PANGEA3 LLC

I recently had the distinct honor of representing Pangea3 on a panel at the Center for Economic Policy Studies’ (CEPS) Fall Symposium at Princeton University. The title of this prestigious event was “Offshoring: Opportunity, Threat, or Both?” The New York Times’ Thomas Friedman (author of “The World Is Flat” and several other excellent tomes) delivered the Keynote, and some of the world’s leading economists spoke at the 2 day event, including Alan Blinder and Jan Hatzius, Chief Economist at Goldman Sachs. Alan is the Founder and Co-Chair of CEPS, and he moderated my panel, which included a consultant (Tom Weakland of Diamond Management), an outsourcing “consumer” (Margaret Canella of J.P. Morgan) and a service provider (me, Pangea3).

My panel was entitled “Offshoring in Practice: Reports from Ground Level” and was the last of the Symposium. It was also the only session to feature non-economists. In preparing for the event, I was quite concerned about how my comments on my 10-plus years in outsourcing (both in private practice and as part of the Management Team at P3) would resonate with these great economic minds. Their reactions caught me off-guard and I learned a very important lesson about the rapidly growing market for offshore legal services and Pangea3’s role as an industry pioneer.

My presentation was focused on defining the offshore legal services industry, and explaining who Pangea3 is and the types of work we do. I expected my audience to lose focus when I got into the details of how we recruit and train our attorneys, the types of customized processes we implement for our global clients, and the types of matters on which we’re working. I knew they wanted to talk dollars and cents, currency-exchange issues and long-term economic forecasting. Instead, they asked the very same questions that I’m used to hearing from all of the U.S. and U.K. attorneys with whom I am constantly speaking. Questions like: How do you ensure quality? What about privacy and confidentiality concerns? It was stunning that this audience hit me with the exact concerns that our clients and prospects have.

The lesson I learned from this? Simply stated, it’s clear to me that the intellectual debate over offshoring has become merely that: intellectual. Finally. Complex, thoughtful discussions on global economics are indeed valuable and necessary, but at the end of the day, a roomful of non-attorneys did not seem fazed by the notion of Pangea3’s Indian attorneys doing U.S. and U.K. legal work. Their questions were focused on the details of how we do the work, rather than whether it is good for the economy or how this will impact the distinguished U.S. and U.K. legal professions.

I’m hopeful that the insight demonstrated at this Symposium is further proof that offshoring, and in particular, the offshoring of legal services, has matured to the point where it is viewed as a key, but uncontroversial, element of our economy.

A recent piece in the ABA Journal cites an article in the Columbia Law Journal, which article asserts that the ethical rules for using and supervising Legal Process Outsourcing (LPO) providers are unclear, and that the legal industry needs clarity on these rules since American corporations and law firms are increasing their use of and reliance on offshore legal outsourcing companies. What nonsense, and what an uninformed attempt to yet again spread fear, uncertainty and doubt. If the last refuge of people opposed to real competition is to spread fear about a dislocative industry or technology, then outsourcing legal services to India is clearly working.

Pangea3’s operations and business model are specifically engineered to comply with state practice of law statutes, at both the client and provider levels.

Having spent the entirety of our professional careers as lawyers, when my Co-CEO Sanjay Kamlani (like me - Penn Law JD 1994) and I founded Pangea3 one of the first things that we dealt with was to ensure that our model of using American and Indian lawyers to provide legal services to in-house counsel and their law firms comported with practice of law statutes. In fact, we consulted with Geoffrey Hazard, our former Penn Law professor, and one of America’s leading authorities on Legal Ethics to make sure that our model complied with practice of law restrictions under the Model Rules and New York State’s Disciplinary rules.

In early 2005, Professor Hazard reviewed the Model Rules (including Rule 5.5), New York’s Disciplinary Rules and caselaw, and provided Pangea3 with a legal opinion that an offshore legal service operation that was a facsimile of Pangea3’s business model would not trigger any practice of law issues.

Importantly, Professor Hazard opined that there would be no danger to preserving privilege if a U.S. attorney used Pangea3’s services because Pangea3 works as an agent for the delegating attorney.

The lesson here is that so long as the delegating attorney instructs the Indian attorneys that the communications and work product are privileged and makes sure that the Indian attorneys understand that guidance and instruction, then the delegating attorney has complied with his professional responsibilities and the privilege will be preserved. In that case, Pangea3 is no different

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Usually, imitation really is the sincerest form of flattery. And as the leading LPO firm, we are used to having our ideas and materials copied. But even we were taken aback when Global Legal Support Group copied entire pages from the Pangea3 website, including entire service line descriptions. If you’re curious, the copied pages can be seen here

Holding yourself out as a new LPO company is one thing - stealing someone else’s materials and lying to potential customers is something entirely different. I would think that a company that claims to use a Harvard Law graduate as a supervisor would seek to set a better example to prospective clients.

Normally, we’d just call the owner and get the infringing material taken down. But there’s a bigger problem here - all these upstart LPO’s and new entrant legal outsourcing companies are causing massive confusion in the marketplace, and influencing potential clients in a negative way. A company who pretends to be a serious legal process outsourcing company but steals any IP, let alone a competitor’s website clearly doesn’t have the skills, resources or understanding of the law to represent serious clients. But if a prospective LPO client sees an infringing website and actually uses that company for services, the negative experience will turn off that client for good, to the client’s detriment and to the detriment of the legitimate LPO’s that have worked so hard over the past five years to build this industry.

So it is critical, now more than ever, that the leaders of our industry continue to evolve standards and rules that provide our clients and potential clients the assurance that working with a leader will in fact provide a world-class legal service. And it is equally critical that we point out when a new entrant is little more than a website that steals content from an industry leader.

ACC’s Annual Meeting is the largest annual gathering of in-house counsel in the world. You can chose from over 100 interactive programs led by international expert panels of in-house counsel, members of academia, and government agency representatives. That is why we are proud to be a part of it!

Pangea3 will be exhibiting our services at the ACC exhibit hall (at the Hyatt Regency in Chicago) on October 29-31, along with representatives from the top legal service providers worldwide. We are at booth 631. If you?re attending, be sure to stop by and experience a Magical new World of legal services.

ACC 2007 Floor Plan

Get detailed insight on our world-class Corporate, Litigation and Intellectual Property services and learn how offshoring legal sources empowers you to transform your legal department ? saving you time and money, and becoming more efficient, more effective and more profitable.

Stay tuned for more about the show here.

Bloomberg News recently did a story on the LPO industry : “BLOOMBERG STORY”.

The Bloomberg piece is well researched and well-written, but I think it misses the point.
The article accurately quotes me as saying that some law firms come to us at their client?s urging, while other law firms come to us on their own initiative in search of creative ways to help their clients. The article also accurately notes that about 80% of Pangea3?s clients are in-house legal departments, rather than corporations.
But the article?s headline and focus on law firms misses the point ? namely,
that legal departments at literally hundreds of US, European and Japanese corporations are quickly turning to offshore legal outsourcing as a way to increase efficiency and morale, get more done and cut costs.
The size and speed of adoption cannot be overstated ? it?s massive and rapid. So while Jones Day
and Kirkland & Ellis?s use of offshore legal outsourcing might make for an eye-catching headline, the real action, and the real story, is taking place every day in the legal suites of many of America?s (and Europe and Japan?s) household names.
These corporations, long accustomed to offshore outsourcing in other areas, are quietly but
consciously moving millions of dollars of legal work to India, to the benefit of their shareholders and underlying customers and clients. It?s a positive sign of the times that the press views corporate outsourcing as a non-story, and that only law firm outsourcing can get people?s attention.

I read a post the other day on Yahoo’s lit support group message board where the poster publicly thanked all that there were still domestic reproduction shops that could compete with all of the offshore coders that seemed to be plaguing him, and it made me think about why someone felt it necessary to make such a comment. Actually, the poster’s original request sought repro houses that kept everything under one roof. Presumably, the poster had chain of custody concerns; I don’t know; he didn’t say why he wanted the self-contained one shop coding op. The odd part was that it didn’t appear that the poster even wanted to find a coding operation in a certain location; he just wanted to identify on-shore all-in-one coding shops.

Regardless, that post bothered me. I didn’t like the jingoistic undercurrent running through its seemingly fresh realization that, yes, Virginia, there are onshore reproduction shops that can copy and process your data all in one place in America! I know that companies have provided offshore objective coding since the 1970s and the Filipino pioneers have been joined by others in India and other low cost jurisdictions. But are they the norm or the exception? So why the hostility?

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Pangea3 LLC, the global leader in legal process outsourcing to corporate in-house counsel and U.S. law firms, announced today that it has closed $7 million in Series C funding, funded by Sequoia Capital India. Sequoia Capital’s investment underscores the significant demand among legal departments and law firms for outsourced
legal services as a solution to increasing legal fees. Sumir Chadha,
managing director of Sequoia Capital India, will join Pangea3’s board of
directors.

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Pangea3 LLC, the global leader in legal process outsourcing to corporate in-house counsel and U.S. law firms, announced today that it was ranked the foremost legal process outsourcing provider worldwide in the renowned “Black Book of Outsourcing.” Pangea3
received the top honors over a pool of 102 legal process outsourcing
providers nominated for consideration.

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Local bar associations in California and New York have jumped into the legal outsourcing fray by issuing the first public advisory opinions impacting the offshore outsourcing of legal services, known as legal process outsourcing (LPO). The Florida Bar is poised to join the fray by issuing its own advisory opinion later this year and is currently collecting comments from its members.

These opinions specifically or implicitly, react to the rise of LPO in India; and offer guidance to their members on if the they can outsource legal tasks for their clients to foreign attorneys and if so, then how. The opinions uniformly caution their readers to what appears to be extreme due diligence and exercise an ambiguously defined “control” over the outsourcing process.

But to paraphrase the Bar, these opinions are full of sound and fury, and signify not much; at least not much more than sanctioning what attorneys should be doing on a daily basis anyway. If these opinions do anything, they answer the technical question of whether the retaining attorney has to disclose to his client that he?s outsourcing a portion of the legal work the client retained him to do. (Short ethical answer = maybe. Smart business answer = Yes. We?ll leave that issue for another post.)

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Three years ago when Pangea3 started selling legal services from India, there were only 5 other companies in the space. Today, having just secured a $7 million investment from Sequoia Venture Partners, Pangea3 continues to pull away from the pack of more than 60 LPO vendors. In recent months it has become increasingly clear to us that our industry is at a turning point.

Here’s why:

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Q: “If its so easy to do legal work in India, how come I’m not hearing about big cases being done there?”

A: “Because you’re not listening carefully.”

Pangea3 has completed several document reviews of over a million pages. One recent review involved 95GB of electronic data and over 4.5 million pages.
We completed the review in under 16 weeks for a cost of less than $500,000.
And we did it working hand in hand with a very happy outside counsel.

We’ve done pharma.

Manufacturing.

We’ve done financial services.

We’ve reviewed for privilege. We’ve reviewed for relevance. We keep the privilege logs. We escalate problematic documents for further discussion.
In short, it looks and feels like on-shore document review for a fraction of the cost and a dramatic increase in speed and accuracy.

Ain’t life grand?

One thing law firms fear almost as much as angry Circuit court judges are fixed fees. Historically, law firm partners and law firm management like to keep risk squarely on the client using the taxi cab model. Get in and start the meter. Traffic? The client pays. Construction? The client pays. An accident? The client pays. The taxi stops, hours are totaled and the client pays the bill.

There’s a better way for clients and for firms.

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