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Growth in Legal Outsourcing Creates New Challenges

by Jared Newnam
July 29, 2010 Read this South Source article about outsourcing legal services.

Wanted: Legal associate with at least two years of experience to do high-end legal research for U.S. law firms. Location: Bangalore, India.

Try doing an internet search for legal jobs and you’ll find scores of postings like the one above that aren’t so close to home. Welcome to the burgeoning business of legal process outsourcing (LPO), where lawyers in India do the work for a fraction of what it would cost in the United States.

“It’s cheaper for a law firm to hire a lawyer in India than here,” says Doris Rachles, online director of Legal Studies for South University — Savannah. In fact, some U.S. firms are hiring lawyers overseas to do work that paralegals do here. That means schools need to train paralegal students to be competitive, Rachles says. “We need to offer more than they get when they hire lawyers in India.” 

South University offers both associate’s and bachelor’s degrees in Legal Studies. Graduates often go on to become paralegals. “A paralegal basically does everything lawyers do, except they can’t give legal advice, can’t set fees in the firm, and can’t represent clients in court,” Rachles says.

Paralegals draft pleadings and interview clients. They can go to court but can’t argue; and they gather evidence, do investigations, contact expert witnesses, make appointments, and work a lot with clients. 

“People in India are doing this kind of work,” she says. “They are doing this by email.”

ValueNotes, an Indian research firm, reports that income from LPO services in India will grow to $440 million by the end of this year, up from $320 million in 2008. The number of Indian firms offering these services has increased from 50 in 2005 to more than 140 now. Just this year computer software giant Microsoft contracted with Integreon, a legal support services company, to have them provide contract and document review services from their offices in India.           

More accessible technology has helped LPO firms expand outside of the United States. Need to check out someone’s criminal record or mortgage data? Just log on to one of the subscription-based online legal research services, such as LexisNexis and Westlaw. These services give easy access to databases that feature all current U.S. and state statutes and laws and nearly all published case opinions from the late 1770s to present, as well as public records, including property deeds, motor vehicle registrations, death certificates, and more.

“It’s an electronic world,” says Rachles. “Paralegals have to be extremely computer savvy. If everyone is doing most of their work through emailing and online, our paralegals have to be experts in everything: cyberlaw, storing data, finding data, cleaning data, metadata.” 

Rachles is working on a new track at South University that will give students an edge in learning about advanced technology in the legal field. Two courses, Cyberlaw and Advanced Technology for Paralegals, will teach students about computer forensics, operating systems, encryption, data recovery, and the use of trial presentation software.

Rachles says LPO has accelerated in just two years ago, since the American Bar Association issued an ethics opinion that said it was okay for U.S. lawyers and firms to outsource legal work to both lawyers and nonlawyers in other countries “if they protect confidential information, ensure that the service providers are competent and suitably trained, and charge a reasonable fee for the work.” That opinion came on the heels of the Florida Bar Board of Governors opinion that authorized both domestic and foreign outsourcing in Florida. Other state bar associations are expected to follow this trend.

The use and sharing of electronic data, and shipping that information overseas, brings a host of ethical issues into the mix, Rachles says, including attorney-client privilege and confidentiality. “If the work is outsourced you have to get permission from the client to discuss the client’s case with someone outside of the firm. You can’t just hire these outside firms without getting your client’s permission.”

When the ABA gave the okay to outsource legal work, it did so with caveats. The association recommends obtaining written consent from a client before engaging in foreign outsourcing. It also recommends conducting reference checks and background investigations of the foreign legal providers and their workers and analyzing the foreign company’s security systems and to visit the provider’s premises. The ABA is currently reviewing the developments in global legal practice.

Though the trend to send legal work offshore may be growing, ValueNotes reports that there are plenty of firms in the legal community that have not considered offshoring. A large number of firms, irrespective of their size, were hesitant about sending work to another country, according to an online survey. It was found that less than 3% of the respondents had any experience with LPO. Overall, the exposure of U.S. law firms to legal services outsourcing is extremely limited, says the Indian company.

Tags: legal outsourcing legal services paralegals legal assistants legal studies south source

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