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.

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“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.

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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.