SETTING UP FAILURE? IS INVESTING IN THE LPO INDUSTRY A MISTAKE?

SETTING UP FAILURE? IS INVESTING IN THE LPO INDUSTRY A MISTAKE?

Are new LPO providers wasting time and resources? Is the LPO Industry A perceived goldmine or an exploited one?

A criticism of the opinion (“How to start up your own LPO: and how not to”) by Sanjay Bhatia of SDD Global which appeared in legallyindia on 22^nd July, 2010 (available at: < http://www.legallyindia.com/201007221127/Legal-opinions/opinion-how-to-start-your-own-lpo-and-how-not-to>)

Should entrepreneurs think twice before looking into the booming LPO sector?

Investor's dilemma? 

The depiction of the dwindling legal process outsourcing industry as projected by Sanjay Bhatia of SDD Global in his article which appeared in legallyindia is not totally true. Indeed, upto a certain extent, we have to agree that not all the LPO’s generating all over the country are capable of achieving a very high quality status. The major reason that Bhatia points out in his opinion is that nowadays it takes more than a simple ‘office, staff and a website’ to start up an LPO. He believes that the boom in the LPO industry is over and we are now just looking at the fading end of it, to which some young entrepreneurs are falling prey to. To this I disagree. The industry, unlike what Bhatia says, is still in its nascent stage. It is growing and growing fast. Some LPO companies have established their credibility in the market. But can’t others? Bhatia’s article is a discouraging one for these new entrepreneurs. But how much of his reasoning is correct is what I shall try to analyse.

Of course, a newly set-up LPO needs clients. But isn’t that true for all enterprises? To be successful in any field by providing a service or creating a product, a company needs clients and customers respectively. That the western companies have to be ‘inspired’ to outsource their work to India is nothing new. Any client in any sector has to be inspired in one way or the other for them to take the services offered. The LPO sector is no exception. The attraction of being able to outsource work at low prices is always there. However, the credibility as well as the experience of the companies being outsourced to has to be looked into by the outsourcers.

Bhatia, in spite of all this, rightly states in his article the most important things to be kept in mind while opening a new LPO. However, the context or the picture that he projects is seriously erred.

ESSENTIAL COMPONENTS OF A NEW LPO:

Effective management is essential.
However it is not mandatory that it
should be US/UK based. 

1. A management team: Bhatia says that a LPO’s success is determined by whether it has ample US or UK qualified lawyers or not. In this regard, I wish to point out that having a management team comprising of US and UK lawyers is not an absolute necessity for setting up a successful LPO. Instead of having an ‘US or UK experienced’ management team, a LPO could do with a simple management and then for each project get guidance from the company which is outsourcing work to it. For example, say an US law firm L is outsourcing work to an Indian LPO A. By my logic, I think that A’s management staff does not necessarily have to be US- based for them to progress well. By no means will the presence of an US lawyer boost the credibility of the LPO. Firm L will not outsource even if A has five US lawyers in its management. This is simply because firm L, to get it work done properly, does not require an US lawyer on the managerial board of A. The lawyers of L can itself assist A as to what work is to be done and how. The work of an LPO is such that all that is needed is a dedicated team which meets deadlines. Foreign firms, companies and attorneys are already aware of the talent in legal research that the Indian students and graduates possess. They know that harnessing that will be  a boost for their organization for the simple reasons that i) they get it cheap and; ii) they get quality work. A firm can collaborate with an LPO with regard to what work has to be done and instruct it at every level. No foreign managerial board members are required to enhance credibility. There cannot be ‘communication lapses’ because there is a constant touch between the LPO and the client. The only factor essential on the part of a LPO to establish itself as a ‘serious player’ is to show dedication and hard work and slowly gather the interest of clients. Only this can lead to a further and further increase in the number of clients.

The Indian Staff chosen has to be competent
 enough to handle the project; their English
has to be good. This is a necessity.
And it is not impossible.

2.        A competent Indian Staff: It is true that, as Bhatia says, a competent staff is essential for the LPO’s success. I completely agree with him in this regard. And in fact, here even he agrees that ‘…All said and done, it is the quality of the work product that determines an LPO's success.’Bhatia are actually not so. First of all, let us try eliminating the number which will not go to an LPO for looking for work unless it is a very high-paying one. These include the graduates from the National Law Universities and the other top level law schools like Symbiosis, ILS, Amity etc. Say there are about 20-25 such Universities around India. Cumulatively, that comes to around 2000 students graduating every year. These students form the higher end of the economic pie who will sacrifice their LPO jobs to wait for law firm jobs. Let us add another 3000 to this pie from all other colleges. Thus, according to Bhatia’s estimate we are left with another 75,000 Indian lawyers. It is not true that the available recruits are the ones who are disastrous at English and cannot be hired for an LPO. Bhatia correctly points out that, in an LPO industry, writing skills occupy the forefront. However, he portrays a very wrong picture when he says that the remaining Indian lawyers/law graduates are grossly incompetent for this purpose. This is an insult to their education for the past five years. Among these remaining 75,000, even on an approximate, there are at least 20,000 odd graduates who are good at English and know the basic law well. The efficiency of the LPO will be determined by who they hire and they have to choose well, because even these 20,000 per year is sufficient to cater the needs of the rising LPO demand in the worldwide legal industry. These, along with a few proficient supervisors, can control the problem of the ‘misplaced comma’ which Bhatia concentrates on so much in his article. Precision is necessary and such precision can be obtained by what resources India has. The industry is not as bleak as Bhatia projects it, but choosing must be accurate in order for it to grow.

Training is a requirement for
the success of any LPO.
Such training has to be provided
by the client's themselves.

3.        Training programmes, which is better if provided ‘in- house’: Again, I have to agree that what Bhatia points out is indeed correct for the functioning of the LPO. It has to be trained to do the client’s work. However, that does not mean that the LPO employee has to be aware from before as to what the ‘intricacies of the US law’ is. On the other hand, it is simple supervision on the part of the client which will pay heed to this. The client will train the employees with regard to what work is expected to be done for them and how. Their training will be with respect to that specific project and not the intricacies of US law. However, this topic has been quite well dealt by Bhatia while analysing the ‘micro-level’ training, and I will not differ much from what he has stated. This kind of ‘in-house’ training by the client is absolutely essential and important for both the client as well as the LPO. There is no reason why both will not be happy to include this as a basis for their mutual growth.

It is true that a lot of importance is placed on quality of work. However, it is equally true that India is capable of handling such work and it new LPO’s with a proper management can proceed to capture the market of outsourcing in India. The bleak and dwindling image of the LPO industry as projected by Bhatia is not at all true. His component break-up and analysis of the essential for a new LPO in the industry is perfect. But his reasoning behind disregarding them in the Indian context is flawed. His article is discouraging and the picture portrayed is not at all true. The industry is rising and will continue to rise over the next decade. Employees have to be chosen correctly, proper supervision and management needs to persist. But all these are factors which are intrinsic for the growth of any company in any sector. None of the LPO entrepreneurs are wasting their time. They have to look for the best resources to tap into. Business will come. Credibility will be established. Work will be outsourced and managed. Lawyers will be employed. And the LPO industry will continue to grow.

Written by:

Anagh Sengupta. 

THE LARGEST MAY NOT NECESSARILY BE THE BEST: Outsourcing can bring about the maximum potential in mid-level law firms.

THE LARGEST MAY NOT NECESSARILY BE THE BEST: Outsourcing can bring about the maximum potential in mid-level law firms.

“Size may no longer be everything. In fact, it may not be anything at all.”

An Analysis of the second part of the article ‘Outsourcing- The New and Improved Business Model Big Law Needs’ in AmLaw Daily (By Stephen Harper)

The piece by Stephen Harper is available at:

http://amlawdaily.typepad.com/amlawdaily/2010/08/harperoutsourcing.html

In the second part of his article, Harper makes a very interesting observation. He says, one of the biggest positives of legal process outsourcing is that it portrays a scenario in which mid-size law firms with ‘talented senior attorneys’ may rise up to the level of the monster law firms all over the world. Assisted by effective talent in research and other zones like document review, contract drafting and due diligence (which are the basics for most LPO’s), these talented but mid-level law firms may dedicate their valuable time solely on their clients and their cases without paying much attention to these ‘menial’ tasks. This can enable them to provide the same or even better quality work than that which is provided by most mega law firms. As it is well known that these huge law firms mainly use their junior attorneys for doing these kinds of basic work, the mid-level law firm can easily outsource such work to an LPO in India, who will have the expertise to deal with the work given to them.

A talented LPO, thus, can assist a mid-level law-firm to achieve new peaks and work at their maximum potential. As Harper notes, this might very well slow down the growth rate of large law firms and foster more effective competition in the legal market. It can also open a whole new arena of law firms to choose from for the client who mostly want the best. The largest then, may not be necessarily be the best. Top clients may migrate towards smaller firms with a more talented pool of resources, if they find them well assisted by an LPO. The attorney’s of these firms will not have to tire themselves with ‘mind-numbing’ tasks. They can rely on the LPO’s to do this work and can dedicate their time to other brain-consuming tasks.

A partnership with an LPO thus, will enable these mid-level law firms to compete more effectively in the big arena. Not only law firms, but also attorneys with a lot of clientele can outsource their ‘menial’ work to these LPO’s and make more and more thriving business. The mega-firm concept may vanish altogether and soon may well be replaced by the firm or attorney assisted by LPO concept. As Harper states, an altogether ‘new business model’ may develop in which quality and not quantity occupies the front-seat. A change may soon come about in the legal industry. Outsourcing can change the entire dynamics of market control and can foster much improved quality in the legal field.

Written by:

Anagh Sengupta,

The first part of the article is available at: http://megalpo.blogspot.com/2010/09/no-more-menial-jobs-young-associates.html

NO MORE MENIAL JOBS: Young Associates set to do the real job.

NO MORE MENIAL JOBS: Young Associates set to do the real job.

An Analysis of the first part of the article ‘Outsourcing- The New and Improved Business Model Big Law Needs’ in AmLaw Daily (By Stephen Harper)

The piece by Stephen Harper is available at:

http://amlawdaily.typepad.com/amlawdaily/2010/08/harperoutsourcing.html

In his article, Harper talks about how outsourcing has for quite some time now been a ‘profit-maximizing’ technique throughout corporate America. Though it has resulted in a loss of jobs for a lot of people in the United States, it has been accepted globally simply as a ‘necessary price’ for firms to thrive in the modern competitive market.

Legal process outsourcing is however, a comparatively newer phenomenon. It is only recently that it has received such hype throughout the world. Quoting the New York Times article in this regard(http://www.nytimes.com/2010/08/05/business/global/05legal.html?_r=1), Harper notes that outsourcing is quite advantageous in the legal profession when it comes to ‘mundane legal tasks’ like due diligence and document review.

According to the New York Times Article, we note that, legal outsourcing is steadily gaining popularity in India. According to Valuenotes (a Pune-based consultancy firm, reported in the article), the number of legal outsourcing companies in India has dramatically increased from 40 in 2005 to more than 140 by the end of 2009. Apart from this, the revenue of Indian legal outsourcing firms is expected to grow to $440 million in 2010 and easily cross the $1 billion mark by 2014.

Harper notes that clients will thus move towards law firms who have outsourced attorneys who work at lower rates and effectively perform ‘necessary but no-critical work’. According to him, young graduates may as a result face a dearth of entry-level jobs at these law firms. On the other hand, he states that though this might be bad for these graduates who miss out, it will mean a comfortable and better standard of work for the best that get through with the law firm. This is because such associates will not have to perform the ‘menial jobs’ which usually young associates do nowadays.

Thus, we see if that the legal profession at the top-most level is set to be more and more elite, with only the best being able to survive at the top. The graduates getting into law firms as associates, in the era of legal process outsourcing, will not have to do the so-called ‘menial jobs’ but instead concentrate on matters strictly important for the law-firm and the type of cases it handles. With the crème only benefiting, the legal profession is set to break new barriers as the standard improves considerably all over. The good research and backroom work by the outsourcing firms in India along with effective performance by the on-site law firms is all set to bring about a drastic change in the legal industry.

The analysis of the second part will follow soon.

Written by:

Anagh Sengupta,

HRD, law, health ministries in tussle over higher education control.

HRD, law, health ministries in tussle over higher education control.

Centric, FML and Hindujas to float one of India's largest LPO firms

UK's Centric, Fox Mandal join Hindujas to float mega LPO

By N Shivapriya & Anto T Joseph, The Economic Times

MUMBAI: UK’S Centric has joined hands with the Hinduja group and leading Indian law firm Fox Mandal Little to set up one of India's largest legal process outsourcing (LPO) firms.

The three-way joint venture, Centric LPO, is likely to employ over 1,000 lawyers initially and aims to make India an outsourcing hub for international legal practices. It will be 40% owned by the UK-based outsourcing major and 60% by the JV between HTMT Technologies and Fox Mandal, with HTMT Tech holding the majority stake.

For Hinduja TMT, which recently completed the acquisition of US-based BPO Affina, it will mean a foray into the fast-growing LPO space. Hinduja group chairman AP Hinduja confirmed the development. “There is a huge $4-billion opportunity in this sector. The JV will address this opportunity,” he said. The HTMT Tech-Fox JV will have four members on the LPO board while Centric will have two.

According to a Nasscom market intelligence report, the LPO segment is poised to cross $6 billion by 2010 and touch $15-$20 billion by 2015. LPO customers include legal departments of multinationals, international law, legal publishing and legal research enterprises.

However, as LPO is still new in India compared to traditional BPO services, like contact centres and finance and accounting services, it accounts for less than 11% of the $6.3-billion ITeS-BPO pie. But it also means there is still a huge market to be tapped. Nasscom estimates the current addressable LPO services market from the US alone to be around $3-$4 billion.

Also, the number of law graduates that India churns out annually is estimated at 79,000. Their starting salary is about 20-30% of their US counterparts, resulting in a significant cost advantage. Other factors driving LPO to India are the proven benefits of offshore outsourcing, access to skilled talent, and the time zone differential. Further, the Indian legal system is similar to those of the UK and US, which makes it easier to train Indian law graduates to suit their needs.

As in software, the US and the UK are the largest LPO markets. Centric will use its existing customer base in these markets to woo clients for the new business. Similarly, Fox Mandal will provide the legal expertise while the Hindujas the process skills. Sources said the JV will become operational in the next two months and that Centric had already lined up business from UK and US clients.

The Toothpaste Is Out Of The Tube..... A look at the NY Times article

"THE TOOTHPASTE IS OUT OF THE TUBE" - New York Times Article Shows How Legal Outsourcing Is Here to Stay... and Growing

By Russell Smith

Thanks to Pangea3, CPA Global, and the New York Times, legal outsourcing to India received a major media boost today. In a prominent, lengthy, and overwhelmingly favorable article, "Outsourcing to India Draws Western Lawyers," the New York Timeshas fired off some informational shots that are being heard around the world. Here are some of our favorites:

India’s legal outsourcing industry has grown in recentyears from an experimental endeavor to a small but mainstream part of the global business of law. Cash-conscious Wall Street banks, mining giants, insurance firms and industrial conglomerates are hiring lawyers in India for document review, due diligence, contract management and more. Now, to win new clients and take on more sophisticated work, legal outsourcing firms in India are actively recruiting experienced lawyers from the West. And U.S. and British lawyers — who might once have turned up their noses at the idea of moving to India or harbored an outright hostility to outsourcing legal work in principle — are re-evaluating the sector.

* * *

“This is not a blip, this is a big historical movement,” said David B. Wilkins, director of Harvard Law School’s program on the legal profession. “There is an increasing pressure by clients to reduce costs and increase efficiency,” he added, and with companies already familiar with outsourcing tasks like information technology work to India, legal services is a natural next step. So far, the number of Western lawyers moving to outsourcing companies could be called more of a trickle then a flood. But that may change, as more business flows out of traditional law firms and into India. Compensation for top managers at legal outsourcing firms is competitive with salaries at midsize law firms outside of major U.S. metro areas, executives in the industry say. Living costs are much lower in India, and often, there is the added allure of stock in the outsourcing company.

* * *

Even white-shoe law firms like Clifford Chance are embracing the concept. “I think the toothpaste is out of the tube,” said Mark Ford, director of the firm’s “Knowledge Center,” an office south of New Delhi with 30 Indian law school graduates who serve Clifford Chance’s global offices. Mr. Ford lived in India for six months to set up the center, and now manages it from London.“We as an industry have shown that a lot of basic legal support work can successfully be done offshore very cost effectively with no quality problems,” Mr. Ford said. “Why on earth would clients accept things going back?”Many corporations agree that outsourcing legal work, in some form or another, is here to stay.

The article already has provoked over 300 comments, mostly what you would expect: protectionist rabble-rousing about how the U.S. needs to build walls around itself to stop "foreigners" from running off with "American jobs." Here's my comment (number 168) (for you frequent readers of this blog, there is no need to read this - you've seen it all before):

I'm one of those U.S. lawyers who outsourced themselves to India. I did not do it for lack of a job elsewhere. I'm a Columbia Law graduate and one of the founding partners of a successful New York and London based media law firm. I went to India enthusiastically, to take part in a much-needed revolution in the way legal services are delivered in the West.

Imagine a new legal landscape where high-quality services are affordable. Imagine deals getting done, because the attorneys don't kill them, with overlawyering and overcharging. Contemplate court cases and other disputes being resolved on their merits, rather than simply on the basis of whether one side cannot or will not pay the absurdly high costs of litigation. Think about legal professionals located in places that suit the interests of clients, rather than in the most expensive parts of the most expensive cities in the world. Consider the resultant savings when legal bills are based on services, not real estate. Envision deals and cases staffed by the most talented and enthusiastic lawyers available. Open your mind to the possibility that some of those lawyers are in India. I know from experience that they are.

And consider the fact that this kind of outsourcing actually creates more legal jobs in the West, rather than cutting them. Every time a deal is done, or a litigation is waged, because legal services are suddenly affordable, it means more work for the Western lawyers involved in supervision, editing, negotiating, and/or appearing in court. This is not only a dream. It is happening every day, thanks to legal outsourcing in India.

For example, a Fortune 100 client of my law firm specifically requested that the legal research and analysis needed for a series of multi-million-dollar deals in the U.S. be done by Indian attorneys at our offshore operation in Mysore. This is a situation where, if not for a Western law firm’s off-shoring capabilities, no lawyers would have been hired, because typical Western legal fees would have made it prohibitive. The work would have been done either in-house, or not at all. Because the India team made it possible for the deals to happen, Western law firms ultimately got more business, handling the otherwise non-existent transactions.

A similar phenomenon has happened in litigation, where corporate clients have chosen to defend themselves against meritless lawsuits, using both U.S. and Indian lawyers. The most high-profile examples are some of the cases filed in Los Angeles against comedian Sacha Baron Cohen. They have been dismissed instead of settled, because of the successful teamwork among attorneys in the U.S. and India. Without legal outsourcing, there might have been no U.S. lawyers hired for any significant litigation work at all, because frivolous cases often are settled at the outset, just to avoid the usual U.S. litigation costs. The off-shoring of legal work is leading to an unprecedented new breed of benign tort reform, as defendants facing bogus or inflated tort claims are choosing to litigate and win. This in turn discourages such claims. And the money that otherwise would be spent by defendants on nuisance payouts can be plowed by corporations right back into the U.S. economy.

On the subject of document review, the claim that sending this "grunt work" to India deprives young U.S. lawyers of training opportunities is inaccurate. I've been practicing law for 25 years, in firms both large and small, and I can tell you that no serious legal training takes place while stuck in room with boxes of documents (or computers full of the same). If you want to provide a meaningful opportunity for young associates to grow, then train them how to do deals, how to argue in court, how to supervise cases, and how to provide legal advice. None of those things can be done for U.S. clients by legal outsourcing companies in India.

Middle Office Outsourcing Improves Law Firm Profit

Middle Office Outsourcing Improves Law Firm Profit

Legal outsourcing is here to stay

Legal outsourcing is here to stay

By Heather Timmons, International Herald Tribune

Western law firms have been trimming their staff and curtailing hiring plans

As an assistant attorney general for New York State, Christopher Wheeler used to spend most of his time arguing in courtrooms in New York City. Today, he works in a sprawling, unfinished planned suburb of New Delhi, where office buildings are sprouting from empty lots and dirt roads are fringed with fresh juice stalls and construction rubble. At Pangea 3, a legal outsourcing firm, Wheeler manages a team of 110 Indian lawyers who do the grunt work traditionally assigned to young lawyers in the United States - at a fraction of the cost. India’s legal outsourcing industry has grown in recent years from an experimental endeavour to a small but mainstream part of the global business of law. Cash-conscious Wall Street banks, mining giants, insurance firms and industrial conglomerates are hiring lawyers in India for document review, due diligence, contract management and more. Now, to win new clients and take on more sophisticated work, legal outsourcing firms in India are actively recruiting experienced lawyers from the West. And American and British lawyers — who might once have turned up their noses at the idea of moving to India, or harbored an outright hostility to outsourcing legal work in principle — are re-evaluating the sector. The number of legal outsourcing companies in India has mushroomed to more than 140 at the end of 2009, from 40 in 2005, according to Valuenotes, a consulting firm in Pune. Revenue at India’s legal outsourcing firms is expected to grow to $440 million this year, up 38 per cent from 2008, and should surpass $1 billion by 2014, Valuenotes estimates. Historical movement “This is not a blip, this is a big historical movement,” said David B Wilkins, director of Harvard Law School’s programme on the legal profession. “There is an increasing pressure by clients to reduce costs and increase efficiency,” he added, and with companies already familiar with outsourcing tasks like information technology work to India, legal services is a natural next step. So far, the number of Western lawyers moving to outsourcing companies could be called more of a trickle than a flood. But that may change, as more business flows out of traditional law firms and into India. Compensation for top managers at legal outsourcing firms is competitive with salaries at midsize law firms outside of major metropolitan areas of the United States, executives in the industry say. Living costs are much lower in India, and often, there is the added allure of stock in the outsourcing company. Right now, Pangea3 is “getting more résumés from United States lawyers than we know what to do with,” said Greg McPolin, managing director of the company’s litigation services group, who divides his time between India and New York. Outsourcing remains a highly contentious issue in the West, particularly as law firms have been trimming their staffs and curtailing hiring plans. But Western lawyers who have joined outsourcing firms are unapologetic about the shift to India. Leah Cooper left her job as managing lawyer for the giant mining company Rio Tinto in February to become director of legal outsourcing for CPA Global, a contract legal services company with offices in Europe, the United States and India. Before hiring Cooper, CPA Global added lawyers from Bank of America and Alliance & Leicester, a British bank. The company has more than 1,500 lawyers now, and Cooper said she planned to hire hundreds in India in the next 12 months. At Rio Tinto, Cooper said, she became a champion of the idea of moving work like document review to a legal outsourcing company “because it works really well.” Many legal outsourcing firms have offices around the world to interact with clients, but keep the majority of their employees in India; some also have a stable of lawyers in the Philippines. Thanks to India’s low wages and costs and a big pool of young, English-speaking lawyers, outsourcing firms charge from one-tenth to one-third what a Western law firm bills an hour. Even global law firms like Clifford Chance, which is based in London, are embracing the concept. “I think the toothpaste is out of the tube,” said Mark Ford, director of the firm’s Knowledge Centre, an office south of New Delhi with 30 Indian law school graduates who serve Clifford Chance’s global offices. Mr. Ford lived in India for six months to set up the Centre, and now manages it from London. Best litigators Many corporations agree that outsourcing legal work, in some form or another, is here to stay. “We will continue to go to big firms for the lawyers they have who are experts in subject matter, world-class thought leaders and the best litigators and regulatory lawyers around the world - and we will pay a lot of money for those lawyers,” said Janine Dascenzo, associate general counsel at General Electric. What G E does not need, though, is the “army of associates around them,” Dascenzo said. “You don’t need a $500-an-hour associate to do things like document review and basic due diligence,” she said. Western lawyers making the leap to legal outsourcing companies come for a variety of reasons, but nearly universally, they say they stay for the opportunities to build a business and manage people. “In many respects it is more rewarding than jobs I had in the United States,” said Wheeler, who moved to India when his Indian-born wife took a job here in 2006. “If you’re talking about 15 employees in a windowless basement office, I’m not interested in making that my life’s calling,” he recalled thinking when he started talking to Pangea3. “But building a 500-person office, now that is a real challenge.” Shelly Dalrymple left her job as a partner at a firm in Tulsa, Oklahama, in 2007 and is now based in India as the senior vice president of global litigation services at UnitedLex, a legal outsourcing company with offices in the United States, Britain, Israel and India. Moving to a legal outsourcing firm, especially in India, is not for everyone. About 5 per cent of Western transplants cannot handle it and move back home, managers estimate. Some find it hard to adapt to India. Other times, the job itself does not suit them-after spending years working nearly independently as a litigator, for example, it can be hard to transition to managing and inspiring a team of young foreign lawyers. Even lawyers who stay are sometimes wistful about their previous careers. “Of course I miss litigation,” Wheeler said. But, he added, “watching people learn some of the same skills I did is gratifying.”

Legal outsourcing is here to stay

By Heather Timmons, International Herald Tribune

Western law firms have been trimming their staff and curtailing hiring plans

As an assistant attorney general for New York State, Christopher Wheeler used to spend most of his time arguing in courtrooms in New York City. Today, he works in a sprawling, unfinished planned suburb of New Delhi, where office buildings are sprouting from empty lots and dirt roads are fringed with fresh juice stalls and construction rubble. At Pangea 3, a legal outsourcing firm, Wheeler manages a team of 110 Indian lawyers who do the grunt work traditionally assigned to young lawyers in the United States - at a fraction of the cost. India’s legal outsourcing industry has grown in recent years from an experimental endeavour to a small but mainstream part of the global business of law. Cash-conscious Wall Street banks, mining giants, insurance firms and industrial conglomerates are hiring lawyers in India for document review, due diligence, contract management and more. Now, to win new clients and take on more sophisticated work, legal outsourcing firms in India are actively recruiting experienced lawyers from the West. And American and British lawyers — who might once have turned up their noses at the idea of moving to India, or harbored an outright hostility to outsourcing legal work in principle — are re-evaluating the sector. The number of legal outsourcing companies in India has mushroomed to more than 140 at the end of 2009, from 40 in 2005, according to Valuenotes, a consulting firm in Pune. Revenue at India’s legal outsourcing firms is expected to grow to $440 million this year, up 38 per cent from 2008, and should surpass $1 billion by 2014, Valuenotes estimates. Historical movement “This is not a blip, this is a big historical movement,” said David B Wilkins, director of Harvard Law School’s programme on the legal profession. “There is an increasing pressure by clients to reduce costs and increase efficiency,” he added, and with companies already familiar with outsourcing tasks like information technology work to India, legal services is a natural next step. So far, the number of Western lawyers moving to outsourcing companies could be called more of a trickle than a flood. But that may change, as more business flows out of traditional law firms and into India. Compensation for top managers at legal outsourcing firms is competitive with salaries at midsize law firms outside of major metropolitan areas of the United States, executives in the industry say. Living costs are much lower in India, and often, there is the added allure of stock in the outsourcing company. Right now, Pangea3 is “getting more résumés from United States lawyers than we know what to do with,” said Greg McPolin, managing director of the company’s litigation services group, who divides his time between India and New York. Outsourcing remains a highly contentious issue in the West, particularly as law firms have been trimming their staffs and curtailing hiring plans. But Western lawyers who have joined outsourcing firms are unapologetic about the shift to India. Leah Cooper left her job as managing lawyer for the giant mining company Rio Tinto in February to become director of legal outsourcing for CPA Global, a contract legal services company with offices in Europe, the United States and India. Before hiring Cooper, CPA Global added lawyers from Bank of America and Alliance & Leicester, a British bank. The company has more than 1,500 lawyers now, and Cooper said she planned to hire hundreds in India in the next 12 months. At Rio Tinto, Cooper said, she became a champion of the idea of moving work like document review to a legal outsourcing company “because it works really well.” Many legal outsourcing firms have offices around the world to interact with clients, but keep the majority of their employees in India; some also have a stable of lawyers in the Philippines. Thanks to India’s low wages and costs and a big pool of young, English-speaking lawyers, outsourcing firms charge from one-tenth to one-third what a Western law firm bills an hour. Even global law firms like Clifford Chance, which is based in London, are embracing the concept. “I think the toothpaste is out of the tube,” said Mark Ford, director of the firm’s Knowledge Centre, an office south of New Delhi with 30 Indian law school graduates who serve Clifford Chance’s global offices. Mr. Ford lived in India for six months to set up the Centre, and now manages it from London. Best litigators Many corporations agree that outsourcing legal work, in some form or another, is here to stay. “We will continue to go to big firms for the lawyers they have who are experts in subject matter, world-class thought leaders and the best litigators and regulatory lawyers around the world - and we will pay a lot of money for those lawyers,” said Janine Dascenzo, associate general counsel at General Electric. What G E does not need, though, is the “army of associates around them,” Dascenzo said. “You don’t need a $500-an-hour associate to do things like document review and basic due diligence,” she said. Western lawyers making the leap to legal outsourcing companies come for a variety of reasons, but nearly universally, they say they stay for the opportunities to build a business and manage people. “In many respects it is more rewarding than jobs I had in the United States,” said Wheeler, who moved to India when his Indian-born wife took a job here in 2006. “If you’re talking about 15 employees in a windowless basement office, I’m not interested in making that my life’s calling,” he recalled thinking when he started talking to Pangea3. “But building a 500-person office, now that is a real challenge.” Shelly Dalrymple left her job as a partner at a firm in Tulsa, Oklahama, in 2007 and is now based in India as the senior vice president of global litigation services at UnitedLex, a legal outsourcing company with offices in the United States, Britain, Israel and India. Moving to a legal outsourcing firm, especially in India, is not for everyone. About 5 per cent of Western transplants cannot handle it and move back home, managers estimate. Some find it hard to adapt to India. Other times, the job itself does not suit them-after spending years working nearly independently as a litigator, for example, it can be hard to transition to managing and inspiring a team of young foreign lawyers. Even lawyers who stay are sometimes wistful about their previous careers. “Of course I miss litigation,” Wheeler said. But, he added, “watching people learn some of the same skills I did is gratifying.” Source: http://www.deccanherald.com/content/86635/legal-outsourcing-here-stay.html