OUTSOURCING LEGAL WORK, PART I: Who’s Sending What Where?

OUTSOURCING LEGAL WORK, PART I: Who’s Sending What Where?

In the latest wave of American outsourcing, a new trend has emerged: U.S. companies and law firms have begun outsourcing domestic legal work to foreign attorneys. But, who is sending what kind of work, and where?

For the past year or so, the American Bar Association (ABA) Ethics 20/20 Commission has been considering changes to the Model Rules of Professional Conduct as they relate to domestic and international outsourcing. The revision process has included soliciting input from stakeholders, including lawyers, law firms, clients and providers of outsourced services. Last year, the ABA proposed changes to the Model Rules that pertain specifically to outsourcing. Some of the ethical issues that outsourcing corporations or firms need to consider include: the unauthorized practice of law, adequate supervision, client confidentiality and consent, conflicts of interest, competence, and appropriate billing. Before diving into how legal ethics are currently affecting legal outsourcing, lets start off with the basics:

Who?

Legal outsourcing has grown dramatically, and is currently used by law firms of all sizes. Outsourcing has led to the advent of intermediary outsourcing firms, also called Legal Process Outsource, or LPO firms. These firms identify foreign lawyers, communicate assignments to them, set and collect fees, and in some instances provide U.S.-lawyer review of outsourced work.

In addition to law firms and LPOs, some of the most active users of the outsourcing market have been corporate legal departments. Corporate general counsel may be more likely to try offshore outsourcing than law firms because they are influenced by the successful experiences of other corporate departments that have outsourced work overseas. Companies that use offshore legal outsourcing include:

  • General Electric
  • DuPont
  • Cisco Systems
  • Morgan Stanley
  • West Publishing

What?

Initially, legal outsourcing primarily involved “legal support” services, such as:

  • Proofreading
  • Typing
  • Legal coding
  • Document review

Recently,  the legal outsourcing market has begun to include skill-intensive work such as:

  • Legal research
  • Document review
  • Patent searches
  • Due diligence
  • Contract drafting

Now, a law firm or corporation can outsource its document review, legal research and writing, or drafting of pleadings and briefs offshore for a fraction of the cost of a paralegal or recent law school graduate.

Where?

Without a doubt, India is the most popular destination for internationally outsourced legal jobs. According to Research and Markets the global legal process outsourcing (LPO) market was worth $400m in 2010 and is expected to be worth $2.4bn by 2012.  Valuenotes, a consulting firm in India, says legal outsourcing revenue is expected to surpass $1 billion in India in the next four years. According to one author, there are five main reasons why India is the most popular destination for American firms that outsource their legal work:

  1. Due to the time difference between the two countries, Indian lawyers are able to perform legal work in the midnight hours for U.S. law firms.
  2. There are over 1 million lawyers in India, and 75,000 new lawyers graduate from Indian law schools every year.
  3. American law firms can save a tremendous amount of money. In India, lawyers who graduate from one of the country’s most prestigious law schools may   earn annually between $3,000 to $10,000 U.S. dollars, whereas, graduates from U.S.’s top law schools may earn more than $100,000 in their first year of work.
  4. The Indian legal system is largely based on the British common law, just like the U.S.’s legal system.
  5. Indian lawyers speak and are educated in English.

It is easy to see the practical and economical benefits that international outsourcing provides to U.S. law firms. For more information about outsourcing, check out this great article in Time Magazine.

 -This is Part 1 of a series on Ethics and Legal Outsourcing. Check out future posts for more information. 

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