a much more efficient cost effective manner. But clearly the winners will be the people who are credible, who really provide very high quality services and who bring the kind of background and experience that others do not have. It is service business so at end of the day people who provide best quality and best customer service will be the winners.
Bar & Bench: Reverse outsourcing – there are reports about outsourcing back to the US. Can you throw some light about the process and how it is happening?
Ganesh Natarajan: We have not embarked that way at all. For instance when LPOs say they employ lawyers in US, they are not really employing lawyers, they are all contract lawyers. They only have a few permanent employees and the rest of them are all contract lawyers. We do not want to get into that model at all. We are very clear that our focus has to be getting the work done out of India.
Our focus is not getting this work done in US for variety of reasons. First of all our employees in India are our employees and they are not contractors. So we can train them, we can groom them, we can develop them, we can retain them and do all of that in a much better way than having contract lawyers in US who may or may not be interested in this work, who are not viewing this as a career and whom you cannot train and sustain because they come and go as attrition rates are very high. Our model is very clear. We have offices in US but these are largely client management and business development offices. We are very clear that work has to be done out of India. Frankly, the quality of work that we can do out of India is much superior to what we can do in US for the kind of work that we do.
Bar & Bench: The recent trend in USA is American lawyers are willing to relocate to India for jobs in LPO industry. Your views.
Ganesh Natarajan: It’s still a trickle of American lawyers willing to relocate to India. It’s clearly not a wave despite the job situation here, it’s not like everybody is thinking of India as the best destination for lawyers. The reasons are because it’s not that easy for Americans to come and live in India. We have hired our share of American lawyers and sent them to India. But we are very careful in ensuring we get the right kind of person with the right sort of cultural affinity to India who will thrive in India. Otherwise just putting people in India is a recipe for disaster because six months from now they may say that they are not happy. It’s almost the cultural issues, living conditions and environmental issues really that are critical for us at least in evaluating somebody who we send to India.
Bar & Bench: Mindcrest has consistently set the standard for the core legal process outsourcing industry. What new developments can we expect from Mindcrest in the future?
Ganesh Natarajan: In terms of core legal services, we will continue to expand into certain industries and certain areas. For example we have a strong focus on financial services, oil and gas, pharmaceuticals, media and the law firms market and that will continue. We will get into some other specific industries as well. Software industry is another area where we are getting a lot of traction, so we will do that.
In addition to this, we look forward to opening up more offices and establishing a centre in US and Europe. These are exciting times for us. We have worked ten years on this and finally we are seeing lot of good results and long term clients with repeat business. We hope to continue serving our clients as we have done in the last ten years.