International Trade in Services.pdf - DSpace at Khazar University

86 International Trade in Services
Box 3.7: Cost Pressures Force Clients to Rethink Their Approach to Legal
Services
In a more global competitive market, law firms are encountering greater cost
pressure from their clients. Consumers of legal services such as governments,
corporations, and individuals are increasingly scrutinizing how law firms price their
services and deliver results. Some clients are using competitive procurement
processes to secure economically priced legal services. Others use software to audit
their legal services bills or establish in-house counsels familiar with the business to
control legal expenses (Tucker 2008).
Law firms are responding to this client demand for more cost-effective offers by
making internal changes to lower their costs. Some may adjust their billing structures
to include fixed fee rates for routine services, capped fees to prevent cost overruns,
and discounted rates for large volumes of work (Murphy 2008). Others employ
technology to work more efficiently and unbundle services to offer specialized
products. But an increasing number of firms also move work overseas, including to
developing countries, to improve their cost position relative to competitors.
The prominent share of expenses for labor compensation gives developing
countries, with their lower wage levels, a major advantage over competitors in
developed countries as long as the qualifications of domestic lawyers match
international standards. There are several avenues for law firms to strengthen
their skill base: (1) improving professional education over the long run,
(2) providing supplemental education to practitioners in the medium term, or
(3) quickly hiring missing talent from competitors in the domestic or overseas
markets.
Raising educational standards will help build value in the profession over time.
Policy makers and professional associations can work with colleges of law to raise
standards to an internationally competitive level. Jordan, for example, is undertaking
a process of assessing educational outcomes in the profession, benchmarking
them against standards designed by international accreditation bodies, and
reworking curricula to ensure that degrees are internationally recognized. More
generally, consultations with the local colleges of law can determine the status of
accreditation of these colleges, as well as benchmarking indicators related to curriculum
and teaching practices (for example, professor-to-student ratios), which
can then be compared with those of other colleges of law in the region and farther
afield. If standards are found to be comparable with those in export markets of
interest, policy makers might want to try to negotiate a mutual recognition agreement
in order to facilitate market access (box 3.8). On the other hand, if marked
knowledge gaps exist in particular areas, student exchanges between local and
foreign law schools or distance learning partnerships can be a cost-effective means
to expand the educational offerings to local students.