The cost to have the same work done by a licensed attorney in India? As little as $25. This price disparity is a major reason why many U.S.-based corporations — and even law firms — are increasingly turning to attorneys in India to handle legal work.
Forrester Research — a respected technology and market-research firm based in Cambridge, Mass. — predicts the trend will result in the offshoring of about 29,000 legal jobs to India this year and up to 79,000 by 2015.
“Cost differential is the single largest factor in the growth of the Indian legal process outsourcing industry and in the growth of our business,” Abhay “Rocky” Dhir, founder and president of Atlas Legal Research LP said. “Our average rate for document review services starts out around $21 an hour; by contrast, law firms in the United States bill out anywhere from $150 to $200 an hour for document review. On the research side, our fees typically start out at $60 an hour, whereas if you hire an associate attorney or a partner at a law firm in this country, be prepared to pay anywhere from $250 to $1,000 an hour.”
Founded in 2001, the Irving, Texas-based firm offers a variety of services, including legal research, brief and memo writing, document coding and contract review services. Atlas Legal Research’s client base includes U.S.-based law firms of all sizes and corporate legal departments.
“Our business is broken down into two major parts: legal research and document review services, both of which our attorneys in India handle,” Dhir said. “We aren’t one of the biggest LPO firms out there — aside from our headquarters in Dallas, we have a facility in Bangalore where we employ 40 attorneys — but we are one of the best firms in the LPO business. I would put my attorneys up against a big New York law firm or a corporate legal department any day — I am that confident in their skills and their knowledge of the American legal system.”
Once a cottage industry, legal process outsourcing — or LPO, as it is better known in American and Indian legal circles — has emerged as one of the fastest-growing sectors of India’s service industry. ValueNotes Database Pvt. Ltd., a Pune, India-based research firm that tracks the country’s economy, reported last November that revenues for the Indian legal process outsourcing industry reached $218 million in 2007, an increase of 49 percent from the year before.
The firm predicts that figure will soar to $640 million by 2010. Among the reasons that ValueNotes cites for the sector’s rapid growth are the time difference between North America and South Asia, which allows attorneys in India to work on tasks while it is nighttime in the United States; India’s vast and highly educated English-speaking workforce; and the lower cost of doing business there.
ValueNotes estimates that there are more than 100 legal-services providers in India, ranging from a small but growing number of legal departments for large American corporations like the E. I. du Pont de Nemours & Co., General Electric Co. and Microsoft Corp., to Indian law firms that specialize in providing low-cost legal services to Western businesses. In this latter category, some of the better-known firms include Pangea3 Global Services Pvt. Ltd., a legal outsourcing services provider that offers legal, patent and IP technical support services to companies and law firms in the United States, Europe and Japan; OfficeTiger Database Systems India Pvt. Ltd., a Chennai-based firm that specializes in sophisticated financial analysis; and Mindcrest Inc., a Chicago-based firm that provides a variety of services including contract management, document review, compliance and document preparation for clients worldwide.
In ValueNotes’ November 2007 report on the LPO industry, “Offshoring Legal Services to India:
An Update,” Natarjan spoke about the challenges that he faced when he established Mindcrest seven years ago and the obstacles that his company and the industry faces now. “Initially, there was a lot of selling in India and explaining to clients about ‘India as a destination’ and capabilities such as good English skills, manpower availability, legal knowledge, etcetera,” he said. “Of course, the IT industry and the growth of the business process outsourcing industry helped the legal services outsourcing industry in a big way. Earlier the question was, ‘Why India?’ Today, the client, who is now convinced of the India part, needs to be comforted about the capabilities of the vendor in particular.”
It is an issue that has dogged the LPO industry since its origin about seven or eight years ago: how to convince clients — particularly American attorneys — that exporting legal work to India was not a violation of the rigid ethical rules that all U.S.-based attorneys must adhere to, and that the jobs won’t fall into the hands of unscrupulous Indian attorneys, and thus, be compromised.
“It’s a concern that most, if not all, LPO companies have dealt with at some time or another,” Dhir said. “But the key is to make sure the attorneys that you have working for you are well trained and paid well. All of our attorneys are licensed and well-versed on the American legal system. I personally train them, sometimes for weeklong sessions, and even when they have downtime, they don’t just surf the Internet — they use their time to learn more. We also hold quarterly workshops to make sure they understand everything we teach them the same as they did on day one.”
Dhir said Atlas Legal Research pays all of its attorneys in India the same starting salary, regardless of their experience. “It doesn’t matter if they are a Supreme Court justice or fresh out of law school — they all start out equally. After that point, the onus is on them to earn more. We pay them bonuses that let them know they’re doing a good job.”
The company also has adopted precautions that prevent its employees from stealing sensitive information about its clients, such as trade secrets. “Our attorneys in India must abide by the same ethical obligations as attorneys in this country — that’s the first layer of protection,” he said. “The second layer is we have them sign confidentiality agreements. The other thing that you can do — and it’s a solid way of protecting data — is to create dummy computer terminals. They have no disc drives, no CD-ROM drives and no USB port, and only limited Internet access. As a result, you cannot download any information onto those computers.”
Atlas Legal Research employees are also prohibited from bringing bags and purses into the company’s analysis room, and each must submit to a security check before leaving the facility.
Still, concerns that outsourcing legal work to foreign nations poses a security risk to individual clients will not go away. In fact, it is now a federal court case. Joseph A. Hennessey, a partner at the Bethesda, Md.-based law firm of Newman McIntosh & Hennessey LLP, filed a complaint on May 7 with the U.S. District Court for the District of Columbia seeking a ruling on the outsourcing of privileged client data that may have been subject to eavesdropping by the U.S. government. District Court Judge Colleen Kollar-Kotelly, who is also chief judge of the Foreign Intelligence Surveillance Court — has been assigned to the case.
Hennessey argues that foreign companies are not afforded the same privacy rights by the Fourth Amendment of the U.S. Constitution as are domestic companies, because the National Security Agency is free to spy on them at will.
The suit names Pres. George W. Bush a co-defendant along with Hyderabad-based Acumen Legal Services India Pvt. Ltd. and its American subsidiary, Acumen Solutions Inc. of Houston. Hennessey alleges in the complaint that Acumen pitched its outsourcing services to Newman McIntosh & Hennessey, claiming that it already services other firms in the nation’s capital.
Also named as defendants are John and Jane Doe attorneys, whom the complaint defines as either competitors of Hennessey’s firm, or opposing counsel. Hennessey said he wants to know whether a law firm on the opposite side of a case that his firm is handling must get his consent before outsourcing data that could be interpreted by the NSA and shared with allies of the U.S. government.
Newman McIntosh & Hennessey has asked the ethics committees for the Maryland State Bar Association and the Washington, D.C. Bar to weigh in on the case; the Maryland State Bar Association declined to address Hennessey’s question, both because it remains in litigation and because it involves political issues that the ethics committee is not familiar with.
Suffolk University Law School professor Andrew M. Perlman, a legal-ethics expert who writes and blogs about the subject, expressed uncertainty over whether Kollar-Kotelly will validate Hennessey’s claim.
“This case is very interesting in that it raises a difficult and very tricky issue for people who are engaged in LPO; it’s not entirely clear at this point how entirely pervasive this problem is and what the risks are,” he said. “As to the merits of the case at this point, it’s hard to tell. There are procedural barriers, such as standing and rightness, which make it unclear as to how the case will progress. But the issues that [Hennessey] raises are indeed very interesting.”
By Ms.Bobby Aanand, Metropolitan Jury.
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