Brandi MooreBack to OpinionBrandi Moore

Outsourcing the law to India


Memo to this year’s graduating law students: Your first job is already gone — to India.

The law firms of America, and their clients, have quietly decided that the work a first-year associate typically performs — such as document review, research and contract drafting — can be done more cheaply. And the cheaper team lives in India.

Don’t believe me? I started out in information technology. I entered the workforce at a time when my bosses couldn’t fathom having work done in India. But as surely as your service calls go to New Delhi, those jobs went away. Today 80 percent of Fortune 500 businesses outsource their IT needs.

It was easy to outsource information technology; it was a relatively new profession. Outsourcing began thriving in the late 1990s, when Americans were creating their first e-mail addresses and learning to surf the Internet. By the time we understood IT’s value to our society, it had become the poster child for how well outsourcing works.

Critics of legal process outsourcing, the formal name of outsourced legal services, say there are ethical and confidentiality issues that make it impossible to outsource legal work. Some say Indians can’t advise on American laws. As with everything else we outsource, there are solutions to all these challenges.

It’s easy to understand why critics say these things: Would you go to India to file for divorce or sue your neighbor? It’s a hard question in such a litigious society, where lawyers touch every aspect of our lives, stoking our love-hate relationship. Our biggest complaint about lawyers? Their cost, which is the driving factor behind everything else we outsource.

When the American Bar Association surveyed its membership last fall about the use of Indian outsourcers, 83 percent refused to answer. Instead, they offered evasive responses: “That is something that I don’t think we’ll be discussing” and “I don’t think that is something that we can comment on.”

I research best practices for managing cultural differences inside Indian and American business partnerships, advising firms how to work together. Outsourcing is part of my research. When lawyers find me at a cocktail party the questions start: “Is the quality good?” or “Our clients keep asking about it, what do YOU think?” These lawyers, still recovering from the recession, have yet to realize outsourcing’s impact.

Law firms aren’t talking, but Forrester Research estimates by 2015, legal process outsourcing in India will grow to $4 billion. What is most important about Forrester’s numbers is that they predict a shift in belief from rejecting the idea that legal work can be done in India, to relying on it. This started during the recession.

In 2009, firms in business for more than a century, like Heller Ehrman in San Francisco or Thacher, Proffitt & Wood in New York City, did the unimaginable: They closed their doors. Other firms survived by firing staff, and reducing or eliminating new hires. This trend continues according to a variety of sources, such as The National Law Journal reporting that the top 250 law firms shed 1,409 jobs in 2010, and law firms themselves, such as Morrison and Forrester LLP, publicly stating it reduced its hiring by 30 percent in 2010.

In tight times, Indian legal process outsource providers offered a solution. Fears about “selling” the use of Indian services quickly abated: To large companies, leveraging India is commonplace. Leaders in these organizations no longer hold the belief that work must be done locally based on successes in IT. Instead, they search the globe for the most cost-efficient place to have work done.

G.E.’s associate general counsel Janine Dascenzo spelled out this mindset in The New York Times last August, remarking that G.E. “will continue to go to big firms for the lawyers they have who are experts in subject matter, [but G.E. does not] need a $500-an-hour associate to do things like document review and basic due diligence.”

Recession-chastened clients are quickly coming around to this way of thinking. According to The American Lawyer’s 2010 report, 47 percent of clients refused to pay for work done by first- or second-year associates. Without clients paying for “training” of junior associates, and with the growing option of outsourced services, law firm partners, worried about their own paycheck, will choose outsourcing.

Outsourcing changes more than physical location and price: It changes how we value a profession and therefore what we are willing to pay. Lawyers are no exception.

As this change unfolds, new lawyers will make less, if they can find positions, making it unclear if their legal education was as valuable as previously thought. Justifying $100,000-plus in tuition is already difficult for law schools; the rise in outsourcing will make it impossible. Tuition cost and reduced opportunity will shift our beliefs about being a lawyer: Getting a law degree will no longer be seen as a fail-safe choice for a stable future.

What is happening behind closed doors inside law firms illustrates how outsourcing is transforming the way we value our most esteemed professions. This transformation causes a loss of faith: What can’t be outsourced?

As a new graduate, consider yourself lucky; it will be worse for those who follow.

 

Comments

  • Dcrbt

    Either the work goes there or we’ll import the workers. People, when will you wise up?

  • JMVM

    Well, sadly, GE could outsource to small american cities and law firms where the billing rate for an associate is only about $150/hr.  They get to keep Americans working, they get American lawyers, and there is no cultural loss in translation.  

    Sadly, the desire to outsource rather than use attorneys in other American cities beyond NYC, DC, SF, and Chicago, shows a cultural arrogance about the supremacy of attorneys from those cities.  There is much fine economic legal counsel available in the US.  Unfortunately, many companies are too short cited to see it.

  • Tfortwins660

    So glad to hear the news..The lawyers are so freaking expensive here,,I hope it happens to Doctors and dentists soon..Cnnot wait when we can talk to doctors online and get a prescription..It is so expensive to see a doc here,,or a dentist,,they are moslty, the most whale-like stomach for money,,Hope half of you go bankrupt..

  • jan

    Questions for some of you to ponder:

    1.  How much do they get per hour for the work and can people pay for a college degree and survive on a salary that small in the U.S.? 

    2.  How is forcing people to work for less going to stimulate the economy via purchasing and/or consuming new items? 

  • J.

    When a law firm bills at lets say $500 an hour for an associate to do the work, the associate only gets paid $60 an hour. The reason why an associate at a big Manhattan law firm can earn that $160,000 a year salary is that he or she is expected to work 12 to 14 hours a day.

  • J.

    It is happening to doctors. The cost of going to medical school or law school is very high. There are also less fellowships and scholarships like the case with Ph.D. programs. The debt lawyers and medical doctors take on make it so that they have to charge a lot to break even by the time they approach middle age. Since educational debt is not dischargeable even in bankruptcy and we are told to pursue higher learning by our parents, the book-smart students go into this endeavor without realizing the wager they have placed.

  • Mdm1701

    This is incredibly dispiriting. I would expect that government jobs for law students will remain open, at least. But as private jobs are absorbed oversees, I imagine even those public job opportunities will shrink.