Outsourcing

Outsourcing; you might have heard of it. It’s the trend whereby law firms send high man hours/low brain effort work overseas to workers who can complete the tasks at a fraction of the cost. Clients love it, consultants are pushing it, and law firms are struggling to add this new efficiency opportunity into their overall business model.

Well, not all law firms. Peter Kalis, managing partner of K&L Gates, gave a quote to the Legal Intelligencer where he called outsourcing “a gnat in an elephant’s ear.” Evidently, K&L Gates is the elephant, LPO’s are the gnats, and I’m not sure who the clients are supposed to be. Perhaps Peter “Aesop” Kalis can let us know in a future fable.

It’s not that Kalis has his head in the sand when it comes to cost savings that can be generated by moving work out of places like New York and Washington. It’s just that in his world he doesn’t view Mumbai as all that different from Pittsburgh.

Maybe he’s right about that?

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“Knowledge Economy”

An environment in which a person has run up $150,000 in student loans to pay for a law degree only to see jobs exported to India whose citizens are apparently very knowledgeable about the U.S. legal system.

Example: “The best job in the knowledge economy is plumbing because nobody with an advanced degree knows how to use Drano.”

– a Yahoo! Finance article on office buzzwords to avoid

This has all happened before, and this will all happen again. So say we all. At the beginning of the recession, just weeks after Lehman Brothers collapsed in September 2008, we brought you a New York Times article from 1990 that illustrated the similarities between the tough legal job markets created by Bush 41 and Bush 43.

Today, we run the DeLorean even further back in time, and to an entirely different country. A loyal reader was cleaning out his office and came across an article from The Law College Magazine of Bombay, India, from 1930. The piece is entitled: “Is It Worthwhile? A Frank Talk With Budding Lawyers.” And it’s all about whether a person should pursue a two-year law degree in India in the 1930s.

Folks, let me tell you: some people worry that India will become the new market for American legal jobs, but that’s not the real fear. The real fear is that American law students will become like Indian law students in 1930.

And maybe that process is already well underway….

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I like paying attention to what consultants say about the Biglaw market. It offers a fun little insight into what people think partners want to hear.

The ABA Journal reports that consultants at Hildebrandt think partners want to hear that they can still fire people — lots of people:

Writing for the blog of law firm consultant Hildebrandt, Lisa Smith makes an argument that outsourcing, efficiencies and increased hiring of staff attorneys could mean a different mix of staff and associate lawyers—and an overall reduction in head count in the next five to seven years.

Hilderbrandt expects an overall reduction of headcount of 17,500. But not partners! Just associates and staff attorneys…

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Lawyers are terrified of outsourcing, and there doesn’t seem to be a whole lot of movement in the legal industry towards keeping entry level legal jobs in America.

But outsourcing didn’t start with low level legal work, and so maybe the reaction against it won’t start in the legal field either. Maybe the counter movement will start in Ohio.

Ohio Governor Ted Strickland just instituted a new ban on outsourcing back-end IT services by the Ohio government. The Wall Street Journal reports:

India’s main software body Wednesday termed the U.S. state of Ohio’s decision to ban technology outsourcing to offshore locations as an “electoral rhetoric” that will be counterproductive, while Infosys Technologies Ltd. said it is concerned about the message from the step.

The Economic Times newspaper said Ohio has banned outsourcing of government IT and back-office projects to offshore locations such as India.

Hey, ABA you might want to pay a little attention to Governor of Ohio. I bet a lot of your constituents wouldn’t mind a little lawyer protectionism just at the moment, globalization be damned.

India Software Body Calls Ohio Ban ‘Electoral Rhetoric’ [Wall Street Journal]

In keeping with the highly optimistic “dey terk er jerbs” story lines of the last couple of weeks, such as Elie’s on how outsourcing could be great for associates, I thought I would address how attorneys working remotely on e-discovery projects could actually be a good thing for the future of Biglaw.

A couple of years ago, I was a legal recruiter for a small staffing agency placing contract attorneys on e-discovery projects in the Washington, DC area. The attorneys constantly asked me the same questions: “Is it true this is all going away?” Or, “Is all doc review really heading to India?”

I would respond by telling them not to worry about India, because the real threat would be coming from Indiana…

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I Can Has Your Job? (I Don't Eat Cheeseburgers.)

There’s been a lot of negativity surrounding the first steps of Biglaw into the outsourcing market. For obvious reasons: the U.S. legal job market is soft, and recent graduates are terrified that their entry-level jobs will flow out of the country.

And they’re probably right. If outsourcing catches on, the structure of a law firm in 2020 could be wildly different from the structure of a law firm in 2010. But maybe that’s a good thing. Let’s face it: whether you’re being paid $145K, $160K, or even (dare to dream) $190K, spending 2,000 hours a year on menial document monkey tasks is no fun. If some of these rote, mind-numbing functions can be done by attorneys overseas, attorneys in the U.S. might have a reason to actually bring their brains to work, along with their mouse-clicking index fingers.

That’s the argument, at least. And it’s being made by former Kirkland & Ellis partner Stephen Harper in today’s Am Law Daily

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In August, 2008 the ABA issued a landmark ethics opinion allowing the outsourcing of U.S. legal work.

This August, the ABA is pondering whether to accredit offshore law schools that follow the U.S. system. Because apparently 200 accredited U.S. law schools just isn’t enough. The National Law Journal reports:

The American Bar Association is already tasked by the U.S. Department of Education to accredit U.S. law schools. Now an ABA committee has recommended that it should seriously consider expanding that power to overseas law schools that follow the U.S. model.

In June, the ABA’s Council of Legal Education and Admissions to the Bar appointed the committee of law professors, attorneys, judges and law deans to examine whether foreign law schools should be allowed to seek ABA accreditation. The council is scheduled to consider the committee’s recommendations in December.

Globalization, baby! Catch the epidemic fever…

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“Believe me, kiddos, this is bad news for all of us.”

As many websites and blogs (including ATL) mentioned last week, The New York Times published an article by Heather Timmons entitled “Outsourcing to India Draws Western Lawyers.” The quote above was from the blog Shilling Me Softly giving its take on the article. As you can probably discern from The Times headline, the piece was very favorable toward legal outsourcing taking place overseas…

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It’s not that we’re snobs. It’s because we couldn’t trust it. The reason clients pay us what they pay us is because they know we’re 100 percent quality control.

– Hughes, Hubbard & Reed partner Kenneth A. Lefkowitz in a New York Times/City Room story about outsourcing.

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