Outsourcing Lawyers: Leaving is Here to Stay

Talks about global warming seem to be the hottest fad, but did you know that the globe is also shrinking?  Ok maybe not literally, but our world is getting smaller thanks to practices such as legal outsourcing.  Legal process outsourcing, or “LPO”, is quickly becoming the latest trend in the legal field, as many American lawyers are packing up their bags and finding work in other countries.

What is LPO?  And how will this change the face of American jurisprudence?  What follows here is a brief primer on legal outsourcing.

Legal outsourcing generally includes two different aspects.  First, it refers mainly to U.S. lawyers leaving the country and transferring their practice to a different country.  They still operate as U.S. attorneys handling American legal issues, except that they are based overseas.  Secondly, LPO also refers to the hiring of foreign nationals to do work that is traditionally assigned to junior associates and legal staff.  Legal outsourcing is often a combination of these two aspects, with the American lawyer acting as supervisors of legal employees in a different country.

What type of legal work is being outsourced? As mentioned, the legal outsourcing is best seen as creating a new type of stratified supervision arrangement.  It links the skills of U.S. lawyers with an abundant pool of foreign legal workers.  U.S. lawyers outsourcing to other countries bring with them skills related to management, such as hiring, training, and monitoring the work to be done by employees with legal training in the host country.

Under the guidance of the American lawyer, the foreign team is typically assigned tasks that involve little to no legal analysis.  These include document review, due diligence, boilerplate drafting and review, paralegal support, word processing and transcription, and e-discovery.  Unless they are licensed to practice U.S. law, most foreign legal workers are barred from providing legal advice or analysis.

Thus, many American lawyers who outsource are not joining pre-existing law firms located abroad.  Instead what we have here is the creation of entirely new legal teams and operations, with the American lawyers acting as a sort of hub around which the work gets supervised and checked for quality.  This can be both exciting and challenging for professionals who are up to the task of leaving loved ones and adjusting to a new country.

So what’s with all the outsourcing?  Obviously, the main reason why lawyers consider outsourcing is for profit.  A traditional cost analysis says that profits can be maximized with increased income and reduction of costs.  With today’s economy, increasing income is somewhat difficult, so law firms are now focusing on reducing costs.

Legal outsourcing is one way to achieve this.  The tasks that are being shipped overseas are now being done at a fraction of the rate charged by American professionals.  Jobs that typically run at $500/hour are now being done at $15-$20/hour (!!!) overseas.  This will definitely impact those who are considering investing in that expensive juris doctor degree.

And where is all the legal work being outsourced to?  Outsourcing to countries in the East such as India, Japan, South Korea, and the Philippines is popular among American legal workers seeking a change of pace and a healthier wallet.  Other favorite destinations include Israel and Australia.  Surprisingly, there are not many reports of LPO operations in China.  However, lately China has been named the world’s 2^nd economic superpower behind the U.S., so we should expect to hear about outsourcing there in the near future.

As legal outsourcing continues to take root, many concerns are being raised about the practice.  At the top of the list are client confidentiality, worker qualifications, and conformity with ethical standards.  After all, who is there to monitor the information when it’s being transferred to the opposite ends of the earth?  This means that supervising attorneys abroad must make extra efforts with regards ethics and professional responsibility.

In response the American Bar Association (ABA) has issued an ethics opinion addressing legal outsourcing.  The opinion outlines several different ways for attorneys to ensure that outsourced work meets the highest of professional standards.  It states that attorneys should inform their domestic clients if work is to be outsourced.  Outsourced lawyers absolutely must consider these guidelines and ensure that their practices fully conform to ABA standards.  If not, outsourcing may quickly degenerate into, well, something nasty.

How will LPO affect the legal field?  I suspect that this is a major movement, one that is here to stay.  Outsourcing might affect not only America, but the entire shrinking globe as well.  The field of international law will probably take a major role in responding to outsourcing concerns.  We may even see such huge steps as countries implementing hybrid jurisprudence systems.

That may sound grandiose, but it’s not an impossibility.  For example, one of the reasons why the Philippines is a popular outsourcing site is due to its hybrid legal system.  The Philippine legal system has been described as a shell of American procedural structures filled with civil statute-type code law.  This makes it easy for American lawyers to adapt to the judicial system (and it makes an excellent case study in comparative jurisprudence as well).  So I wouldn’t be surprised if outsourcing makes international legal borders more transparent.

In its beginning stages the practice of legal process outsourcing was highly unpopular.  Many firms are still reluctant to talk about outsourcing.  But in my opinion, leaving your home country and crossing oceans to settle elsewhere, this to me is very “American”.  It may actually be one of the most American things to do.

After all, America was founded by individuals who left their countries to start new communities.  In a sense, America itself is an “outsourced country” to begin with.  It looks like that ol’ pioneering spirit is alive and well.  Those interested in LPOs might want to start their expedition at Lewis & Clark.