Are they given enough budget to purchase legal software? If yes, then the budget may have ended up in someone's pocket. If not, does the head office suggest open source solutions like OpenOffice? Either way, they have to stop such practice.
However, if this "branch office" is really an outsourcing company that deals with your company on a contract basis, then it doesn't really matter how they do their work.
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Are they given enough budget to purchase legal software? If yes, then the budget may have ended up in someone's pocket. If not, does the head office suggest open source solutions like OpenOffice? Either way, they have to stop such practice. However, if this "branch office" is really an outsourcing company that deals with your company on a contract basis, then it doesn't really matter how they do their work.