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LEGAL OUTSOURCING INDIA

Written by: Kaviraj Singh

Article Overview: 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.

LEGAL OUTSOURCING 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

This week also saw another development that supports the legal outsourcing upward trend. Hildebrandt International has announced a joint venture to offer law firms administrative outsourcing support through India-based OfficeTiger. Hildebrandt is known for its work with large, old- line law firms.

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.

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Article Tags: attorney delhi, corporate lawyer india, india, legal outsourcing, lpo elhi



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