Legal outsourcing
Encyclopedia
Legal Process Outsourcing (also known as 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. When the outsourced entity is based in another country the practice is sometimes called Offshoring.
LPO services is at a nascent stage with relatively consistent market growth since early emergence of LPO in 1997.
LPO providers have established themselves in Canada
, India
, the Philippines
, the US, Israel
and Latin America
. They traditionally offer services in the areas of document review, legal research and writing, drafting of pleadings and briefs, and patent services outsourcing.
In-house law departments of major multinational corporations outsource some of their work in order to limit costs.
Initially, legal process outsourcing gained traction in the Asian subcontinent. However, in recent years the so called "near shore", "back-door" "specialized legal firms" have sprung up to satisfy law firms and corporations that demand quality and confidentiality.
In Gurgaon
and Bangalore
, India the industry has benefited from the Global Financial Crisis, due to the increasing number of litigations and bankruptcies. http://news.bbc.co.uk/2/hi/business/7968138.stm
Teams of Indian lawyers have achieved notable success providing legal research and drafting services in high-profile U.S. litigation matters.
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."
As noted 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."
However, there have been ethics opinions from various local bar associations (New York San Diego ) and recently, the American Bar Association
that discuss ethical legal outsourcing and how to achieve it.
Finally, there is criticism that LPO's are in effect practising U.S law without a licence/U.S law degree. (e.g.writing memorandum, briefs, etc). Work traditionally given to a junior associate in a law firm.
. During the early years of legal process outsourcing, many law firms hesitated to outsource their work. Attorney-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.
Similarly, those people who are against legal process outsourcing claim that since communication is being sent to a country other than United States, the confidentiality is broken; hence, the privilege has been waived. However, American Bar Association
clarified this in 2008, clearing the way for the development of legal process outsourcing.
Emergence of legal Outsourcing Work to India
Law firm
A law firm is a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise clients about their legal rights and responsibilities, and to represent clients in civil or criminal cases, business transactions, and other...
or corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
obtaining legal support services from an outside law firm or legal support services company. When the outsourced entity is based in another country the practice is sometimes called Offshoring.
LPO services is at a nascent stage with relatively consistent market growth since early emergence of LPO in 1997.
LPO providers have established themselves in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
, the US, Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
and Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
. They traditionally offer services in the areas of document review, legal research and writing, drafting of pleadings and briefs, and patent services outsourcing.
In-house law departments of major multinational corporations outsource some of their work in order to limit costs.
Initially, legal process outsourcing gained traction in the Asian subcontinent. However, in recent years the so called "near shore", "back-door" "specialized legal firms" have sprung up to satisfy law firms and corporations that demand quality and confidentiality.
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.In Gurgaon
Gurgaon
Gurgaon is the second largest city in the Indian state of Haryana. Gurgaon is the industrial and financial center of Haryana. It is located 30 km south of national capital New Delhi, about 10 kilometers from Dwarka Sub City and 268 km south of Chandigarh, the state capital...
and Bangalore
Bangalore
Bengaluru , formerly called Bengaluru is the capital of the Indian state of Karnataka. Bangalore is nicknamed the Garden City and was once called a pensioner's paradise. Located on the Deccan Plateau in the south-eastern part of Karnataka, Bangalore is India's third most populous city and...
, India the industry has benefited from the Global Financial Crisis, due to the increasing number of litigations and bankruptcies. http://news.bbc.co.uk/2/hi/business/7968138.stm
Teams of Indian lawyers have achieved notable success providing legal research and drafting services in high-profile U.S. litigation matters.
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."
As noted 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."
Criticisms
One of the major concerns with legal outsourcing is the potential for breach of clients confidentiality. Secondly, another concern is that the people performing legal work may not be bound to the necessary ethical standards.However, there have been ethics opinions from various local bar associations (New York San Diego ) and recently, the American Bar Association
American Bar Association
The American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...
that discuss ethical legal outsourcing and how to achieve it.
Finally, there is criticism that LPO's are in effect practising U.S law without a licence/U.S law degree. (e.g.writing memorandum, briefs, etc). Work traditionally given to a junior associate in a law firm.
LPO Industry and the Recession
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 U.S. Their expectations have not been met. The major reason for this is that U.S. lawyers themselves have started looking at alternative fee structures due to the recession and job losses. In spite of some setbacks, the LPO industry has seen growth of about 40-60% in the last one year. 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, among others, have gained ground, resulting in a good amount of business directed to LPO firms in India.Issues of Confidentiality and Attorney-Client Privilege
Legal outsourcing is entirely a different game. In other forms of outsourcing, there are issues like client confidentiality and data security. However, legal process outsourcing has more complicated issues such as the liability of service providers and violation of the Attorney-Client privilegeAttorney-client privilege
Attorney–client privilege is a legal concept that protects certain communications between a client and his or her attorney and keeps those communications confidential....
. During the early years of legal process outsourcing, many law firms hesitated to outsource their work. Attorney-Client Privilege
Attorney-client privilege
Attorney–client privilege is a legal concept that protects certain communications between a client and his or her attorney and keeps those communications confidential....
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.
Similarly, those people who are against legal process outsourcing claim that since communication is being sent to a country other than United States, the confidentiality is broken; hence, the privilege has been waived. However, American Bar Association
American Bar Association
The American Bar Association , founded August 21, 1878, is a voluntary bar association of lawyers and law students, which is not specific to any jurisdiction in the United States. The ABA's most important stated activities are the setting of academic standards for law schools, and the formulation...
clarified this in 2008, clearing the way for the development of legal process outsourcing.
"The Global Lawyers"
India has become one of the most popular destinations for companies wanting to outsource legal work. This is so because there are certain very obvious advantages like availability of English speaking, US and UK graduated, qualified lawyers working at less expensive rates. Besides the Indian legal system is based on English common law, much like the US, UK, and Australia. The other major LPO hubs are in Japan, France, Australia, South Korea, China, Argentina and the Philippines. Some companies are also looking at setting up their own establishments in these countries to save costs. Many LPO providers are even using US-licensed attorneys residing in foreign countries who are willing to work at discounted rates. Countries like China and Sri Lanka are also stepping in as tough competitors to India. However, Indian legal professionals seems to be the most suitable ones due to their legal education system.External links
- "Strategic resourcing: Thinking differently about delivery of legal services" 2009 LAWPRO Magazine "Changing Direction," July 2009 (Vol. 8 no. 1)
- "Effective and Profitable Outsourcing: 10 Tips from 10 Years of Experience" by Stephen L. Taran, H.B.A., LL.B., TVA | The Legal Outsourcing Network, 2007
- "Outsourcing" by Aida Van Wees, LL.B., MBA, LL.M. TVA | The Legal Outsourcing Network, 2007
- "The Case For Outsourcing" by Jean Weir. Metropolitan Corporate Counsel, March 1, 2009
- (Bluecurrent vs. Dell) LPO firm assists in large IP litigation matter
- Outsourcing the Lawyers by Krysten Crawford (CNNMoney.com)
- Legal Outsourcing Makes Its Case by Nandini Laxman (rediff.com)
- Are Your Lawyers in New York or New Delhi? by Daniel Brook (legalaffairs.org)
- It's India for Legal Services by Abdul Latheef Naha (The Hindu, November 26, 2007)
- U.S. Legal Work Booms in India by Rama Lakshmi (Washington Post, May 11, 2008)
- U.S. Corporates Outsource Legal Work to India by Anjali Prayag (The Hindu Business Line)
Emergence of legal Outsourcing Work to India
- LPOs Add More Punch to India Action by Sushmita Mohapatra & P P Thimmaya (The Economic Times)
- Hyperion Research: LPO Vendor List (Market Research)
- Indian Legal Expertise Wins U.S. Court Battle by Mini Joseph Tejaswi (Times of India, April 22, 2009)
- Hollywood's Legal Work is Done in Mysore by Mini Joseph Tejaswi (Times of India, November 13, 2007)