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Legal outsourcing

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Legal outsourcing, also known as legal process outsourcing (LPO) refers to the practice of a law firm or corporation obtaining legal support services from an outside law firm or legal support services company. This process has been marked by the practice of outsourcing any activity except those where personal presence or contact is required e.g. appearances in court and face-to-face negotiations. This process is one of the incidents of the larger movement towards outsourcing.[1] The most commonly offered services have been document review,[2] legal research and writing,[3] drafting of pleadings and briefs,[4] and patent services.[5]

This phenomena has been a part of the legal experience since the 1950s, where it was restricted only to patents.[6] Later, firms began to contract certain services to back door firms. The process of subcontracting part of the legal process to different countries is at a nascent stage, with relatively consistent market growth.[7] Legal process outsourcing has predominantly been to countries that had previously taken advantage of the business process outsourcing wave. LPO providers have established themselves in Canada, India[8] , the Philippines[9] , the United States, Israel[10] and Latin America.

Overview

The concept of legal process outsourcing is based on the division of labour principle, prevalent in law firms, where various time consuming and onerous processes like due diligence are delegated to paralegals, document reviewers or interns.[11] This allows the firm to address the various legal issues that arise on a daily basis while being able to streamline productivity.

The process involves a contract, with due consideration, between both firms. The following are the various methods by which the process could be initiated:[12]

  • Direct Contract – This is the most straight forward means of establishing contact. The firm needing legal services directly approaches the legal process outsourcing vendor.
  • Managed Outsourcing – This is a case where the firm establishes contact with a legal process outsourcing vendor and retains a traditional law firm to coordinate the vendor's activities and to ensure quality control.
  • Required Outsourcing – This form of outsourcing occurs when the firm mandates a certain level of outsourcing in the legal process, either to reduce costs or to fulfill statutory requirements.
  • Multi-sourcing – This involves segregating the work assigned to LPO providers in order to reduce risk and take advantage of each provider's strengths. This approach is helpful is cases where expertise is required on matters of jurisdiction and merits. Having more than one provider "on deck" also allows a service recipient to obtain more favorable pricing. On the other hand, multi-sourcing can be more complicated than other approaches. Successfully managing multiple, competing providers requires strong and effective governance procedures.[13]

Reasons

Among the leading proponents of this process have been corporate clients concerned with rising legal expenses. The legal departments of corporations began using the services of such providers. Soon these corporations began to pressure their legal representatives to outsource certain legal processes to cost costs.[14]

Advantages

Most firms and corporations outsource primarily to save cash, and this is considered the biggest advantage for legal outsourcing. While an attorney in major legal markets such as the US may charge from $150–350 dollars/hour when performing rote services, legal process outsourcing firms can often charge a fraction of this. It has attracted major corporations to outsource specific work outside their legal departments. Many destinations for outsourcing have benefited from the upsurge in bankruptcies and litigations that have occurred in the wake of the Global Financial Crisis.[15] [16] As reported in the ABA Journal, "[t]he market for outsourced legal work is booming in India. While lawyers there are doing a lot of routine work, they are also handling some interesting legal matters, including work for the makers of movies and television shows."[17] As stated in USA Today, "'[y]ou could call it "Outsourcing 2.0" or maybe even "3.0." Now firms are increasingly trying to leverage expertise,' says Saikat Chaudhuri, an assistant professor in the business school at the University of Pennsylvania. Legal Outsourcing is 'growing very, very quickly.'"[18]

LPO industry and the Global Financial Crisis

LPO firms in India had predicted an annual growth of 200% due to recession related litigation and the increased need to save costs in the US. Their expectations have not been met.[19] The major reason for this is that US lawyers themselves have started looking at alternative fee structures due to the recession and job losses.[20] In spite of setbacks, the LPO industry has seen growth of about 40-60% in the last year.[citation needed] Although some areas of practice, such as real estate, have drastically collapsed due to the recession, some areas such as litigation, document review, and corporate compliance have gained ground, resulting in business directed to LPO firms in India.

Criticisms

One of the major concerns with outsourcing is the potential for breaches of client confidentiality. In legal process outsourcing the issue of client confidentiality assumes utmost importance. Theattorney–client privilege is a doctrine that says anything conveyed between an attorney and his client shall be treated with utmost confidentiality and is exempted from disclosure even in a court of law. However, when either party discloses confidential information to a third party or the opposite party, the privilege is deemed to be waived. During the early years of legal process outsourcing, many law firms hesitated to outsource their work.[21] Critics and opponents state that, since communication is being sent to a country other than United States, the confidentiality is broken; hence, the attorney client privilege has been waived. However, American Bar Association clarified this in 2008, clearing the way for the development of legal process outsourcing.[22][full citation needed] Another criticism is that people performing legal work may not be bound to necessary ethical standards .[23].The process of Legal Outsourcing has come in conflict with the Model Code of Conduct issued by the American Bar Association.[24]. However, there have been ethics opinions from various local bar associations (New York,[25] San Diego[26]) and recently the American Bar Association[27] that discuss ethical legal outsourcing and how to achieve it.


India has become one of the most popular destinations for legal outsourcing due the availability of English-speaking, US and UK-educated, qualified lawyers working at less expensive rates. The Indian legal system is based on English common law, much like the US, UK, and Australia. Other major LPO hubs are in Japan, France, Australia, South Korea, China, Argentina, and the Philippines. Some companies[which?] are also considering setting up their own establishments in these countries to save costs. Many LPO providers are using US-licensed attorneys who live in foreign countries and are willing to work at discounted rates.[28] China and Sri Lanka are becoming competitors with India[29] , whose success has come from a familiarity with Britsh law, a strong economic infrastructure, online freedom, and marketing by Indian policymakers.[30] "[China] will probably need to rethink some aspects of its political and diplomatic strategies if it wants to wrest a bigger share of the lucrative knowledge-based services market."[30]

Notes

  1. ^ [1][dead link]
  2. ^ "Online Legal Document Review Attorney Service". Documentreview.bizandlegis.com. Retrieved 2012-06-19.
  3. ^ "Legal Research". bizandlegis.com. Retrieved 2012-06-19.
  4. ^ "Online Legal Document Services". Bizandlegis.com. Retrieved 2012-06-19.
  5. ^ "IP Legal Services by Intellectual Property Attorneys and Lawyers". Bizandlegis.com. Retrieved 2012-06-19.
  6. ^ "History of CPA Global". Cpaglobal.com. Retrieved 2012-06-19.
  7. ^ Spencer, Beverly (2000). "Legal Recruitment and Outsourcing" (PDF). Canadian Lawyer. 24 (10). Retrieved 19 June 2012. {{cite journal}}: Unknown parameter |month= ignored (help)
  8. ^ http://www.bizandlegis.com/india-desk.htm}}
  9. ^ Engardio, Pete. journalist http://www.businessweek.com/magazine/content/06_38/b4001061.htm. Retrieved 20 June 2012. {{cite web}}: Missing or empty |title= (help)
  10. ^ Easton, Jonathan. legal, jouralism http://exactlegalreview.com/legal-outsourcing-to-israel-is-professionally-wise-and-economically-sound/. Retrieved 20 June 2012. {{cite web}}: Missing or empty |title= (help)
  11. ^ "Legal Process Outsourcing and 'Fly In/Fly Out' Lawyering Addressed at Ethics 20/20 Commission Hearing in San Francisco". Abanow.org. Retrieved 2012-06-19.
  12. ^ Mark W. Heaphy; Sarvesh D. Mahajan. "The "Nuts And Bolts" of Legal Process Outsourcing". Sddglobal.com. Retrieved 2012-06-19.
  13. ^ "Section of International Law". American Bar Association. Retrieved 2012-06-19.
  14. ^ Mark Ross (2007-10-30). "Legal Process Outsourcing (LPO): 2007 and Beyond". American Bar Association. Retrieved 2012-06-19.
  15. ^ "India boom threatened by slowdown". BBC News. 2009-03-27. Retrieved 2012-06-19.
  16. ^ Julie Triedman (2009-04-22). "SmithDehn Beats Back Libel Suit for Da Ali G Show, Channel 4". Amlawdaily.typepad.com. Retrieved 2012-06-19.
  17. ^ Debra Cassens Weiss (2008-05-12). "Indian Lawyers Handling Outsourced Work Do More Than Document Review". ABA Journal. Retrieved 2012-06-19.
  18. ^ Leinwand, Donna (2008-10-14). "More legal legwork gets outsourced to India". Usatoday.Com. Retrieved 2012-06-19.
  19. ^ PTI Nov 29, 2009, 06.04pm IST (2009-11-29). "LPO industry to suffer from economic downturn for short term". Economictimes.indiatimes.com. Retrieved 2012-06-19.{{cite web}}: CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link)
  20. ^ [2][dead link]
  21. ^ [3][dead link]
  22. ^ ABA Opinion on Legal Outsourcing
  23. ^ Barlyn, Suzanne (2008-04-03). "Call My Lawyer ... in India". TIME. Retrieved 2012-06-19.
  24. ^ Template:Http://www.americanbar.org/groups/professional responsibility/publications/model rules of professional conduct/rule 5 5 unauthorized practice of law multijurisdictional practice of law.html
  25. ^ [4][dead link]
  26. ^ [5][dead link]
  27. ^ Steven J. Mintz (2008-08-28). "Ethics Opinions Allow Foreign Legal Outsourcing". American Bar Association. Retrieved 2012-06-19.
  28. ^ Posted by VeritasLegalWeb (2010-08-24). "VeritasLegalWeb: Expat Outsourcing: The Next India?". Veritaslegalweb.blogspot.com. Retrieved 2012-06-19.
  29. ^ http://www.pwc.com/ca/en/media/release/2010-02-04-global-outsourcing.jhtml}}
  30. ^ a b "India's edge in legal process outsourcing". Chinadaily.com.cn. 2009-08-10. Retrieved 2012-06-19.

References

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