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November 26, 2008

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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.

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.

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