Outsourcing: Here’s the Pitch
Our recent post about outsourcing sparked some interesting debate about whether junior-level work will be shipped out of the country in the near future.
The commenters seemed to break into three camps: (1) you’re an idiot, outsourcing is already here; (2) you’re an idiot, ain’t nobody gonna take my job, USA, USA; and (3) you’re an idiot.
Fair enough on all counts. But wherever you stand on the issue it should be noted that people are trying to convince your partners to outsource, now.
Ron Friedmann of Integreon, a large legal process outsourcing firm, has written a treatise to convince firms to outsource the work most junior associates do for a living. He starts out talking in language managing partners love:
Until recently, firms emphasized revenue growth over cost reduction. They have merged, invested in marketing, added practice groups, and opened offices around the world. Now, however, with a recession likely, cost control is of growing interest.
Most people should know what “cost control” is code for. But let Friedmann do the double talk:
Outsourcing converts fixed costs to variable ones and avoids the need to borrow. Many law firms are under-capitalized. Partners may therefore want to avoid fixed commitments and to minimize borrowing. Similarly, law departments have small capital budgets and like to avoid locking in headcount. For both, outsourcing provides flexibility and avoids capital commitments.
Capital commitments? Like summer associate programs that offer rising 3Ls jobs over a year before they report to work? Great.
Friedmann tries to be funny, after the break.
I love it when people suggest that taking work away is a great thing for the people who have lost the work:
Allows lawyers to focus on their “highest and best use,” which is serving clients and winning new business. Eliminating managerial distractions from lawyers can let them bill more hours, thus boosting revenue.
I can’t count the number of “managerial distractions” I faced in Biglaw. If only there had been somebody offshore reviewing all of my documents for me, I could have focused on writing briefs and representing my clients in court, instead of having to rely on the good graces of the senior partners to pick up my slack.
Friedmann then goes on to list every single job he believes outsourced attorneys can perform, which is pretty much every single hour Biglaw associates bill. Doc review, due diligence, legal research, drafting contracts … all done more cost-effectively off-site or offshore.
There is one positive aspect to Friedmann’s report, Biglaw associates; he is still trying to sell it. While he uses all the buzzwords and pie charts that we expect managing partners would like to hear and see, outsourcing is still a commercial, not a reality.
At least for now.
Why and What Lawyers Should Consider Outsourcing [LLRX.com]
Earlier: Extinction Level Event: Outsourcing
(62) 
Comments
First?
First?
Has the bar association commented on this issue?
5:23 - Yes:
http://abovethelaw.com/2008/08/outsourcing_biglaw_jobs_india_tsunami.php
3 -- there's actually a new formal ethics opinion from the ABA on outsourcing that came out earlier this month.
The ABA should push immediately for legislation to stop this.
I know it is a bit different, but look at what has happened when the AMA let medical education get outsourced. A bunch of foreign educated Indian doctors who suck at their jobs and take away residency spots from great US med students.
The AMA has let control of their profession get away from the physicians in many respects. We cannot let the ABA sit by idly and take away our power over the US legal system.
Elie,
This is your best post yet. The effort is noticeable and appreciated.
Agree with 5:34 - funny, snarky, good.
6, foreign med students don't take residency spots from US med students. foreign med students take the residency spots that US med students refuse to take (i.e., low prestige, inner city hell-holes).
This will be the end of the elite social class of attorneys in the U.S. if we don't stop it. We can't let those carpet weavers take our work away.
Offering a rising 3L a job in a year is not a capital commitment. Come on people, we are lawyers not ingorant lay people. A capital commitment is a contract to purchase a 1000 boxes of widgets at $100 a box in january 2009 or a lease obligation pursuant to buying equipment.
Every single one of those offers can be rescinded at any time for any reason or no reason.
Moreover, we are all at will employees and every one can be fired tomorrow for any reason or no reason. Those rising 3Ls can be fired the day after they arrive.
Dumb comment Elie, although I appreciate the fact that you are pandering to your audience.
7 has a point. the problem is that Elie's best still sucks.
11 - there are significant recruiting/stigma costs to actually treating lawyers as at will employees. Firms would not aim for 100% offers to summers otherwise. They would also be slashing their entering classes right now as opposed to cutting back on recruiting. Even though firms are not contractually obligated the analogy is relevant.
6, you are an idiot. Why would Indian students take US students' spots if the Indian doctors suck. Obviously the US med students must suck more.
13 -- don't worry, no firm is going to rescind offers. But you (and Elie) should know the difference between a capital commitment and a "recruiting/stigma" cost.
-- Nuff said
10: Wake up, that happened a long time ago, especially with the advent of the non-T14 law schools churning out law grads by the tens of thousands every year.
HTH.
You're an idiot.
Not true 14. Indian doctors suck. If we didn't allow foreign educated doctors there would be more demand for the jobs those idiots take. The increased demand would drive up salary/prestige and American doctors would be your family care physcian again. There would also be more medical school spots in American schools for qualified white kids from the burbs who can't get into medical school because of affirmative action/elective diversity programs.
I think there should be a website devoted to how much Indian doctors suck. We can't let them into the law. They will start as associates doing bitch work in India. Then they will mvoe here and try to take our jobs. Keep them out of our system!!!!!
18, you're a fucking idiot. Surely an AU grad.
20--You are obviously have an Indian Doctor dad who put you through a TTT.
20--You obviously have an Indian Doctor dad who put you through a TTT.
Yes you are right. I have an Indian doctor dad, who took away your dad's chances of getting into medical school, hence your dad shines my dad's shoes for a living.
It's amazing to see continued outsourcing of jobs to India, despite the clear lack of quality work coming from there. Has anyone actually seen decent work product or service coming from India?
The call centers are a nightmare, email customer service and support are a nightmare, and I have heard horror stories about software development.
Why do companies continue to outsource professional & service jobs to India? Unlike certain jobs, like rug weaving, there is little quality control.
HTH.
Do Indians wear shoes?
My dad only shines shoes for Black peope who actually had to earn their MD from an American school.
23--There is nothing worse than entitled daughters of foreign educated Indian doctors. I hate everyone of them I have met and I have met a lot. They are snobby, dumb, and really superficial. You are obviously one of them.
Cost-effective is not the same as high quality. If clients want to hire cheap overseas lawyers who didn't attend top law schools, who didn't have clerkships, and who aren't barred by any state, then they will get what they pay for.
I said it before and I'll say it again. A couple big firms will (and have) outsource doc review to India. One big firm will get caught up in a massive malpractice suit. Client/plaintiff will find some SNAFU and tie it back to the Indian doc reviewers. Law firm will either lose HUGE, or settle HUGE. Malpractice insurance for firms with outsourcing programs will skyrocket, eliminating any savings from outsourcing. Outsourcing will be over. The end.
I'll worry when the indians can effectively answer my questions regarding my long distance service.
Further, anyone ever had a class with a foreign-educated lawyer or dealt with one in practice? There were a lot of foreign lawyers in LL.M. programs at my law school and they were NOT impressive. They basically go to undergrad and major in pre-law and then get out and practice law in many countries.
I'll worry when the indians can effectively answer my questions regarding my long distance service.
Further, anyone ever had a class with a foreign-educated lawyer or dealt with one in practice? There were a lot of foreign lawyers in LL.M. programs at my law school and they were NOT impressive. They basically go to undergrad and major in pre-law and then get out and practice law in many countries.
I'll worry when the indians can effectively answer my questions regarding my long distance service.
Further, anyone ever had a class with a foreign-educated lawyer or dealt with one in practice? There were a lot of foreign lawyers in LL.M. programs at my law school and they were NOT impressive. They basically go to undergrad and major in pre-law and then get out and practice law in many countries.
If clients wanted to outsource (reduce costs) so bad, they would be forcing BigLaw to hire contract attorneys to do all the shit work as we speak. They are not doing that. Clients are still very willing to pay high salaried BigLaw associates to do this stuff right now.
This won't happen.
Before the comment trail devolves into an inane exchange between xenophobes, let me congratulate Elie on a solid post. I've been critical when appropriate, but this is pretty good stuff.
And on the issue, I don't see outsourcing as a problem in the near future. The legal profession is prone to be conservative and maintain a good-ole-boy culture, even when cost-cutting measures are possibilities. This will eventually break down, but hopefully I can become either wealthy enough or valuable enough not to care at that point.
33--You must be daughter of an Indian doctor also.
I am the son of an inane xenophobe pre-med grad shoe shiner.
27--Clients could care less where you went to school. They want results at a cheap price. If I am an experienced corporate lawyer in NYC, I will just as easly oversee 12 Patels at $22,000 per year than 6 Hollingsworths at $160,000 per year. I can easly hire 1 Hollingworth to go to Bombay to manage the Patels--that is the leverage. The corp. U.S. lead attorney survives, but the associate ranks will be decimated. Is there any question that an Indian who speaks fluent English can write with as much quality as the editors and posters here.
Every time outsourcing has been employed, it has been unstoppable.
look at wsj.com, endofesq.com and overlawyered.com.
I was going to suggest outsourcing the ATL EIC job, but Elie has been improving.
28- spot on.
Moreover, as I have stated before, outsourcing is happening RIGHT NOW. Seyfarth Shaw practically brags about this in firm-wide emails. (I am a Seyfarth associate).
Outsourcing is a good thing. Look, if you are better at your job than some guy in India, you will simply get better work and more responsibility. If you are not that good, then you deserve to compete with people who will do your job for pennies on the dollar. Maybe you shouldn't have operated at a level or chosen an area of law that could be easily done by cheaper labor. Ultimately, outsourcing will benefit our economy and the pockets of the clients and partners, who ultimately own their business and can do whatever they want with their money. Stop complaining and start separating yourself from people who will do your job for 20% of your salary.
GULC started outsourcing its students to Sri Lanka last year. Old news.
yes we all agree that american lawyers can do a better (and even probably much better) job than their foreign counterparts. the issue is really one of expense, though.
since firms began raising first-year associate salaries into six figures beginning in 1999, and now to 160K, clients have been pulling out their hair in frustration over legal expenses. lawyers are now prohibitively expensive for many companies and while these same lawyers are still needed for some tasks (like arguing in court or key projects), companies have already been and are going to continue to demand ways to reduce legal expenses. so firms will either need to roll back the salary increases over the past decade or find some of their "work" taken away from them.
from former lawyer - now client
I can make it rain whenver I want.
Not directly on topic, but why don't more firms do what Wachtell (and every ibank) does and charge a percentage of the deal? I understand this doesn't work for litigation, but the billable hour doesn't seem like the best method of compensation for transactional work.
F BIglaw and the ABA was retarded for letting it happen.
Anyone want to pool some money to assassinate some of these outsourcing promoters?
the ABA needs to get off it's ass and immediately
1. stop creating so many crappy new law schools, close all the horrible ripoff ones, and improve the genuine article new schools to better standards. this would almost instantly increase the value of ALL lawyers, T14 or TTT (cause that's the only two categories of lawyers, apparently)
2. lobby to stop outsourcing of legal work, again increasing the value by cutting off supply but at the same time safe guarding quality
the vast majority of politicians and all judges in this country belong to our profession. with concerted effort we can surely protect our own professional interests
efficiency be damned. lawyers should work together to restore our place on top of the social ladder, by making supply more scarce and increasing overall quality. we already have a cartel we might as well use it
I am a BigLaw associate in NYC. Whenever I receive an assignment from a partner, I outsource it to India for 500 rupees. I then climb under my desk and sleep the rest of the day away. When I awake, my assignment is done. Everyone is happy.
My experience with Indian call centers has brrn fine; probably better than domestic customer assistance.
I have also had an Indian doctor for years; done a fine job, well other than not diagnosing my type one diabetes right away when I went to see her complaining of dramatic weight loss, but anyone can miss one.
Would think the out sourcing on the transactional side would have to stop at a fairly junior level, unless firms outsource things like negotiating the documents and running different parts of the deal.
its over -- get out while you still have a shred of self worth left.
www.endofesq.com
I'd much rather have an Indian doctor than some TTT Dr. Nick School of Medicine grad.
38 - Outsourcing has not benefited our economy. As the manufacturing sector and other outsourced sectors have shown, it enhances the wealth of those that outsource and leaves behind lower paying and fewer hjobs domestically. Part of the reason for the extreme concentration of wealth over the past few years has been from companies outsourcing to other places and continuing to charge the same fees as they did before outsourcing. The price of clothing has not gone down since China has taken over manufacturing. Likewise, clients will not see much, if any, benefit from outsourcing.
On the medical comparison, an Indian doctor that wants to practice in the US must still pass his medical boards and be regulated by the state medical board. The outsourcing being talked about here is a complete end run around the attorney regulation system in the US (for all its faults). Therefore, there is a greater risk of problem.
33 is dead wrong. This is CLIENT-driven. Who bends over for the clients? The conservative, good-old boy partners you think will not support this. The manufacturing of Client X's product is already out-sourced...product must pass American safety standards (hello FDA, generic drugs manufactured in India, anyone?)...Client X has already placed it's product, it's profit, it's name, it's integrity (ha) in the hands of outsourced workers. Why not it's legal work? Most of which (large case mgmt, in response to regulator investigation) is performed at an exhorbitant rate by jr associates who had no idea they were going to be doing same fresh out of law school. Translation- they fuc* it up, and they get paid to fuc* it up. So send a staff attorney (who has been sweeping up behind said associate) to India to manage a team of people who probably learned more about privilege and the 4 corners rule in law school than about the many philosophies of constitutional interpretation.
I have no problem with outsourcing to india, as long as its the company we are suing. as for me, i hate reading off shored documents from india and hate even worse the damn curry that they spill on them.
i am confused here - can some wise reader clear up why i need a license to practice law in say California but the ABA says someone in India does not?
#53: just like a summer associate doesnt need a law license to draft briefs, that is what the indian folks are doing. they are working for the lawyers. frankly, if i can keep my job, i dont mind the off shoring. this will lead to a significant brain drain, i.e. no experience is being gained in the associate ranks. those that do have experience will become more valuable, assuming i am not off shored.
off shoring is really a short-sited fix for economic distress. in the long run, just like everything else that has been off shored, it leads to quality control issues. plus, as the economies grow over there, the price savings dont make sense. then, when you try to bring the work back to the states, every associate knows how the partners in a particular firm sold them out. do you think they may have trouble finding good help? yep.
Bombay to 160,000 rupee!
Honestly, my clients, and the clients of most large firms, don't want to use the kind of lawyers who charge lower rates doing their work - they want lawyers who charge high rates doing their work. They just don't want to pay those rates. They want to save money, but they already have options to do so. Already, my clients could go to the lawyers in my city who charge half of what I charge, and they don't. It's not credible to me that any clients who use large law firms for their work are going to start sending much work to India. Before they would do that, they would be sending the easier, more repetitive, more time consuming work to cheaper domestic lawyers.
It might be different for high-volume work that can be, or has already been, commoditized. I'm not sure that document review fits that definition, and due diligence certainly doesn't. That stuff matters. It might suck to do, and it might be expensive to pay for, but it matters.
The Indian lawyers I have dealt with have not had the command of written or spoken English or the best practices of the American legal and financial systems necessary to do high-quality legal work. The cheapest is rarely the best.
outsourcing legal work offshore is happening and will inevitably get bigger. there is a huge middle-class of highly educated lawyers in india who have strong english skills, and they can make much more money, in better working conditions, reviewing docs like a first-year associate than doing indian legal work for indians.
e-discovery is a tsunami. in cases that worth 8-figures-plus, the goldmans and citigroups of the world can afford to pay US junior associate rates to do first-level privilege and relevance reviews (although they icnreasingly grumble about costs, and want contract attorneys where possible).
but for those clients who aren't so moneybags, or in cases that are worth $5 million or less, it is often an attractive option to get 90% of the quality of a US junior associate or contract attorney at 25% of the cost. it makes no sense for wachtell/cravath/etc. to offshore their doc review. it makes total sense for seyfarth shaw and similarly situated firms to do so (because they tend to get lower money, non-"bet the company" cases).
are indian lawyers 90% as good? time, and the market, will tell. but I think folks starting companies to do doc review and similar mundane legal tasks in india are going to make a mint. charging a client $50/hour for doc review (rather than $250 and up) will save huge, and the indian lawyers getting $30/hour will be making mad cash when converted to rupees. and that leaves a nice, fat profit margin for the owners of such a business. if only I weren't settled in a nice job with a nice family who wants to stay here in NY...
57 here with another thought. two biggest challenges for an offshoring company are (1) quality control, and (2) convincing US firms that you have good quality control. that will take time, effort, and a presence on the ground in india of US-trained supervisors with good pedigrees (the kind clients are comfy with -- top schools, big firm experience, etc.). the early entrants will find both (1) and (2) tough. but it will happen, and the spoils will go to the first firm that jumps these two hurdles.
In my experience, the slovaks (in, say, Bratislava) are far superior to their Indian counterparts when it comes to legal outsourcing.
19, yep, Indians are the most educated minority in America earning the highest salaries on average. I guess its just a matter of time before my triple ivy league indian-american ass becomes partner off my foreign educated indian doctor parents naturalized here for the last 30 years ...
Protectionist policies are going to make America nation of cardboard box makers not space explorers...
56: your clients DO want to lower costs, they just want you to be on the hook for it. example: higher the best law firm (highest rates, reputation, etc), imply that they should outsource work to lower costs (i.e. set ridiculously low budgets). firm wants to keep client, so they abide. crap work comes back from india, client gets to blame the firm rather than take it themselves. firm cannot blame the client (say goodbye to other clients if they do) and finding someone in india that gives a crap about the firm will be unlikely, as it is not in the script they receive.
see, it all works out just fine.
My firm has tried it, with various different outsourcing firms and the product we received (not all that cheaply either), was never anything terribly special. There are countless really good contract lawyers out there for about the same price and the contract lawyers actually know American law.