You're going to use Indian lawyers on this, aren't you, clients ask

It's clients who are helping push routine legal tasks offshore, particularly to India.  They know the cost advantage. General Counsels have been telling me this is going to revolutionize how BigLaw conducts business, especially its billing practices. "Change is coming from the client side," said one Midwestern GC in manufacturing.

In their article in THE WALL STREET JOURNAL today Niraj Sheth and Nathan Koppel report that when negotiating the terms and conditions of working with a U.S. law firm, clients frequently ask about using Indian lawyers. A seasoned Indian lawyer bills at $75 to $100 an hour versus U.S. associates who bill at $200 an hour.  By 2010, Forrester Research Inc. estimates that 35,000 U.S. legal jobs, mostly those junior kind, will be lost to offshore firms.  By 2015, that number will reach 79,000. 

Since both Indian and U.S. legal systems are grounded in British law outsourcing can proceed smoothly.  When the wok is closely supervised by senior attorneys at U.S. firms few problems will arise, whether that be in confidentiality or quality of service.

What seems to be happening is that demand for U.S. legal associates is declining and will continue to do so.  That work can be outsourced or assigned to temporary or contract attorneys. But those who do make it into U.S. law firms and don't get canned can probably look forward to a rosy future.  It's the experienced legal player who is of value.  There were no rookies on the legal teams for lead paint litigation, public nuisance or personal injury.  Clearly that was treated by the clients as premium work that had to be done right.

Comments

[Lisa Solomon]

Although the Wall Street Journal article that is the subject of this post focuses on foreign outsourcing by large law firms, it overlooks the realities of practice for small firms and sole practitioners, who comprise the majority of American lawyers.

There is a growing cadre of independent US-based contract lawyers (as well as US-admitted lawyers who live abroad) who generally provide unique, individualized services to small firms and solo practitioners. This work is less subject to commoditization than the document review work for corporations or large firms that forms the majority of legal work that is shipped abroad. Nevertheless, small firms and sole practitioners are no doubt facing at least as much pressure to trim their fees as large firms are experiencing; in fact, the individuals and small companies that comprise the client base of many small firms are likely even more cost-sensitive than the big companies that are represented by BigLaw.

These circumstances—combined with a recent ABA ethics opinion (Formal Op. 08-451) that explains the benefits of using contract lawyers, analogizes contract lawyers to associates (but without the overhead), and clearly states that it is ethical to earn a profit on the work performed by contract lawyers—present an unprecedented opportunity for independent US-based contract lawyers who can clearly communicate to potential hiring attorneys the benefits that they and their clients can obtain through outsourcing.

[Saul Lieberman]

Legal work is also being outsourced to Israel, albeit on a smaller scale. Most of the work is “routine” but some of the work is more “sophisticated”. Israel has a number of expatriate American lawyers who were raised in the US, graduated from US law schools, are admitted in the US and have US law firm experience (and continue to file US tax returns). Some US companies rely on expatriate American lawyers as their primary counsel, at significant savings.