Trends in the Legal Industry
Outsourcing of Legal Work—How Serious is it?

The practice of law would seem to be one of the few areas that is safe from the outsourcing trends that have had such a profound affect on American businesses. That’s no longer the case.

According to the New York Law Journal: “Outsourcing legal work to India is no longer a novelty. It’s a reality.” Click here to read entire article.

After initial resistance based on quality issues, corporations and investment banks seem increasingly willing to give outsourcing a try. What’s driving the change? The answer is simple … an ongoing effort by general counsel to cut costs.

The reality of legal outsourcing
In a recent study released by the Forrester group, a Cambridge-based research firm, they estimated the current value of legal outsourcing to be $80 million with more than three fourths of it based in India. They go on to predict that the total amount of legal outsourcing will increase to $4 billion by 2015. And they expect much of the outsourced work to go beyond the basics like IT and human resource support.
http://www.legalweek.com/Articles/1029148/
Management++IT+The+evolution+of+outsourcing.html

It is currently estimated that there are as many as 200 business process outsourcing companies scattered around India alone, providing a variety of business and legal services. Two companies in particular are worth noting as representative of the trend.  

The first is Pangea3, one of the largest of the Indian legal process outsourcing (LPO) companies. Pangea3 has received two separate infusions of venture capital cash from the United States: $4.4 million from GlenRock Capital and $7 million from Sequoia Capital. Sequoia is a well know silicon valley firm that was an early investor in Yahoo®, PayPal™ and YouTube™ among others. Pangea3 has used the money to expand its operations, which now include five offices (three in Mumbai, one in Delhi and one in New York). On their Web site they claim they: “… deliver best-of-breed patent analytics and patent drafting, contract drafting and contract management, legal research, competitive intelligence, electronic discovery, and document review services to U.S., European and Japanese corporations and law firms at a radically low cost.”
http://www.pangea3.com/index.html

The second firm is Office Tiger, which was started by two American graduates of Princeton University, in Chennai, India. Specializing in business and financial services, Office Tiger provided legal outsourcing as well. After growing to more than 5,000 employees with revenues of more than $125 million, Office Tiger was purchased in 2006 by RR Donnelley for $250 million. The division currently has more than 10,000 employees with multiple locations.
http://outsourcing.rrd.com/wwwFinancial/OutSourcing/Solutions/solutions.asp

What does this mean for you?
Does this mean that all your hard work building a career, not to mention the costs for law school are about to go down the drain? Probably not. Especially if you take a few simple steps to make yourself more valuable both to your firm and your clients.

One way to make yourself more valuable is to pursue more complex projects that take a higher degree of knowledge and sophistication. Most of the work being outsourced is relatively low level and routine, and much of it is currently being done by contractors here in the states. The more value you personally add to your projects, the more difficult it will be to replace you.

The second thing you do is develop strong personal relationships with your clients. After quality, the greatest concern that general counsel have about outsourcing is fear that the contracted lawyer will not understand their business. Nothing can replace the knowledge and trust gained through first-hand experience. This is especially true when you bring new clients to the firm yourself. This establishes the personal relationship up front and impresses the partners with your rainmaking abilities.

So what do you think? Is the trend toward legal outsourcing going to continue? Can outsourcing firms provide the quality of work that is required by clients? Should lawyers from outsourcing firms be required to join the bar for states in which clients have their headquarters?

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