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.