Outsourcing inside a far-flung Nestlé’s legal team, and three consequences

Nestlé, with 250 lawyers worldwide, “has a matrix of legal departments covering 52 countries,” according to the Financial Times report, “Innovative Lawyers 2009,” dated Oct. 23, 2009 at 33. The report says that the legal team “has set up centres of skill and scale, where premium, specialist work is carried out in the former and repeatable work done in the latter.” Its group general counsel, Hans Peter Frick, describes the effect as “outsourcing across its own network.” He points out that “it is difficult to beat legal work done in Barcelona for €130 an hour.”

The economics and labor arbitrage make sense, but three deductions follow. First, Nestlé doesn’t pay all of its lawyers at the same level, or there would not be such a differential as the Barcelona quote implies. Second, some lawyers must recognize that they are doing the grunt work of repeatable processes and that must dampen engagement and recruiting. Third, someone has to categorize work at the start to shunt it to one stream or the other.

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