The figure seventy-nine thousand is frequently tossed around by those discussing legal outsourcing to India; it is the number of US legal jobs expected to be outsourced to India by 2015, as predicted in fall 2005 by the firm of Forrester Research. The Forrester prediction made headlines around the world when it was released. In India, news headlines proclaimed "79,000 jobs on offer!" as if all one had to do was show up with a law degree in hand to replace an American lawyer. The 79,000 figure was a huge increase over the 12,000 legal jobs that Forrester estimated were outsourced from the US to India in 2004.
It is not yet 2015 so there is no way to know if the 79,000 is accurate, but in the meantime, not everyone readily accepts the Forrester figure. Furthermore, of the 79,000, not all are expected to be lawyer jobs – many will be paralegal and other legal support positions. However, perhaps encouraged by the enthusiasm generated by the 79,000 estimate, legal process outsourcing (LPO) vendors have proliferated, giving every indication that at least some folks have confidence that Forrester is on the right track.
Law firms in particular have been outsourcing work to India for at least five years, if one considers legal outsourcing to include contracting out of legal support functions such as paralegal, accounting, and IT services. What is new is the movement toward s-called value added legal services, by which Indian lawyers will perform professional legal services for clients, whether those clients are law firms, publishing companies or corporations. LPO providers are eagerly seeking entry into the legal field, and many have hired US attorneys to represent them in tapping into the US legal services market.
A significant number of India-based LPOs have set up offices in the US and many have attorneys who are admitted to practice in the US. The US-admitted attorneys (particularly if based in the US) are not likely to be producing the lion's share of the legal work, however, because that would undermine the cost savings to be achieved by the use of lower-priced Indian lawyers. Mostly, the US attorneys are engaged because they know the American legal system, they have experience in firms and corporate law departments, and they can communicate easily with the potential clients, without language, cultural or similar barriers.
The established LPOs entered the US legal market by performing tasks such as document review and document management to support large-scale litigation, which is a huge budget item for litigation. However, the LPOs are not likely to remain satisfied with this relatively low level routine work for long; if legal outsourcing does succeed, the LPOs will eventually transition their services to high level intellectual work on a par with US and European firms. In the meantime, they will gain experience and grow their staffs by saving money for firms and corporations engaged in expensive litigation, an undertaking with no apparent end in sight.
The document handling and review involved in large-scale litigation has increased geometrically with the increase in email and electronic communications. More documents mean more potential evidence potentially relevant to a dispute. Even information on Blackberries and other PDAs can be relevant in litigation. Electronic document creation has obviously contributed to the number of potentially relevant documents requiring review, but so has the ease and low cost of electronic document storage. Companies are sometimes afraid to destroy any information at all, which means that huge volumes of stored electronic records must also be reviewed in response to a request for production of documents.
The cost of document review can be anywhere between half and three-quarters of the total cost of litigation, according to legal experts. KPMG estimates that first level document review can consume 58-90% of total litigation costs. [See Dario Olivas & Michael Dolan, "Legal Process Outsourcing of First Level Document Review," in sourcingmag.com.] Any vendor that can punch a hole in such a large portion of the expense without jeopardizing quality or the outcome of the case ought to be in high demand.
A primer for those considering legal outsourcing for the first time begins with an explanation of the type of tasks that can be quickly outsourced, and that the LPOs have prior experience with. First among these would be first-level or primary document review, which means the decision-making involved in determining whether specific items are responsive to the case or the discovery. In this review, document reviewers (usually paralegals or lawyers) scan items to determine if they are responsive to information requests. The responsive documents are segregated from the non-responsive ones in this phase of the work. First level document review is also used to identify confidential documents subject to protective orders, privileged material and attorney work product.
Primary or first-level document review is already outsourced by many large firms, in the form of subcontracting with legal staffing firms that provide temporary lawyers (sometimes called contract attorneys). Firms that outsource to US-based legal staffing agencies but hesitate to use Indian LPOs may harbor the belief that they are more in control of the lawyers and paralegals from a local staffing agency than they would be if the work was being done half a world away.
Technology provides one obvious response to the concern about contract attorney control and supervision. And technology is where India shines. Virtually all major IT companies already outsource programming to India, where computer programmers and electronic engineers earn about 1/6 of comparable US salaries. Application of technology to document review processes has resulted in proprietary software that enables document reviewers to use sophisticated tools in their work. The subjective element of the document review effort is reduced, and the results of the review (and the performance of individual reviewers) can be evaluated more easily with such high-tech software programs.
Another advantage to the LPO model is that the LPO lawyer employees are regular employees, not contract personnel who come and go arbitrarily. With traditional legal staffing agencies, there is little predictability about which lawyers will be available, or for what cases. The convenience that drives many American lawyers to work for staffing agencies in the first place (part-time schedules, ability to work around life events such as maternity leave or disability, temporary need or desire for work and income rather than commitment to a career) can be a disadvantage for the companies and firms that rely on temporary lawyers. Furthermore, as many formal surveys and weblogs show, the temporary lawyers themselves are frequently unhappy about doing so-called temp work, its conditions, and the pay. Unhappy contract lawyers doing temporary work without an expectation of promising career prospects can lead to output of uncertain quality. [Olivas & Dolan, infra, have described temporary contract attorneys as having a day labor mentality.]
In India, on the other hand, working in an LPO is a prestigious situation for many lawyers. (This subject is discussed in this issue in Hiren Patel's article LPO Companies Attract Top Legal Talent.) The cost-savings in using Indian lawyers cannot be minimized – some of these lawyers earn salaries that are about 1/10 of the US equivalent. Because there is continuous employment, the attorneys involved are less likely to have to be trained and re-trained with every assignment. LPOs have little incentive to keep non-performing individuals on staff, whereas a legal staffing agency will not know in advance whether the legal skills of any particular lawyer are weak or strong, and the clients pay for both the good and the bad, usually on an hourly basis. Taking these factors together, it makes a great deal of sense for litigators at both law firms and corporate counsel to consider the potential benefits of working with LPOs.
Initial steps in working with LPO vendors may involve:
1. Meeting with various LPO representatives to learn about their offerings and abilities. [Note: LPO Network will publish an LPO Directory which will be available through the website www.legalprocessoutsourcingnetwork.com.]
2. Attending meetings on the LPO industry to learn about ethical, billing, security and other practical aspects of the LPO industry, especially as conducted offshore.
3. Assigning a small, low-risk project to a selected LPO to evaluate the quality of the work.
4. Producing a Request for Proposal for issuance to a number of selected LPOs and evaluation of the responses, with the possibility of testing several LPOs on an assignment in order to determine which companies are deserving of more permanent relationships.