Legal outsourcing

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Legal outsourcing refers to the practice of a law firm obtaining legal support services from an outside law firm or legal support services company. When the outsourced entity is based in another country the practice is sometimes called Offshoring.

Legal Outsourcing has gained tremendous ground in the past few years in the United States. Legal Outsourcing companies, primarily from India, have had success by providing services such as document review, legal research and writing, drafting of pleadings and briefs and providing patent services.

In-house law departments of major multinational corporations outsource some of their work in order to save costs. While it will not be prudent to list those firms here for confidential reasons it is expected that as they move to save costs they will outsource more work.

Initially, the Asian subcontinent were targets for different types of outsourcing with the legal field gaining traction. However, in recent years the so called "near shore", "back-door" "specialized legal firms" have sprung up to satisfy law firms and corporations that demand quality and confidentiality.

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[edit] Advantages

Most firms and corporations outsource primarily for cost saving measures and this is considered the biggest advantage for legal outsourcing. While an attorney in major legal markets such as the US charge at minimum 250 dollars for work, countries that are offering legal outsourcing may charge a fraction of this. Some countries, especially in the sub-continent have gained prominence due to the fact that some of their attorneys with higher degrees work at meager salaries. This has attracted major corporations to outsource some minor and less sensitive work in their legal departments. Another advantage is turnaround time.

At face value, it would appear that outsourcing service work to another country is detrimental to the U.S. workforce. This is only at the surface, though. The net effect created might be a positive one for the U.S. The creation of jobs in countries such as India leads to the creation of new wealth, and a new class of consumers will have increased purchasing power to buy U.S. goods. Countries like India, to which jobs have been outsourced, make for new markets for the U.S. to export to, and this in turn creates revenue for the U.S..

The outsourcing of service work also lends itself positively to the overall development of a U.S. business. Workers can focus more on specialized areas and precious resources can be freed up to further these. In turn, more specialized and focused businesses have a chance of creating additional jobs for more skilled workers by branching off into areas that require a special skill set. On a more macro level, the overall wealth of a nation like the U.S. can improve if companies are focusing on developing core businesses.

It goes without saying that the LPO trend offers great benefits. India’s legal services are affordable, efficient, and above all, skilled. Outsourcing legal work to India costs up to 80% less than the cost of using the services of American law firms. Because it is far less expensive to hire talent in countries such as India, an outsourcing company is in the enviable position of being able to commit larger teams of talented workers to more specific areas of concentration. An LPO, for instance, can afford the luxury of dedicating an entire team to register trademarks or process immigration visas.

It isn’t just cost savings that make the LPO an attractive business prospect for U.S. companies and forward-looking law firms. As is the case with the BPO and the KPO, LPO users can avail of a range of benefits, not least saving time on getting important work done. LPO users can gain more operational efficiencies by focusing on core business activities while having access to a breadth of skills, technology and service offerings, at a reduced cost.

[edit] Criticism

The biggest criticism to legal outsourcing is the distinction of legal work as being complex and specialized to the particular jurisdiction in which a client seeks representation. Unlike other types of outsourcing the practice of law remains constrained by ethical and technical difficulties. Lawyers in the United States, for example, are limited to practice in the federal court system and in the state court system in which they have passed their bar examination. This means that direct outsourcing of law work, such as representation in court, remains in the hands of lawyers in those particular countries. This leaves business process outsourcing as perhaps the most lucrative area in legal outsourcing. Legal outsourcing, therefore, consists of general accounting, forensic accounting, legal drafting, legal research, document sifting, forensic analysis of administrative communications and printed material, as well as secretarial and administrative tasks. Nevertheless, many criticisms have been leveled at even this kind of BPO work done by outsourcing corporations.

Criticism of legal business process outsourcing consists of two kinds of complaints. The first is leveled at law firms in the United States that utilize these kinds of outsourcing services. It is alleged by some in the legal profession that firms that outsource their clients' work risk losing control over the quality of the work. The risk of losing quality is substantially larger with legal outsourcing than with other kinds of outsourcing because of the combination of forensic, technical and legal skills that many clients require from a law firm in order to successfully deliver on a client’s request. A successful use of BPO by a legal firm requires constant communication and supervision. Moreover, since most of this work is being done in offshore locations this creates its own difficulties. The caliber of the people working at many Far East locations is suspect as they may not have the requisite experience that is needed to carry out the assigned task. It has been noticed by legal firms that outsource on a regular basis, that the easier the work that is outsourced the better the value of any such outsourcing. Thus, standardized work, such as non-forensic accounting, the drafting of straight forward legal documents from templates etc. have had much more success than more complicated and analytical work process that requires long term experience, supervision and a level of comfort in communication that comes through time which BPO has yet to match. At the same time, the outsourcing firms in the Far East tend to hold themselves out "we can do anything" firms.

The second type of complaint leveled at legal outsourcing primarily comes from ethical issues related to the confidential nature of the client’s work that is normally found in a legal firm. Most firms have to handle sensitive and protected information that has great value to the client and in many cases to the client’s competitors. Outsourcing usually entails the employment of workers in offshore locations where compensation is drastically lower. This means that the workers handling most of the law firm’s important documents have an economic incentive to transfer the information into the hands of the highest bidder. Other types of outsourcing also uncovers similar issues but unlike the development of software, legal work consists of quantifiable and finished documents whose transfer is both more viable and the transfer of which might not raise red flags. For example a piece of software under development in an offshore location might consist of already protected and published pieces that are hard to steal or transfer. Legal work, on the other hand, consists mainly of pieces of intangible information that are floating around that can easily be exploited without much warning as to its compromised status. In many cases legal work is more susceptible than other kinds of outsourced work since it consists of easily identifiable clientele on the other side of the litigation for the purchase of information.

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