Legal outsourcing LPO legal outsourcing LPO India (Trustman & Co) - Delhi Legal process Outsourcing patent Research litigation support

ARTICLE ON LEGAL OUTSOURCING TO INDIA

Outsourcing is defined as the "the process of transferring an existing business function, including the relevant physical and/or human assets, to an external provider in order to strategically use outside resources to perform activities previously handled in-house.

Outsourcing involves transferring a significant amount of management control and decision-making to the outside supplier. Buying products from another entity is not outsourcing or out-tasking, but merely a vendor relationship. Likewise, buying services from a provider is not necessarily outsourcing or out-tasking. Outsourcing always involves a considerable degree of two-way information exchange, coordination, and trust.

Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Many companies look to employ expert organizations in the areas targeted for outsourcing. Business segments typically outsourced include information technology, human resources, facilities and real estate management, legal and accounting. Many companies also outsource customer support and call center functions, manufacturing and engineering. Outsourcing business is often characterized by expertise not inherent to the core of the client organization.

The overhead costs of customer service are typically less where outsourcing has been used, leading to many companies, from utilities to manufacturers, closing their in-house customer relations departments and outsourcing their customer service to third party call centers. The logical extension of these decisions was of outsourcing labor overseas to countries with lower labor costs, this trend is often referred to as offshoring of customer service.

OUTSOURCING LEGAL WORK TO INDIA

The outsourcing of legal work is known in India as Legal Process Outsourcing ("LPO"). In terms of brainpower and English fluency, there is no reason why Indian lawyers can't do much of the work that U.S. lawyers are currently doing. India's legal system is based on English Common Law, Indian legal training is conducted solely in English, Appellate and Supreme Court proceedings take place exclusively in English, and legal opinions are written exclusively in English. Virtually all Indian lawyers are conversant with the UK legal system.

OUTSOURCING LEGAL WORK TO INDIA began in 1995, when the 34-lawyer, Dallas-based litigation firm of Bickel & Brewer opened an office in Hyderabad. Co-founder and co-managing partner Bill Brewer, who is 53 years old, explained that the idea was hatched when he was out to brunch with a relation by marriage. The relative, C. S. Prasada Rao, was originally from India. "We were looking for new ways to be more efficient in handling the millions of pieces of information that confront us in each case. I'm not sure how it came out of the conversation but somewhere a light went off. I asked, 'You can have a lawyer for how much an hour in India?' He said, 'Two dollars an hour.' We didn't make it to dinner before we were setting up the subsidiary in India.

INDIA ADVANTAGE

The time difference between India and the United States allows for work to be done overnight, and many people in India's enormous workforce are college-educated and English-speaking. There is a day time when there is a night in US, hence, Attorney, while leaving the office, instruct his counterpart in India to do research on specific legal issues and he can have the complete research done on his table in the early morning.

There are 200 million English-speaking, college-educated Indians and there are not 200 million jobs," Steinberg said. Such a disparity in supply and demand allows his company to hire credentialed, capable labor, cheaply.

India seemed like the best bet. With more than 500 law schools and about 200,000 law students graduating each year, it had no shortage of attorneys. Lawyers in India had access to the same research tools and case summaries as any associate in the U.S. Sure, they didn't speak American English. "But they were highly motivated, highly intelligent, and extremely process-oriented, They were also eager to tackle the kinds of tasks that most new associates at law firms look down upon--such as poring over and coding thousands of documents in advance of a trial. In other words, they were perfect for the kind of document-review work he had in mind.

On the other hand, US attorney fees, even of junior attorney, is growing and becoming unaffordable. Small law firm and solo practioner in US, who can not afford to have large number of staff, can concentrate on their practice while their work being handled in India at a fraction of cost and without having too much investment in infrastructure and staff. It also helped many to grow in US.

ATTORNEYS' SALARIES range from $6,000 to $36,000. The employees, whose résumés lead off with LLMs from top U.S. law schools and are studded with internships at the World Trade Organization in Geneva and apprenticeships at the Indian Supreme Court, would earn six-figure salaries at elite U.S. law firms. But the education visas most of these young attorneys used to study in the United States allow for only one year of work after graduation, so most have to return to India to find jobs.

With outsourcing, those who are not members of an American bar are supervised, and their work vouched for, by someone who is. "To the extent that what you have them do is legal research for U.S. firms, it's not much different than having law students do it, said George Washington University Law School professor Thomas Morgan, a scholar of professional responsibility.

The core business of law firms is a combination of solving legal problems and helping clients cope with difficult situations. An old adage says that lawyers are finders (business getters), minders (relationship managers), or grinders (ones who crank out legal work). Today, lawyers who are great at "client hand holding" typically rely on a partner or associate to do the legal work. Could the minder instead outsource this to a lawyer in another organization? The point is that even in what many would consider the core business of law firms lie potential outsourcing opportunities.

There is a compelling logic to this approach and there has been some push from clients as hourly rates for inexperienced lawyers have soared. The recent round of salary increases for starting associates will only cause more interest in this approach. My sense is that, not surprisingly, like all areas of outsourcing, we've seen mixed results at the beginning. As the industry matures and we can determine who does this well, the results are likely to improve substantially. I expect to see more of this happening, especially in "commodity" legal work, especially document review and standard litigation preparation work. I also expect state bar regulators, who seem to have become very aggressive in the last few years, will soon have legal outsourcing on their radars.

LEGAL OUTSOURCING TREND

Some of the dozen or so outsourcing companies that have sprung up over the last decade in India focus on low-level paralegal work—keeping track of filing dates and document reviews.

I came across with many solo Indian legal practioner who is doing legal work such as documents review, legal research, litigation support and legal opinions for US, Canada and UK while sitting in the peace of their home.

In 2001, General Electric added a legal division to a currently existing base of operations in India to handle legal compliance and research for two of its divisions, GE Plastics and GE Consumer Finance.

American companies tend to be reticent about sending legal work overseas to outsourcing firms. Third-party outsourcing companies in India are secretive about their client lists, concerned about a backlash from workers or customers in the U.S.

Even Microsoft, which has been widely reported to be using India for patent research, declined to discuss the company beyond confirming that Microsoft is a client and issuing a statement that "[as] a global company, we are constantly working to improve our ability to serve our customers worldwide in the most cost effective, efficient manner.

Given this reluctance to discuss outsourcing, convincing a potential client to accept even a free sample can take months of lobbying

Generally, the legal work is outsourced by legal department of the companies and solo legal practioner, small law firms to India but the trend is changing, large law firm is beginning to think about legal outsourcing to India.

While the plight of underpaid legal researchers is unlikely to be the next cause célébre for the anti-sweatshop movement, legal outsourcing, whispered about now, is likely to become a hotly debated topic in American law soon. For now, third-party outsourcers remain popular mostly with corporate legal departments, which use outsourcing to keep costs down. Large law firms have been slower to send work to overseas outsourcers.

But what if they were to come around? Thomas Morgan, the professional responsibility expert, says bar association ethics rules require law firms to pass on to clients cost savings from outsourcing. In theory, at least, it would take only one big firm looking for a competitive advantage to start a bidding war that could change the cost of buying legal advice in the U.S.

The legal outsourcing to India is bound to grow further within next 5 years and shall resolve all the present controversies despite initial issues relating to security, quality and political issues.

The US attorney shall get benefited by concentrating on quality legal work, thus enhanced fees and it will also help the small law firm to grow without requiring much investment and staff.

The client shall also benefited in terms of reduced legal cost. The presently, the benefit of low cost legal outsourcing is not passed over to the client but US attorney shall have to pass the benefit to their client.

We are clearly in the trial and error phase, which I expect to continue for another year or so. Bold corporations are moving in this direction cautiously but the lure of cutting expenses by 70 percent is a powerful siren. So long as the results meet expectations, expect to see more jumping on this bandwagon. Law firms will be led by the large British firms which are already spread across the globe. Adding Indian offices and centralizing work there will feel natural to them. Americans will follow slowly at best.

The political controversy around off-shoring has focused a lot of attention on the issue. That attention has caused some law firms to take a wait and see attitude -- after all, some law firms are political animals. However, other law firms are progressive and are keenly interested in reducing costs and increasing responsiveness. For these firms, the political debate has actually raised awareness of off-shoring as a well entrenched business trend

79,000/- jobs and approximately US 7 billion dollar are expected in India with a short span of time only from US outsourcing. Other countries i.e. Canada, Australia and UK have also started outsourcing to India.

SOME OTHER OPINION

Rob Hyndman, a technology lawyer in solo practice in Toronto who has a particular interest in outsourcing, believes it has the potential to transform the legal profession by levelling the playing field for small and large firms. “The common wisdom now is that you’ve got to be big or you’ve got to be focused,” he says, but outsourcing enables small firms and even sole practitioners to bring on extra people with a variety of skills as needed, giving them the staffing advantages enjoyed by bigger firms, but without the overhead.

With the work being done in India becoming more sophisticated, some American attorneys are skeptical of American firms that use outsourced legal services. "I think a lawyer has a responsibility over his work and he just can't delegate it," said former ABA president Jerome Shestack, now the head of litigation at the Philadelphia firm of Wolf, Block, Schorr and Solis-Cohen. "The problem with outsourcing is, how do you keep control over it? How do you see how it's being done?"

Galbenski is clearly a maverick bold enough to lead a whole new industry. But his new brand won't be able to survive many mistakes. By making the simultaneous switch from the Contract Counsel brand while moving offshore, Galbenski is taking on a big educational challenge. Clients want to know that they can trust their attorneys, so the company is going to have to figure out how to translate the message that cheap prices also mean high quality. There could be a disconnect there. Customers need to get the same quality of service they are used to--even if they are paying less.

Doreen Lorenzo COO
Frog Design Sunnyvale, Calif.

There have been some disputes within the American Bar Association about whether document review and legal research constitutes the practice of law. We have decided that if we bill people out as lawyers, they need to be licensed in the state they are working in. There are plenty of phenomenal lawyers here in the U.S. that you don't have to gamble on. You can screen who is doing the work; you have access to where they went to law school, where they clerked. That's something you might not get from lawyers in India.

Jane Hanner Allen President
Counsel On Call Brentwood, Tenn.

Ron Friedmann : Law firms have long outsourced many functions, from the mail room to travel services. In the past, outsourcing was restricted to what almost everyone would agree are "back office" tasks. Today, however, some firms outsource functions closer to the "front office," that is, what lawyers do, for example, legal research, drafting contracts, or document review by contract lawyers. There is no magic in where to draw the line between front and back office. Ultimately, law firm economics, ethics considerations, and market demand draw the line. Today, the trend is to outsource more. I've talked to lawyers who'd like to explore offshoring document review and to CIOs who want to investigate outsourcing help desks. So in my experience, outsourcing is not hype but serious consideration of this option, however, does not guarantee rapid growth.

John Tredennick : There is more going on that meets the eye. Business process outsourcing companies like Office Tiger are now targeting the legal market as the next candidate for outsourcing. As I wrote in an earlier article, Office Tiger provides outsourced legal secretaries to a major U.K. firm at a 3 to 1 ratio. That isn't 3 attorneys to one secretary as you might expect. Rather, that's 3 secretaries to one attorney--round the clock secretarial support for about 30,000 Euros a year. Another major company has just entered into a $4 million contract to outsource much of its litigation support work--scanning, coding, subjective review, etc. This work often went to law firm paralegals and US companies. Now it is heading overseas. This company is a longtime thought leader in corporate circles so you can bet that others will follow quickly. It won't take long for them to start outsourcing some of their legal efforts as well.

Stephen M. Nipper : Thomas L. Friedman in The World is Flat, notes that "...you are not going to go to Bangalore to find an internist or a divorce lawyer, but your divorce lawyer may one day use a legal aide in Bangalore for basic research or to write up vanilla legal documents..." ["Chapter 6: The Untouchables"]. As for my opinion, I think the biggest impact on law firms that "outsourcing" hype will cause is increasing the rate at which clients question the fees their attorneys are charging them. While a client may not REALLY send their work overseas, this "outsourcing" discussion may increase their desire to seek lower cost alternatives, including sending work to smaller firms and "farmshoring" (working with law firms in smaller metropolitan areas where billable rates are lower but quality is just as high).

Out sourcing as seen by Rob Hyndman, a technology lawyer in solo practice in Toronto

Large firms, which Hyndman describes as “the high-overhead/high-cost model,” are essential for certain cases, he says. “The work they do on high-value transactions with significant complexity won’t be affected by the outsourcing model. If eBay is buying Skype, they need a big team with a large range of skill sets, so they need a large law firm. But more generic or standard types of business law can be provided equally well by either large or small firms, and the large firms are expensive for that kind of work. Large clients typically go to their large law firms for everything, because it’s simpler. The small to medium-sized practitioners have had a hard time getting that work, as they don’t have enough skill sets, or business flexibility, in-house.”

The “outsourcing model” changes all that, Hyndman says. It gives small firms “an opportunity to dramatically leverage their local market knowledge, experience and client relationships.” Outsourcing to India, in particular, is “one of the unsung opportunities to take on new volumes of business,” he adds. With today’s technology, “it’s much easier to outsource now than it was 10 or 15 years ago, and there’s no reason why patent applications, for example, shouldn’t be prepared anywhere.”

Increasingly, while law offices in Manhattan, Dallas and Los Angeles are closed for the night, work for their clients continues halfway around the world in New Delhi, Hyderabad and Bangalore. It’s still a rarity for Canadian lawyers, though. “I think some Canadian firms are doing it, but they don’t want to talk about it as they’re sensitive to the impression being made,” says Hyndman. They may be worried that clients will be concerned about deterioration of quality.

For a growing number of U.S. lawyers, that concern has been outweighed by the demonstrated benefits of outsourcing certain functions to India: substantially lower costs and quick, sometimes overnight service. Outsourcing to India “is much more pronounced in the U.S., especially in the legal departments of large technology corporations, less so with U.S. law firms,” says Hyndman. “It’s in the early days in the U.K. now and it will come here in Canada.”