Well, it was only a matter of time before the lawyers started to go where the work is. And, if you’ve been paying attention, you know that the work is in India.
Western-trained lawyers are heading to India, to manage the country’s burgeoning legal outsourcing resources. From the New York Times (gavel bang: WSJ Law Blog):
India’s legal outsourcing industry has grown in recent years from an experimental endeavor to a small but mainstream part of the global business of law. Cash-conscious Wall Street banks, mining giants, insurance firms and industrial conglomerates are hiring lawyers in India for document review, due diligence, contract management and more.
Now, to win new clients and take on more sophisticated work, legal outsourcing firms in India are actively recruiting experienced lawyers from the West. And U.S. and British lawyers — who might once have turned up their noses at the idea of moving to India or harbored an outright hostility to outsourcing legal work in principle — are re-evaluating the sector.
Mumbai to 8,743,800 rupees? Not quite, not yet at least…
Are Biglaw firms outsourcing legal work, or not? We don’t know, because apparently firms don’t want clients to know. The ABA Journal reports that most firms declined to even answer an outsourcing questionnaire:
About 83 percent of the 30 responding law firms declined to participate in the survey, according to Fronterion, the Chicago-based outsourcing consulting firm that conducted the study. Fronterion managing principal Michael Bell believes a majority of top law firms are using legal outsourcing providers, at least on an ad hoc basis, but they are reluctant to admit it because of the sensitivity of the issue.
Apparently all that criticism of the quality of international LPOs has made firms afraid to talk about outsourcing.
But since we’re dealing with top law firms, not talking =/= not doing…
It’s been a while since we checked in with the coming junior associate apocalypse that is legal outsourcing. Rest assured, LPOs around the globe are working hard to make sure that the Biglaw junior associate becomes extinct — at least as we know it.
There’s a fascinating article on Law21 that discusses the evolution of legal process outsourcing — and what LPOs need to do next:
Still in its relative infancy, legal process outsourcing has already had a huge impact on the legal services marketplace: scoring major deals with the likes of Microsoft and Rio Tinto, garnering the attention of private-equity investors, and helping to expose the degree to which law firms have overcharged for the simplest legal work, among other accomplishments. But this impact has set off two important chains of events.
The first affects LPOs themselves: they now need to move their value proposition beyond cost savings in a market they helped to make more sophisticated. The second affects everyone: the legal profession’s response to LPO is having an unexpected effect on how legal work is distributed and how legal resources are allocated.
Some law firms still seem to be fighting the last war and are committed to fending off outsourcing until the bitter end. But other firms are preparing themselves for the next war: remaining the primary legal advisor to their clients in a world where the clients themselves can go to a number of providers to get the work done…
Now I have another reason to love Georgetown: Jim Michalowitz. You see, Georgetown University Law Center is one of the few schools with an e-discovery blog. I have highlighted it before on Gabe’s Guide. So you can imagine how thrilled I was to discover that Jim had actually taken time out of his busy schedule to write a response to my ATL post that was highly critical of the legal outsourcing of e-discovery work to non-attorneys here and overseas.
With the title, “You Can’t Trust Them Foreigners – Outsourcing Document Review,” it’s of little surprise that Mr. Michalowitz — advisory board member of Georgetown University’s CLE e-Discovery Institute, Six Sigma enthusiast, and proponent of foreign legal outsourcing — took a different take on the issue.
And, you know what? He was so right. I just don’t trust them foreigners. I didn’t know it until I read his post, but it all makes perfect sense now.
Here are some of Mr. Michalowitz’s conclusions about my original arguments against outsourcing legal work to non lawyers:
My position on legal outsourcing was extreme
Using foreign or non-attorneys would equal a poor or lower quality work product
Foreign lawyers might as well be considered non- or “not-real” lawyers
Mr. Michalowitz brings up some good points; however, he either has some fundamental misunderstandings of — or is falsely characterizing — my views on legal outsourcing. So, I thought that I would take the time to nicely clarify any misconceptions he might have. Oh, and by nicely, I mean, I am coming like the Clash of the Titans, because I am about to release the Kraken, after the jump.
Ed. note: Gabe Acevedo, who covered LegalTech for Above the Law earlier this month, will be writing for these pages about legal technology.
Recently, Steven C. Bennett, the chair of Jones Day’s E-Discovery Committee, published an article [PDF] in the Northern Kentucky Law Review entitled “The Ethics of Legal Outsourcing.” In his article, Bennett relied heavily on a six page ethics opinion [PDF] issued by the ABA in August of 2008. When the ABA Formal Opinion 08-451 was released, many legal process outsourcing companies (LPOs) — the companies that hire overseas attorneys to do the work of American attorneys at a fraction of the cost — lauded it as an “endorsement” of their work. As Bennett noted in his article, the opinion even referred to outsourcing as something that was “salutary,” in that it would reduce costs for clients.
Those LPOs had a right to be celebratory about ABA 08-451. After all, never in the history of the United States was there ever an ethics opinion of any Bar Association that had done more to undermine the standing of both American attorneys and our practice of law.
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.
It appears that Magic Circle firms have fallen in love with outsourcing. Most American associates will hope that like Mad Cow disease, the outsourcing craze stays on English side of the ocean. The Lawyer reports:
Allen & Overy (A&O) has become the first magic circle firm to outsource legal work as an increasing number of UK firms embrace legal process outsourcing (LPO) in a bid to reduce their overheads.
The firm has partnered with LPO provider Integreon to outsource basic litigation document review to teams in New York and Mumbai, in what could generate a 30-50 per cent cost saving.
Anybody think we’ll see some geographic hypocrisy in the comment thread? Outsourcing to New York = good, outsourcing to Mumbai = bad? Or will everybody simply agree that outsourcing = apocalyptic?
After the jump, The Lawyer has an excellent chart that shows us where British firms stand with regards to outsourcing.
It wasn’t that long ago — just back in August 2008 — that the ABA changed its rules to allow the outsourcing of American legal work. In the midst of the recession, a lot of people are still trying to figure out if outsourcing will cause a more fundamental change to the nature of the Biglaw business model than anything we’ve seen during the credit crunch.
Now, the ABA is asking its lawyers to share their opinion on outsourcing. This week’s ABA Intellectual Property Law section e-letter contains a link to a very interesting survey. Here’s the description from the e-letter:
Outsourcing Task Force Seeks Survey Input From You
The American Bar Association’s Outsourcing Task Force is conducting a survey on outsourcing. The objective of the Task Force, at the Request of ABA President-Elect Steve Zack, is a Report with Recommendations to the House of Delegates on the subject at next year’s Annual Meeting.
An important means of collecting input from a broader cross section of the
ABA is an online survey which can be accessed at: http://www.zoomerang.com/Survey/?p=WEB229LAVJNGRM.
As input from the broadest possible range of American lawyers is critical, the Task Force would greatly appreciate if every member could take a moment to complete this survey.
Immediate Past Section Chair Gordon Arnold is a member of the Task Force and serves as its Liaison to the Section of Intellectual Property Law. He strongly encourages all to complete this survey.
IP lawyers, here is one chance to voice your opinion.
After the jump, some we post a couple of the questions the task force is asking.
Baker & McKenzie, which held the #2 spot in terms of revenue for 2008, has taken a dip in 2009. The firm’s fiscal year ended on June 30, and AmLaw Daily reports that global revenue fell by 3% for the firm.
As noted in Morning Docket, profits per partner took a bigger hit, plummeting 17%, thanks to the recession:
Baker & McKenzie reported Friday that global revenue declined 3 percent to $2.11 billion and profits per partner fell a more significant 17 percent to $992,000 in fiscal year 2009, bringing an end to a four-year period over which the firm experienced consecutive double-digit revenue growth and an 85 percent increase in profits.
While Chicago-based Baker & McKenzie, which generated 66 percent of its fees outside the United States, highlighted the role currency exchange rates played in the falling benchmarks for fiscal year 2009, management admitted the economic downturn negatively impacted the firm’s financial performance.
As we’ve previously reported, Baker has been a leader in terms of outsourcing legal work. The new profit numbers should mean that the trend continues. More details after the jump.
Ed. note: The Asia Chronicles column is authored by Kinney Recruiting. Kinney has made more placements of U.S. associates, counsels and partners in Asia than any other recruiting firm in each of the past seven years. You can reach them by email: firstname.lastname@example.org.
It’s that time of year again when JDs are starting to apply for 2L summer jobs and 2L summers are deciding which practice area to focus on.
For those JDs with an interest in potentially lateraling to or transferring to Asia in the future, please feel free to reach out to Kinney for advice on firm choices, interviewing and practice choices, relating to future marketability in Asia, or for a general discussion on your particular Asia markets of interest. This is of course a free of cost service for those who some years in the future may be our future industry contacts or perhaps even clients.
For some years now Kinney’s Asia head, Evan Jowers, has been formally advising Harvard Law students with such questions, as the Asia expert in Harvard Law’s “Ask The Experts Market Program” each summer and fall, with podcasts and scheduled phone calls. This has been an enjoyable and productive experience for all involved.
Whether you’re fresh off the bar exam or hitting your stride after hanging a shingle a few years ago, one thing’s for certain: independent attorneys who start a solo or small-law practice live with a certain amount of stress.
Non-attorneys would think the stress comes from preparing for a big trial, deposing a hostile witness, or crafting the perfect contract for a picky client.
But that’s nothing compared to the constant, nagging, real-life kind, the kind you get from the day-to-day grind of being a law-abiding attorney.
Connecticut plaintiffs-side boutique litigation firm (12 lawyers) seeks full-time associate with 2-4 years litigation experience, top tier undergraduate and law school education. Journal or clerkship experience a plus; highest ethical standards and strong work ethic required. Familiarity with Connecticut state court legal practice is preferred, but not required.
The firm handles sophisticated, high-end cases for plaintiffs, including individuals and businesses with significant claims in a wide array of matters. Our cases often have important public policy implications, and are litigated in state and federal courts throughout Connecticut. Representative areas of practice include medical malpractice, catastrophic personal injury, business torts, deceptive trade practices and other complex commercial litigation, and products liability.
Additional information can be located on our website, at www.sgtlaw.com.