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Legally Speaking

 

Issue: December, 2005
Author: Mary B. Guthrie

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Executive Director's Report

Like most of you, I get a lot of junk-type mail mixed in with important correspondence. I’ve gotten pretty good about determining what should be read and what should be tossed. Certainly anything that comes from Nigeria and offers me great wealth is summarily pitched. However, recently a letter from a law firm in India caught my eye. I would like to share that letter with you because it might portend changes that will be made in the practice of law.

Dear Colleague:

OUTSOURCING SERVICES TO US ATTORNEYS/LAW FIRMS

Good Morning!

Please excuse me for making this heavy call on your busy time.

By way of introduction, I am an Indian attorney with 31 years experience in all branches of law, presently heading this full service law firm CONSULTA JURIS, headquartered at Mumbai (Bombay), India, and having offices in all the important Indian cities including Bangalore.

We have about thirty attorneys (some of them qualified from US) and fifteen paralegals with us, which is, by Indian standards, remarkable. Quality services at competitive costs is our hallmark.

India, as you know, has now become one of the most important locations for Business Process Outsourcing. I learn that, some of the U.S. attorneys/law firms, have already started, or are on the look out for, outsourcing their non-core processes to India. We are seriously considering branching out into legal support services to the US attorneys/law firms interested in outsourcing such services, as permissible under the relevant laws, to India.

I shall be grateful, if you will kindly arrange for making our availability known to your members so that those interested can contact us directly.

Yours sincerely, M. Prabhakaran

I obviously did not respond to my new Indian friend. However, his letter is instructive, because it demonstrates that the world is changing at a fast pace.

When I read Thomas Friedman’s The World is Flat: A Brief History of the Twenty First Century (Farrar, Straus and Giroux, 2005), I gained some appreciation of how business can be conducted from any part of the globe. However, I really had not understood how the global economy and particularly outsourcing could affect Wyoming lawyers until I received the letter from the Indian law firm.

M. Prabhakaran’s solicitation piqued my curiosity on how much legal work has been outsourced. After doing some research, I learned that it is not uncommon for corporations to send routine legal work abroad. A number of Fortune 500 firms outsource routine legal work to India, South Korea and Australia: “It happened with tech support, financial services and catalog order-taking. Now, a growing number of U.S. and British companies as well as law firms are outsourcing legal work to India.” For example, General Electric has established a subsidiary in India that employs 30 lawyers. Mindcrest, a Chicago company that sells services like document management and research, has doubled its business annually since it was founded in the late 1990s.

It is understandable that word processing and filing services and other work done primarily by para-professionals could be done virtually anywhere. However, it was harder for me to realize that the next step has been taken and “experienced, but inexpensive lawyers are doing things ranging from patent applications to divorce papers to legal research for Western clients.” The basic rationale for outsourcing is the cost differential between the fees charged by American and Indian law firms. Roamware, a company that sells computer systems to cell phone companies, recently hired an Indian law firm to create an electronic database of key terms that occurred in several hundred contracts. The company paid $5,000 for the work, which would probably have cost about $60,000 if a U.S. law firm had been involved. The justification is that the people who are being hired are well-educated and willing to work at a hourly rate that is 10% of what lawyers in large U.S. firms might charge. Other savings accrue because Indian attorneys do not expect to be housed in big offices or receive comfortable benefits.

About 12,000 legal jobs have been moved offshore. However, it has been predicted that the number will rise to 29,000 by 2008 and 79,000 by 2015. While many of these jobs were not performed by attorneys, some of that work is often done by new associates.

The good news is that outsourcing should not be viewed as doom and gloom by attorneys. As long as lawyers are required to be licensed in the states in which they practice, big legal projects, such as trials, mergers and public stock offerings will be performed by American attorneys. The authors of the September 28th Wall Street Journal article contend that this trend might have a positive effect on law firms:

Indeed, outsourcing could ultimately change the way legal work is done in Western countries, industry analysts and company executives say. They expect it to free up American and British lawyers from time-consuming paperwork, allowing small firms to take on bigger cases, while cutting the number of legal jobs needed in the U.S. Some suggest that it could even encourage companies and individuals to become more litigious by lowering the costs of filing lawsuits.

The result would be that U.S. attorneys would function more as managers, doing value added, high-visibility, highly profitable work, while other mundane work is outsourced.

Change is hard for some of us to handle. We feel threatened when events over which we have no control occur. However, change is inevitable. While most Wyoming lawyers will probably never send their work to a firm of bright Indian lawyers, it is possible that the legal profession as a whole will continue to outsource work, thereby changing the way law is practiced.

Thomas Friedman’s views on the effect of globalization on the world economy have been much discussed and analyzed. Therefore, some remarks that he made in a recent interview are revealing. When asked how he would advise his daughters on how to compete in a “flat” world, he said:

Girls, when I was growing up my parents used to say to me, “Tom, finish your dinner. People in China and India are starving.” I say to my girls, “Girls finish your homework. People in China and India are starving for your jobs.”

In following along with that advice, I might counsel young lawyers and law students, “Friends, do excellent legal work at responsible prices. M. Prabhakaran and his associates are starving for your jobs.”


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