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A. Everyone who has made a phone call for any kind of tech support or credit card problem knows that computer companies and banks have used call centers in India and other countries for several years. In addition, hospitals routinely send MRIs and CT scans offshore to be read overnight and the results are waiting for the doctors when they come to work in the morning. Interestingly, India is preferred over China and other low-wage countries because English has long been the second language (and the first language of business) there.
The trend toward outsourcing legal services is a relatively new phenomenon, and the trend is growing without a lot of fanfare or publicity. That may be because law firms either don't want their clients to know that their work is being done elsewhere for pennies on the dollar (and presumably billed at U.S. rates) or they don't want their competitors to know how much money they are saving by cutting the cost of delivering legal services.
Of course, lower costs can translate to greater profits—but they can also lead to lower legal fees if the word gets out. In either case, most folks probably haven't read much about it.
Outsourcing of legal work by U.S. law firms and corporations involves the entire range of legal services, from high-level legal work being done by overseas lawyers to routine clerical tasks and everything in between.
Offshore companies offer to do all the clerical and administrative work that is generated by any law firm, including the following tasks:
In addition, offshore companies, particularly Indian companies, say that they can perform higher-level legal work such as this:
A Google search on the words “Outsourcing Legal Services” will result in thousands of results from companies in India, Pakistan, Singapore and elsewhere offering their services to the U.S. legal community.
In some cases, the offshore companies have access to the client law firms' computer network and can work online like anyone else in the office. In other cases, the work is sent in batch files or dictated over the telephone and the results are sent back to the client. Fees are based on low hourly rates. But in many cases, fees are also based on quick turnaround so the offshore company has incentive to work fast.
So how much are law firms and corporations saving? One article on the Legal IT Forum Web site (www.legalitforum.com) reports that paralegals in India earn between $10,000 and $12,000 per year, compared to three to five times that amount earned here. The same article reports that General Electric claims to have saved more than a half-million dollars by creating an in-house legal department in India.
How has all this change affected small firms? Probably not much so far. As to whether small firms are actively jumping on board with the outsourcing trend, few, if any, small firm lawyers (or solos) are outsourcing either clerical or legal services to lower-cost countries.
However, chances are that they will catch on before long. Services are now available so that even small-volume users can call an 800 number and dictate a letter or a pleading or a motion and have the document created offshore and e-mailed back within hours. The cheaper it becomes and the easier it gets, the more likely it is that more lawyers will give it a try.
To learn more about the outsourcing trend, read the April 2006 issue of the Law Practice Today Webzine..