Outsourcing Legal Services: Where is Your Attorney Sending Your Case Work?

Wikipedia describes legal outsourcing as the practice of a law firm using outside law firms or legal support services to facilitate routine legal work. For several years now, that practice has expanded to include sending legal work overseas, often called "offshoring." The majority of legal work sent overseas is work typically performed by paralegals or legal secretaries. Routine legal services include document coding, legal research and document drafting, patent applications and litigation support services.

According to an American Bar Association article , "Outsourcing Legal Services Overseas" (Nov. 2007) by Ken Wollins, technological advances allowing electronic document management at a much lower cost have made outsourcing legal services overseas very attractive. Large corporations, such as GE, have moved their in house legal work overseas. Hollywood has jumped on the bandwagon as well, with the larger film studios sending the majority of their work to India, by far the country currently taking in the most outsourced legal work.

A Forrester Research project from 2005, mentioned in the ABA article, predicts that by the year 2015, the market will grow to a 4 billion dollar industryby 2015, growing from the 70 million spent in 2004. The Forrester Research study also states that about 50,000 legal jobs will move overseas by 2015 as well. Large corporations, and now, some of the larger law firms in the U. S., are attempting to save costs and offer a broader range of services to their clients by sending these services to India.

Typically the work performed by paralegals here in the U. S. is billed as hours to a client at a much higher rate than is billed from work performed in India. Research by U.S. paralegals can be billed at up to $250.00 an hour, contrasted with the $65.00 to $95.00 billed from Indian workers. (Statistics from "Made in India", by Daniel Brook, Legal Affairs Magazine, June 2005) Sending work offshore can save a large company from 65% to 80% of their legal costs. The benefits of also include 24/7 operations, and because India is on opposite time from the U. S., overnight work can be performed and electronically sent next day.

The large companies like GE, simply move their entire in house legal department to India and set up shop there. In addition, almost 100 third party legal services providers are in business in India today. One of the largest legal publishers, West/Thompson, has offices in India. With legal outsourcing continuing to grow, several state bar associations are looking at the process of having legal work sent overseas and reviewing the many conflicts that can arise from doing so.

Many clients and attorneys fear that confidentiality cannot be maintained when work is sent to India. As well, the unauthorized practice of law is a serious violation of ethics that may become difficult to supervise when the work has left the U.S. Questions arise as to whether someone in India is properly qualified to perform the work, and to whether Indian lawyers understand American law well enough to perform research and prepare briefs. Issues regarding conflict of interest, billing practices and client consent are additional red flags to be cautious of when offshoring legal work.

The San Diego and New York State Bar Associations both recently published Formal Opinions regarding the ethical questions from this recent growing trend. In each of these states, the Opinions require direct U.S. attorney supervision of all work sent overseas and the attorney must bear ultimate responsibility for all work performed. The attorneys should work diligently to protect against the unauthorized practice of law. Regarding consent, clients of an attorney would not normally expect work on their case to be sent overseas, so providing the client with advance notice and requesting consent is appropriate. It was also decided that billing the client for offshore work as a "cost" of doing business, with a reasonable markup for providing the service, is an acceptable practice.

The offshoring of work in many other industries, such as information technology, has proven successful for many companies. Offshoring legal services from the U.S. will continue to grow in the next several years. It's almost certain that the remaining states will issue opinions in the coming months, setting standards for the practice of offshoring legal services. However, many barriers still remain, such as language, and many cultural differences as well. How much do these differences affect the quality of work and the satisfaction of the client?

The legal services industry in India will have to grow and accommodate these issues as well. Poor management of the work can lead to angry clients, a poor reputation for the firm, and, for the attorneys, even dismissal from the bar. In essence, work must be diligently managed for legal services offshoring to continue to be a success.

http://en.wikipedia.org/wiki/Legal_Process_Outsourcing
http://www.abanet.org/buslaw/blt/2007-11-12/wollins.shtml
http://www.legalaffairs.org/issues/May-June-2005/scene_brook_mayjun05.msp
http://www.forrester.com/rb/research