Next, Outsource All the Lawyers
August 16 2006 by David Perla
Tech support, financial services and retailing led the wave of business services increasingly being sourced overseas. But the offshoring effect is now rippling outward and upward to encompass more sophisticated-and more profitable-work. Now, a growing number of U.S. companies are turning to India-based lawyers for a wide range of legal services.
While Indian lawyers cannot argue in U.S. courts, they can negotiate and draft contracts, review litigation documents, conduct competitive intelligence, perform patent research and analysis, and manage nondisclosure agreement processes for some of America‘s leading corporations. What’s more, operating from state-of-the-art offices half a world away in Mumbai, India, these lawyers provide services at 25 to 70 percent less than the cost of comparable legal work done in the U.S.
Why is India a particular hot spot in legal service outsourcing? Law school in India is taught exclusively in English, so its lawyers speak the language fluently. And because India‘s legal system, based on British Common Law, is similar to that of the the U.S., Indian lawyers are able to grasp its intricacies with little additional training. The country’s law schools graduate 75,000 lawyers annually, which means there is an abundance of highly trained lawyers there-many of whom are attracted to outsourcing firms for their highly competitive salaries, sophisticated work and merit-based career advancement opportunities.
As legal costs in the U.S. continue to escalate, companies like Primus Telecommunications Group and Roamware are turning to India-based attorneys for cost-efficient, quality legal support services. In-house lawyers at Primus Telecommunications are assisted by Indian attorneys in drafting, revising and reviewing telecom related agreements, while Roamware has outsourced the drafting of patent applications for its voice and data mobile roaming technology.
When to Outsource
In some cases, the outsourcing initiative fills in when the volume of work on a designated project doesn’t justify the hiring of a new in-house, full-time employee. In others, the outsourcing provider in India replaces domestic outside counsels. A New England-based, publicly traded manufacturing company, for example, recently saved more than $500,000 in just the first two months of an engagement by outsourcing document review for a large-scale products liability class action suit.
Outsourcing offers significant cost savings at a time when 86 percent of corporate law departments surveyed by the American Corporate Counsel Association cite outside legal costs as their top concern. It also frees corporate legal departments from time-consuming paperwork-enabling them to focus on more sophisticated, expensive and sensitive legal matters best handled in-house. Combining elite pedigree U.S. and “offshore” lawyers and scientists with a secure global technology infrastructure ensures a world-class, U.S.-quality and dependable work product. The crossborder infrastructure and technology model provides seamless integration between U.S. corporate legal department personnel and the outsource provider. The outsourcing provider functions as an extension of a company’s in-house legal team, easily reached via secure VoIP telephony, instant messaging, web conferencing and email. As an added benefit, outsourced work can be done on an overnight turnaround basis thanks to time zone differences; lawyers in India work while their American counterparts sleep.
The legal support services most effectively outsourced include:
- Litigation support, including document review, briefing and motion writing
- Contract drafting, administration, management and abstraction
- Legal, business information and competitive intelligence research
- Patent research, analysis, drafting and prosecution support
Leading legal support services providers work closely with in-house legal departments and law firms to ensure that their services do not run afoul of strictures against the unauthorized practice of law. The in house and firm lawyers practice law, while the outsourcing firm provides support services.
However, not all legal services can be sourced offshore. For example, outsourcing does not lend itself to laws governing the securities industry. These include the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 or the Investment Advisers Act of 1940.
Privilege and Protection
Under applicable law, the attorney- client privilege applies to vendors that provide services to a lawyer under a direct engagement relationship. Fiduciary obligations to keep client documents and communications confidential apply under both Indian and U.S. law. And top providers sign nondisclosure agreements with clients, as well as, if requested, with the underlying client of any law firm clients. They also require all employees to sign standard nondisclosure, noncompetition and nonsolicitation agreements. The best outsourcing firms avoid conflicts of interest by conducting industry-standard conflicts checks at the start of all potential client relationships and periodically throughout the relationship.
With U.S. firms becoming more aware of and comfortable with the concept, legal services outsourcing is expected to reach more than 10 times its current size of $61 million in revenues in this decade alone, according to a ValueNotes report. In 2005, $250 billion was spent on legal services globally, with the U.S. accounting for $170 billion, according to Forrester Research. With outsourced legal services running just 25 to 70 percent of the cost of domestic legal services, an offshoring boom will translate into billions of dollars of legal expenses saved per year.
The bottom line? Ultimately, shifting lower value legal work offshore allows general counsels to use their in-house legal staffs and outside U.S. law firms more effectively.
David Perla is co-founder and co- CEO of Pangea3, a provider of outsourced legal support services to U.S. corporations and law firms.
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