American and European law firms are increasingly looking towards outsourcing legal work. This trend began as a cost-saving strategy but is now realizing its full potential by growing into the area of enterprise management. To some extent, outsourcing has reached the managerial level.
What is the driver or more aptly the market reality behind it?
Asian countries such as India, Bangladesh and the Philippines boast educated, English-speaking workforces coupled with the significant market reality of cost arbitrage. US and European corporations which previously gave their legal work to law firms in their jurisdiction are now sending that work offshore.
Added to this is the reality that some corporate legal departments have taken steps to set up their own operations overseas, or established direct relationships with law firms in outsourcing centres such as India.
Amendments in the Federal Rules of Civil Procedure regarding electronic discovery have also paved a road for the high volume of litigation work increasingly being outsourced. According to news reports, the offshore outsourcing of document reviews seems to have greatly increased due to high quality deliverables at significantly comparable prices.
US and European law firms are now outsourcing everything from office support services to complex legal work. Selecting what services to outsource is a major function which can make or break a successful outsourcing initiative.
Identifying profitable services
The question which needs examination here is what factors outsourcers should keep in mind while deciding on service lines to be outsourced.
Surveying the services currently being outsourced is a major prerequisite.
This step generally provides a first hand account of the prevailing scenario in the market as well as the market realities behind it. Very often, services in high demand are those which contain an inherent capacity for scalability and can be performed with minimal risk. These risks may pertain to legal, professional and business considerations.
Outsourced legal work eligible under the requirements of professional considerations such as confidentiality, work supervision, work-product doctrine and client-attorney privilege pose little or no risk.
An understanding of social and cultural business norms is also vital and must not go amiss.
The next step involves evaluating the nature of work that may be outsourced according to the determinants above. Tasks such as corporate, intellectual property and patent litigation, litigation and e-discovery, and research and database management, for example, may be scaled up in volume and performed without involving any risk factors thus making them ideal tasks for outsourcing.
As a final step, examining a flow chart of the transition of work from the outsourcer’s end to the vendor’s facility, the processing of the work at the vendor’s end and the transfer back of the processed work from the vendor’s end to the outsourcer’s point, would lend a helping hand to efficiently perform a task.
Outsourcers are now offering a spectrum of support services for high-end legal work. There are generally eight broad segments in legal outsourcing that may be focused on: legal transcriptions, document reviews, litigation support, legal research, intellectual property, contract-related services and secretarial and legal publishing services.
Another frequently outsourced task is basic legal research, i.e. compiling statutory materials on a particular subject for every jurisdiction.
Outsourcing efforts based on a selection of services can be very elaborate and expensive for big firms; however, low-cost opportunities for midsize and smaller firms do exist. Scores of small legal ventures outsource work like legal analysis and a variety of legal support tasks.
Smaller firms have taken advantage of the knowledge possessed by Indian attorneys working in outsourcing centres, who have been trained in the English common law system. This is reflected in the quality and reliability of the specialized legal work being done.
The determination of what services to outsource and the subsequent expansion of that scope lies at the base of a successful outsourcing initiative. Deciding what kind of services to outsource can begin through the transfer of lower-value services which may gradually become more complex and specialized, depending on the business relationship developed.
Areas that have proved highly successful include high-volume services like document reviews, e-discovery and legal publishing, while niche areas in intellectual property such as trademark searches and contract management services are going to drive future growth in legal service outsourcing.
Savi Gupta is a lawyer at Clairvolex Knowledge Processes, a Delhi-based legal outsourcing firm.
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