I’ve been trying to be optimistic about the future of Biglaw in 2010. There’s no harm in hoping for the best.
But I’m positive that 2010 will see more outsourcing of American and British legal jobs to India. And from the perspective of junior Biglaw associates or current law students, that trend does not lead them to a good place.
The Times of London (gavel bang: Am Law Daily) has an excellent expose on Pangea3, an Indian company doing work that used to be done by junior attorneys in the U.K. Once again, we see that law firm managers — and their clients — have compelling cost reasons to ship legal work overseas:

Much of the work that Pangea3 and similar firms deal with, such as drafting derivatives contracts or conducting due diligence for mergers and acquisitions, was once the preserve of trainees and associates at big City law firms. Some of those firms racked up annual revenues of more than £1 billion during the boom years, in part by billing out teams of junior lawyers for up to £300 an hour for even the most routine tasks. …
Whereas a new recruit at a “magic circle” firm in London can expect a starting salary of about £60,000 — rising to more than £90,000 at the best paid firms — Pangea3 can pay a good Indian law graduate as little as £350,000 rupees (£4,700) a year.

Those are powerful numbers. And apparently it’s not even all that hard to start one of these companies.
Details after the jump.

Continue reading “Outsourcing: It’s Cheap and Easy to Do.”

We reported last month that the ABA made it easier for law firms to outsource legal work. But as many commenters pointed out, there would need to be a reason for firms to do that and risk a reputation hit.

Perhaps the market crisis has given firms the perfect opening to begin using low cost legal workers outside the United States.

The Hindu Business Line reports that India is “lawyering-up”:

At a time when the off-shoring industry is plagued with instances of employee lay-offs, companies providing legal process outsourcing (LPO) services are on a hiring spree as demand for litigation services from the US rises.

In the next six months to a year, several LPOs have plans to at least double headcount in order to cater to the increased work flow resulting from the recent turmoil in the US that has seen several financial institutions collapse.

The Wall Street crisis has resulted in increased litigation related to bankruptcy, mergers & acquisitions and other related aspects.

We’ve said before that the first front of this outsourcing battle would be fought over document intensive litigation, when clients demanded the lowest possible costs. Does that sound like a bankruptcy proceeding to anybody?

Indian businesspeople watch CNBC too:

For US companies and law firms, the pressure to put a throttle on costs is immense. By outsourcing to Indian vendors, companies can save about 70 per cent in costs vis-À-vis law firms in America.

After the jump, how Indian firms save 70 cents on the dollar.

Continue reading “While Wall Street Collapses, Mumbai Picks Up The Scraps”

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.

Continue reading “Outsourcing: Here’s the Pitch”