PANGEA3 LLC

To our valued readers,

Season’s Greetings and Best Wishes for the New Year!

In the New year, we will continue to update you with the latest legal and legal outsourcing news and more…so stay tuned.

Happy 2009!

The Silicon Valley Association of General Counsel (SVAGC) and Ivy Associates are hosting the 20th Annual All Hands Meeting on December 4, 2008 at the Santa Clara Convention Center in Santa Clara, CA. An all-day MCLE session, the conference will provide important updates pertaining to law for in-house counsel in the high tech sector. The conference includes speaking sessions from individual experts and panel discussions along four tracks: corporate counsel updates, technology agreements, advanced IP and life sciences.

Pangea3 is honored to be among the exhibitors.

See us at the event and drop by our booth for exciting giveaways!!

Niraj Sheth and Nathan Koppel, from the Wall Street Journal, published a comprehensive and interesting article featuring Pangea3 on the U.S. credit crisis and its impact on legal outsourcing. WSJ interviewed Sanjay Kamlani, Co-CEO and Co-founder of Pangea3, along with several of our attorneys regarding the current economic crisis on Wall Street. The declining economy has been beneficial for the legal outsourcing industry in general and Pangea3 in particular. As a result of the global economic crisis and recent law firm layoffs, Pangea3 has seen a rise in credit-crisis related litigation work as corporations move additional work offshore as a method to reduce costs.

Read the wsj.com article on: With Times Tight, Even Lawyers get Outsourced, by Niraj Sheth & Nathan Koppel, November 26,2008.

The unprecedented credit crisis, which led the U.S. Senate to pass the Emergency Economic Stabilization Act of 2008 ("EESA"), or the “Bailout Bill", to restore liquidity and stability of the U.S. financial system, is likely to create a new frontier in the financial marketplace, as financial institutions including banks, savings associations, credit unions, security brokers and insurance companies, prepare to face the impact of the EESA and newer regulations. A key component of the EESA, the Troubled Asset Relief Program ("TARP"), will allow the U.S. treasury to acquire troubled assets from financial institutions and to inject liquidity into the U.S. banking system.

Pangea3 represents a wide range of banks and financial services companies, including companies that have recently converted into bank holding companies. To address their growing needs during this global financial crisis, Pangea3 is pleased to announce the launch of its TARP Services Unit, and Mortgage Loan Modification Program. The TARP Services Unit is an offshoot of Pangea3’s current financial services offerings. The TARP Services Unit will assist financial services clients with managing their debt portfolios, modifying financial instruments, and complying with existing and new TARP-related laws and regulations. At the same time, it will help clients defend themselves against potential litigation - at compelling costs.

Spearheaded by seasoned U.S. and Indian attorneys with experience and expertise in providing risk management, corporate and litigation services for financial services companies and banks, our TARP Services group will offer financial institutions critical services including:

The TARP Services Unit will offer critical services to financial institutions including:

• TARP Monitoring & Compliance:
  • FCPA & AML compliance, including Know-Your-Customer research and reporting.
  • Broker-Dealer and stock exchange compliance, including e-mail monitoring and review.
  • Corporate governance & corporate secretarial management, including monitoring of new TARP-related regulations.
• Litigation & Litigation Support:
  • Substantive document review for responsiveness, privilege and materiality for TARP-related and financial services litigation, including shareholder derivative suits.
  • Objective coding and document processing and culling.
• Visibility:
  • Review, summarization, abstraction and analysis of complex and high-volume portfolios of financial instruments.
  • Due diligence on portfolios of financial instruments, for both disposition and acquisition.
• Financial Instrument Modification - modification of mortgages and other financial instruments, on a fixed, unit-priced basis.

Watch this space as we unfold more information on our TARP program in the coming days. Call Pangea3 at +212-689-3819.

Read Press Release.

Always looking to understand industry needs and growth, on October 26th through 28th, Pangea3 joined professionals from various industries including healthcare, electronics, technology, and insurance to discuss best practices and developments in contract management at Selectica’s annual Fusion Conference in Monterey, California.

The Fusion Conference opened with a keynote address by Tim Cummins, President and CEO of the International Association for Contract and Commercial Management. Cummins, widely know for being as captivating a speaker as he is an insightful thought leader, led conference participants through a strategy of change aimed at revitalizing and modernizing traditional approaches to contracts in the new world of financial reform and ethical considerations.

Over the course of the next two days, conference participants split into focus groups. Demonstrations of upcoming features of the award-winning, enterprise-class Selectica platform followed by user/developer feedback proved a valuable forum for progress in the contract management space, and focus groups on contract operations within the healthcare industry offered new approaches to long time challenges.

During the first session in the Legal and Compliance Issues track, Kevin Colangelo, our Vice President of Legal Services, presented a well received talk on Creating Greater Efficiencies in the GC’s Office. During the session, he presented ways to determine the most appropriate contract related projects for outsourcing and, judging from the audience feedback, presented novel yet viable ways to strengthen internal corporate control and organization while reducing costs.

In beautiful Monterey, it would be difficult to keep the good times restricted to industry learnings, though, and the Selectica organizers did a fabulous job combining work with play. Attendees kicked off the conference with a game of golf on the world famous Poppy Hills Gold Course on Pebble Beach, indulged in evening cocktails and casino play, and concluded the conference in style at a sit down dinner overlooking the sparkling tanks of nature’s most beautiful fish at the renowned Monterey Bay Aquarium.

We look forward to attending next year’s Fusion Conference and will continue to stay abreast of leading edge progress and challenges in contract management in order to better serve our clients.

The Center for Competitive Management (CCM) audio conference on law firm management will be held on March 2009. The 75 minute CLE session on the topic, Legal Process Outsourcing (LPO): Maximizing Cost Savings, Overcoming Challenges, will feature Jonathan Goldstein, Vice President, Legal Services at Pangea3, and Michael Mensik, Partner at Baker & McKenzie, as key speakers. Audio conference attendees will learn key strategies and best practices related to the legal outsourcing industry.

click here for details.

Pangea3’s client is a large innovative Fortune 500 consumer electronics company. Considered to be a pioneer in its industry, it has a large and expanding patent portfolio. Over the past several years, Pangea3 has worked with attorneys and technologists at this company to help it stay at the top of its industry by providing a wide variety of Intellectual Property services including prior art searches, validity searches, patent landscapes, mapping patents against technology standards and business research utilizing a team of dedicated engineers and scientists.

Our consistently high quality work product, a client-dedicated team and significant cost savings has made Pangea3 the provider of choice for this client. Recently, a senior IP attorney at the client approached us with a strategic objective - expanding their patent portfolio through licensing and patent acquisition, specifically in the online consumer behavior domain. Pangea3 partnered with the client to identify and implement strategies for patent acquisition. Through the course of our conversations with the client, we determined that the best combination of Pangea3 services that would help it achieve its business objectives included patent bucketing, a patent validity search and business research.

Patent bucketing: Pangea3’s IP team performed analyses that were used to identify patents of value based on a preliminary list of patents and a multi-level taxonomy for categorizing the patents sent from the client. We performed an in-depth technical review of the patents and categorized each patent against the taxonomy. The client then mapped the resulting set against their existing patent portfolio and identified patents that would best enhance their patent holdings. Technology and business executives from the client’s team came up with a shortlist of patents to be licensed or acquired.

Validity analysis: For each identified patent, we performed a validity search. In our report, we identified the patent and non-patent references that revealed the subject matter closest to the patent of interest. We provided claim charts comparing each reference with the patent of interest. Our reports served a dual purpose by confirming the enforceability of each patent, by anticipating counter-arguments, and helping assess the true value offered by the patent.

Business research: Based on public records, we identified the owner of each patent. For each owner, we utilized public as well as subscription databases including USPTO databases, Nexis, Hoovers, and Google Finance to provide information on financial details, patent holdings, and litigation records. We also provided the contact information for the target’s legal team and senior management. The client received a detailed dossier on each company, prepared for senior client executives, and informed their ultimate decision making with respect to each identified patent.

Result: Outsourcing resource intensive portions of patent acquisition work to Pangea3 allowed the client to accelerate their patent acquisitions without increasing their budget. Our full-featured service offering distinguished us from other IP vendors who do not have the capabilities to perform the necessary services the client needed to achieve its business objective. As a result of Pangea3’s thorough analyses and research, our client is now actively engaged in acquiriring a portion of the identified patents.

About Pangea3’s IP Team

Pangea3’s Intellectual Property group provides patent and trademark services to some of the world’s leading international corporations and law firms. With over 60 engineers and scientists with domain expertise in electronics, telecommunications, computer software, mechanical engineering, biotechnology and pharmaceuticals the IP group is headed by Pangea3’s U.S. patent attorneys ensuring a US quality work product for every service.

Last week, a blog called Faaltumail published a completely false posting about Pangea3’s attrition rates. The posting was submitted by someone named “Sushant” and contained a quote from “Bipin Chauhan, an HR manager at Pangea3.” There is no such person at Pangea3, in any department, and the quote attributed to the fictional Bipin Chauhan is completely invented.

In fact, Pangea3 is proud of its voluntary attrition rate, which remains steady at about 15% annually. Like all employer-of-choice companies, we pride ourselves on having terrific employees and managers, challenging work, and an environment where merit and performance are the paths to success. Performance management is one of our key focus areas and our employees receive regular feedback, training and career development opportunities. Likewise, we believe that the best managers come from within the company, and our advancement system has contributed to our retention rates. A testimony to this fact is that a significant number of founding employees now hold key managerial positions within the organization and act as a role model for new employees. We are also proud of the fact that some employees who left the company to complete higher education or work with other organizations, have chosen to return to Pangea3 claiming that the work environment and quality of work at Pangea3 is the best in the LPO space.

That said, we’re troubled that someone is not only spreading lies about the attrition rates at Pangea3 and in the LPO industry in general (which has enviably high retention rates), but is clearly trying to scare the users of our services - our clients. Let’s be clear - the main focus of the LPO industry remains the delivery of world-class work product, safely and securely, at a significant savings for our clients. Our clients can rest safely knowing that attrition is NOT a problem, and that we and our peers in the LPO industry remain committed to delivery world-class work in the manner to which they have become accustomed.

David Perla, co-founder and co-CEO, Pangea3 LLC
Sanjay Kamlani, co-founder and co-CEO, Pangea3 LLC
Mohan Ayyangar, COO, Pangea3 LLC
Sampada Parulekar, Manager, Talent Management Group, Pangea3 LLC

On October 20, leading independent consultancy (and authors of the report “Legal Industry Outsourcing Trends 2008″) Prince OMC will be visiting Pangea3’s Mumbai (Leela) office with a delegation of representatives from leading U.S. and U.K. law firms and corporations.

This visit to Pangea3 is part of a weeklong executive study tour conducted by Prince OMC that is intended to provide executives from leading law firms and corporations with a detailed examination of India’s top tier outsourcing providers.

In its study tour materials, Prince OMC states that offshore sourcing is “[T]he most promising new opportunity in driving improved productivity in the legal services market.”

Pangea3 is honored to be included among the select few LPOs that Prince OMC has chosen to showcase on this visit. Please watch this space in the coming weeks for a recap of their visit.

David Perla recently co-authored an article with Peter Sloane, partner at Ostrolenk Faber LLP on trademarks and company names, which appears as the lead story on Entrepreneur.com. The article, What’s in a name? Everything, is a must read for all entrepreneurs facing the classic marketing dilemma of choosing the right company name.

The article explores some of the best approaches to choosing a Company name:

• Determining a name that differentiates your business from competitors
• Creating successful Company names
• How to trademark your Company name
• Common mistakes to be avoided

See this article on Entrepreneur.com.

The 44th Pacific Advisory Rim Council (PRAC) International Conference will be held in Mumbai on November 15-18. Pangea3 is proud to be part of the Conference and a guest speaker on the Legal Outsourcing panel scheduled November 17th from 2:00 - 3:15 PM alongside John Shirbin of Clayton Utz, Richard Scott of Fraser Milner Casgrain LLP and Jorge Perez Taiman of Muniz, Ramirez, Perez-Taiman & Luna - Victoria, Attorneys at Law, Lima, San Isidro.

Selectica’s 2nd Annual Contract Management Summit is taking place on October 26-28, in Monterey, CA. The summit is tailored for Selectica’s clients, partners and industry experts. With breakout sessions along four tracks it will provide practical guidance on creating and driving contract management initiatives.

Pangea3 is proud to be one of the main sponsors for this summit as well as a speaker on the “Creating Greater Efficiencies in the GC’s Office: Legal Outsourcing” session on October 28th from 10:30 AM to 11:15 AM.

The NYSBA Intellectual Property Law Section Fall 2008 Meeting will be held on October, 16-19, in New York. I am delighted to be invited as the speaker on the topic, Ethics of Outsourcing on October, 17 from 2:00-3:00 PM.

ACC will be holding their Annual Meeting on October 19-22 in Seattle. The event provides ACC members with an opportunity to discuss key issues related to in-house counsel and participate in over 100 CLE seminars along with networking opportunities and meeting potential new providers. Pangea3 is proud to be one of the sponsors for the event as well as a session speaker.

I will be on the Considerations in Outsourcing Legal Services panel, session 009 on October, 20th from 9:30 AM -10:30 AM, along with Gabriel Buigas, General Counsel of Hewlett-Packard, Michael L. Goodman, Managing Attorney of NIKE and Daniel Reed, Chief Executive Officer of UnitedLex. This session will address pertinent issues related to legal outsourcing that are important for organizations that outsource their legal work or are evaluating the possibility of outsourcing.

In addition, we are one of the exhibitors at this conference. Stop by and speak with Pangea3 representatives at Booth 521 throughout the conference to learn more about our services.

Details:

ACC Annual Meeting 2008
October 19-22
Washington State Convention & Trade Center
Seattle, WA

click here for more information.

ACC Booth Map:

On October 7, 2008 Wesfacca (ACC) will hold a seminar on Advanced Outsourcing & Transformational IT Contracting : what really matters when outsourcing or engaging in other IT-related transactions. I am honored to be invited as one of the speakers for this seminar alongside Akiba Stern and Edward Hansen of Morgan Lewis. This seminar will focus on an increasingly important model for building strong outsourcing and technology relationships. It will provide an overview of the legal outsourcing industry and address many of the substantive concerns related to legal outsourcing, including what services to outsource, the recent ABA ethics opinion and the economics of outsourcing. The event will run from 9:00 AM to 12:00 PM.

The American Conference Institute (ACI) is hosting a fall India LPO Summit on September 15-16th in New York. I am honored to be invited as one of the speakers of the pre-conference panel, Getting to Grips with Outsourcing your Legal Services Offshore: the A-Z of Enacting and Managing Outsourcing Relationships, along with Mark Ross, Vice President of Sales & Marketing at Lawscribe, and Carrie Bowers, Director of Group Offshoring at UBS. The pre-conference workshop will be held at the Marriott East Side Hotel from 9:00 am to 12:00 pm on September 15, 2008. The topic will provide key information for attorney’s who are considering the possibility of offshore outsourcing.

Daniel A Masur & Sonia Baldia, partners at Mayer Brown LLP, published a very interesting and comprehensive article on legal process outsourcing in this month’s Global Services magazine. See the article on globalservices.com :Is LPO Right For Your Company? Objective Gating Analysis in Legal Process Outsourcing by Daniel A Masur & Sonia Baldia,08 September, 2008.

Daniel Masur and Sonia Baldia have been looking at the legal outsourcing industry for quite a long time, and it’s gratifying to see two partners at an AmLaw 100 law firm approach the topic on legal outsourcing so thoughtfully and carefully - and accurately.

Industry watchers have by now seen the extensive coverage of the dismissal of the anti legal outsourcing lawsuit filed in Federal District Court by Newman, McIntosh & Hennessey L.L.P. See the story on mddailyrecords.com: Outsourcing Challenge Dropped for Now by Caryn Tamber in the Daily Record Legal Affairs, Sept 3 2008 for a summary of what happened. What the dismissal of the lawsuit means for the legal outsourcing industry remains to be seen, but many of us were looking forward to Mr. Hennessey and his friends losing.

Leaving aside the veracity of Mr. Hennessey’s claims about why he withdrew the suit and what he plans next in his attacks on the legal outsourcing industry and outsourcing in general, Hennessey’s statements are troubling because they make clear that he’s prepared to waste the court’s time.

See the blog entry on ridethelightning.senseient.com: Newman Fires Back on Legal Outsourcing by Sharon D.Nelson, Sept 03, 2008, in which Hennessey claims that “we decided that rather than litigate an academic declaratory judgment action, we would bring an action for damages on a class wide basis.” I’m sure that the U.S. District Court for the District of Columbia, where the action was originally brought, would be delighted to know that the action, and the press that the plaintiff sought by filing it, was merely academic. Based on his own words, I can only assume that by “academic,” Hennessey means what Merriam-Webster defines as “3.a : theoretical, speculative ‘[an academic question]’ b: having no practical or useful significance.” In other words, the original action, as filed with a Federal court, was frivolous, just as everyone who read it had concluded.

Pangea3 and its colleagues in the legal outsourcing and offshore legal services industry will continue to oppose Mr. Hennessey and his new partners in their efforts to prevent law firms and corporations from lowering costs for their clients in an ethical, legal and now widely accepted and endorsed manner. See the recent ABA ethics opinion story on law.com: ABA Gives Thumbs up to Legal Outsourcing by Anthony Lin in the New York Law Journal, August 27, 2008, summarizing the recent ABA Ethics Committee opinion blessing legal outsourcing. Also see our recent blog entries: Lawsuit challenging legality of offshore legal outsourcing is withdrawn, 05 Sep 2008, and ABA Blesses Use of Legal Outsourcing;August ABA Ethics Opinion Confirms that Offshoring Legal Work is Ethical, 27th Aug 2008. And we will continue to expose the frivolous nature of the lawsuits filed by them.

Pangea3 has learned that the lawsuit filed earlier this year in the D.C. District Court challenging the legality of offshore legal outsourcing has been withdrawn by the Plaintiff firm, Bethesda, Maryland-based Newman, McIntosh & Hennessey.

The withdrawal comes only days after the American Bar Association (ABA) issued a formal ethics opinion that not only approves but endorses the use of legal outsourcing providers as a method to extend in-house capacity and to reduce costs. Please see our blog posting of August 27th entitled ABA Blesses Use of Legal Outsourcing; August ABA Ethics Opinion Confirms that Offshoring Legal Work is Ethical.

At this time, we can only assume that the Plaintiff firm realized the futility of prosecuting their suit in the shadow of the ABA’s opinion, and the opinions of the New York City Bar Association, Florida State Bar Association, San Diego County Bar Association and the Los Angeles County Bar Association, each of which affirmed that the use of offshore legal services providers like Pangea3 does not violate any ethical rules or regulations.

Please watch this space for more details on this development as they become available.

Following in the footsteps of the New York City Bar Association, Florida State Bar Association, San Diego County Bar Association and the Los Angeles County Bar Association, the American Bar Association officially issued an ethics opinion that not only approves but endorses the use of legal outsourcing providers as a method to extend in-house capacity and to reduce costs.

Interestingly, the ABA does not distinguish between utilizing a legal process outsourcing provider such as Pangea3 and utilizing temporary attorneys for document review, a document management company for litigation or a legal research service. According to the ABA, all of these providers fall within the realm of legal outsourcing.

Similar to every ethics opinion about legal outsourcing, ABA Ethics Opinion 08-451 provides guidelines for attorneys in order to maintain compliance with Rules 1.1, 5.1 and 5.3, disclosure of the outsourcing relationship to the client, maintaining client confidentiality and disclosing the outsourcing relationship to the underlying client, among others.

The ABA ethics opinion validates what all of our clients, including our many Fortune 500 and Am Law 200 clients, have already studied and concluded - that the use of offshore legal outsourcing providers is indeed ethical.

Here is the full ABA Ethics Opinion .

The USPTO recently issued a notice regarding the outsourcing of patent prosecution work to foreign countries. It has become a hot topic in numerous IP blogs as bloggers speculate whether this notice ends patent outsourcing. To educate our clients and other interested parties, we’ve written a formal response explaining how the notice impacts the current patent prosecution work outsourced to India. A copy of it is below:

The United States Patent and Trademark Office ("USPTO") recently issued a Notice in the Federal Register (Vol. 73, No. 142/Wednesday, July 23, 2008/Notices) titled, “Scope of Foreign Filing Licenses.” The Notice is directed toward the export of subject matter pursuant to a license from the USPTO.

The Notice reminds applicants and registered patent practitioners that the export of subject matter pursuant to a license from the USPTO is limited to the filing of foreign patent applications. More as a reiteration than a departure from existing law or regulations, the Notice serves as a reminder that exporting of subject matter for any purpose other than the filing of foreign patent applications (post a foreign filing license from the USPTO), requires obtaining the appropriate clearance from the Bureau of Industry and Security at the Department of Commerce.

The Notice does not purport to change or adversely affect the export of subject matter to, for example, an LPO. To the contrary, it addresses any doubts or confusion in connection with such an export. Stating it succinctly, export of any subject matter that does not require an export license is unaffected by the Notice.

The foregoing is in accordance with the Export Administration Regulations promulgated by the Bureau of Industry and Security that governs exports of various commodities, software and technology. Indeed, the Notice ends by stating that it “does not change existing law or regulations.” We agree.

Craig Ball wrote a terrific blog piece on June 6th about the Victor Stanley Inc. v. Creative Pipe Inc. decision from the Eastern District of Maryland. Magistrate Judge Paul Grimm found that the defendants waived the attorney-client privilege for 165 “inadvertently” produced documents because they relied on keyword searches and a review of document title pages as their privilege review. Furthermore, the defendents failed to get a clawback agreement with opposing counsel before producing the documents. Unfortunately, Creative Pipe was unable to rationalize to the Court why they believed keyword and document title searches were sufficient methods to meet their professional responsibilities. As a result, Creative Pipe became yet another party injured by insufficient preparation by failing to concentrate on document review workflow and processes.

Craig’s blog focuses on the need for better keyword search techniques and he provides valuable lessons (reminders?) for all practitioners ? “Get expert help, Collaborate on search methods, Test your searches, Check the discard pile, and Get that clawback agreement.”

But I believe that process is just as important as keyword search effectivness in this case. It’s not enough to know your methods work, you have to be able prove it too.

Ensuring that your document review workflow and processes are effective is critical to any document review Quality Assurance process, whether at the outset of a review when culling non-responsive documents from a document collection or when identifying privileged documents. In each case, you should test the accuracy of your search strategy by checking for false positives and for false negatives. Perfection isn’t required nor should it be the goal. But Courts will expect attorneys to take some reasonable steps to assure themselves that what they’re doing actually has some reasonable connection to what is expected. Don’t just take my word for it:

“Defendants do not assert that any sampling was done of the text searchable ESI files that were determined not to contain privileged information on the basis of the keyword search to see if the search results were reliable. Common sense suggests that even a properly designed and executed keyword search may prove to be over-inclusive or under-inclusive, resulting in the identification of documents as privileged which are not, and non-privileged which, in fact, are. The only prudent way to test the reliability of the keyword search is to perform some appropriate sampling of the documents determined to be privileged and those determined not to be in order to arrive at a comfort level that the categories are neither overinclusive nor under-inclusive. There is no evidence on the record that the Defendants did so in this case.” Mem at 11-12.

The irony of is case is that Magistrate Judge Grimm suggested that the majority of the documents were not in fact privileged anyway! Thus another important lesson learned from Victor Stanley is the importance of memorializing your keyword strategies and documenting the execution your strategies. So when it is time to provide that affidavit, you’ll have everything you’ll need and you can avoid having to read something like this:

“Defendants are regrettably vague in their description of the seventy keywords used for the text-searchable ESI privilege review, how they were developed, how the search was conducted, and what quality controls were employed to assess their reliability and accuracy. While it is known that M. Pappas (a party) and Mohr and Schmid (attorneys) selected the keywords, nothing is known from the affidavits provided to the court regarding their qualifications for designing a search and information retrieval strategy that could be expected to produce an effective and reliable privilege review.” Mem. At 11.

As Craig Ball notes, “[a]voiding privilege waiver is a powerful incentive to” follow this advice.

I’ve always expected challenges to the legality of offshore legal process outsourcing, but a growing number of state and local bar association opinions (four as of this writing) have largely negated unauthorized practice of law challenges. Now comes a challenge from a Maryland law firm that lacks in legal substance and compliance with the Federal Rules of Civil Procedure, common law pleading requirements and the federal jurisdictional statutes.

Apparently motivated by a cold email solicitation from an India-based LPO provider, the law firm of Newman McIntosh & Hennessey, LLP became so concerned about protecting their clients’ Fourth Amendment rights that it filed complaints with both the Maryland and Washington, D.C. Bar Associations, and commenced an action against the LPO industry and President Bush in the D.C. District Court. Assumingly out of grave concern that it is unable to take steps to protect its clients’ confidential information, Newman McIntosh & Hennessey wants the federal courts and the D.C. and Maryland Bar Associations to give it blanket protections against the purportedly tangled web of offshore legal process outsourcing and electronic surveillance.

The whole thing is absurd but it’s received so much attention that it requires a cogent response.

Newman McIntosh & Hennessey’s Fourth Amendment argument is clever but specious because it relies on a faulty premise: that the Fourth Amendment does not apply to communications between a delegating U.S. attorney and an offshore LPO, and that the NSA will inevitably intercept the attorney’s transmission of clients’ documents to the offshore LPO without any recourse for the firm’s client. That proposition falls on its face. Surely, the complaint isn’t that the NSA can lawfully intercept a communication or electronic transmission from a U.S.-based attorney to an LPO ? in essence spying on a U.S. citizen or entity ? without complying with the Fourth Amendment, the Foreign Intelligence Surveillance Act and other applicable statutes?

Practically speaking, I cannot think of a situation in offshore legal process outsourcing where the NSA could intercept the transmission of documents between two foreign nationals sitting at two international points (and outside the jurisdiction of the Fourth Amendment and FISA). Ninety percent of Pangea3’s work is completed remotely, with attorneys in India accessing databases hosted in the United States. For example, if a document review is hosted in the U.S., then every electronic transmission has a jurisdictional basis in the U.S. and the privacy of the data is protected by the Fourth Amendment. As a result, the NSA cannot intercept any such electronic transmission without good cause. Conversely, if the review takes place completely offshore, then any communications with counsel would necessarily involve a U.S.-based attorney (or agent thereof) and again the Fourth Amendment protects such communications.

But let’s assume for the purposes of this discussion that the NSA is intercepting all offshore communications, including privileged communications (of course the consequences of that scenario are astounding), as I understand it, Newman McIntosh & Hennessey is claiming that the attorney-client privilege would be waived because a party transmitting otherwise-privileged communications overseas would know that the government (in this case, a non-privileged party) will see it, and therefore has not taken the requisite steps to protect the privilege. Even if this unlikely scenario were to occur, the Omnibus Crime Control and Safe Streets Act of 1968 would protect the information. Among other things, the OCCSS Act preserves the privileged character of all otherwise-privileged electronic communications that the federal government intercepts. You’ll find the relevant section of the OCCSS Act at 18 U.S.C. s. 2517(4)("No otherwise privileged wire, oral, or electronic communication intercepted in accordance with, or in violation of, the provisions of [Chapter 119. Wire and Electronic Communications Interception and Interception of Oral Communications] shall lose its privileged character.").

Moreover, as the American Law Institute has recognized, “[m]odern American authority generally does not insist that the client be able to exclude all possibility that eavesdroppers will overhear the communication.” Restatement (Third) of Law Governing Law ?71 (2000) comment citing generally C. Wolfram, Modern Legal Ethics ?6.3.7, at 264-65 (1986) “Confidentiality is a practical requirement. Exigent circumstances may require communications under conditions where ordinary precautions for confidentiality are impossible. The privilege applies if the communicating person has taken reasonable precautions in the circumstances.”

Accordingly, an attorney who transmits or receives an otherwise privileged communication internationally does not and will not waive any existing privilege so long as the attorney takes reasonable steps to preserve the privilege. Even if the NSA intercepted the communication, the privileged character of the information is retained.

Ironically, I’m not certain what Newman McIntosh & Hennessey believes to be the greater threat. Is it the NSA’s alleged interception of every electronic communication via the purported ECHELON program, or offshore legal process outsourcing? I’d like to think that it is the former and not offshore legal process outsourcing in and of itself. Ironically, the firm doesn’t ascribe any fault to LPOs such as Pangea3. The complaint does not allege that LPO providers are not capable, nor is it concerned that an LPO provider cannot assist the firm in carrying out its professional responsibilities to the firm’s clients.

Instead, the LPO provider’s apparent greatest fault is only that it is a foreign national (albeit one that is seeking to assist with U.S. litigation matters) and the NSA’s computers sit between the provider and its U.S.-based client. However, judging by the vitriolic postings I’ve read on some of the blogs since this complaint was filed, I’d say that Newman McIntosh & Hennessey is feeding upon a misplaced hostility towards offshore legal process outsourcing that simply ignores the plain facts and established applicable law.

Pangea3 is addicted to information. For several years now, we’ve had a myriad of RSS feeds, blog subscriptions, Google alerts, etc. ? the obvious intent of which are to keep us current on relevant happenings & developments with our clients and within the legal marketplace. Over the last 6 months or so, the volume of LPO-related (or legal outsourcing if you prefer) information has increased exponentially, and it is more than just my fellow industry leaders blogging, issuing press releases and having conference presentations uploaded to the web. Mainstream media and leading legal periodicals are discussing the LPO industry with breathtaking regularity, which is a fantastic indication of acceptance within the legal community. It’s indeed an exciting time, but that’s not my main point.

The main point of this post is how our industry is being represented within the mainstream media. It’s not as rosy a world as we’d hope. Take, for example, a new recurring column in the ACC Docket (the monthly magazine of the Association of Corporate Counsel ("ACC"), to which all 20,000 + ACC members are automatically subscribed) entitled “Outsource Resource.” The author of the column is Kenneth Cutshaw, General Counsel of Cajun Operating Company (d/b/a Church’s Chicken, a successful U.S. fast-food chain). I’ve read both of Mr. Cutshaw’s columns and have been very pleased with his insightful and thorough explanation and endorsement of the LPO industry. In both pieces, he goes into significant detail of how he, as the G.C. of Cajun Operating Company, came to realize the value of outsourcing some of his contract drafting work to an LPO based in Gurgaon, India. His satisfaction with the work product is the theme of both articles, and his endorsement of the LPO industry is made clear in phrases such as “state-of-the-art” and “efficient and capable providers.” On the surface, this recurring column and the glowing reviews from a General Counsel of a large U.S. company are perfect, visible endorsements for the entire LPO industry.

Unfortunately, all is not what it seems with Mr. Cutshaw. My colleagues and I happen to have crossed paths with Mr. Cutshaw on more than one occasion at events featuring discussions about LPO. It was during one of those events that we came to learn (from an unrelated party) that Mr. Cutshaw is actually on the leadership team of Kochhar LexServe, a Gurgaon, India-based LPO. Neither of his articles in the ACC Docket mention this fact. Mr. Cutshaw is simply credited as “the executive vice president and general counsel of Cajun Operating Company d/b/a Church’s Chicken located in Atlanta, Ga.,” and within his articles he repeatedly includes himself within the “brotherhood” of in-house counsel. Not once in either article does Mr. Cutshaw make reference to an affiliation with any LPO.

Now, in order to stress my main point, please take a moment to think about this situation.

The LPO industry has been accepted within the legal community to the point where a publication no less prestigious than the ACC Docket includes a regular column on the industry. Let’s call that one HUGE step forward for LPO. Then, there’s our protagonist, Mr. Cutshaw, G.C. of a large, well-known restaurant chain. Let’s cut to the chase and call his overzealous promotion of an industry in which he has a clear, but undisclosed personal interest at least one HUGE step backward for LPO.

So to my point: the LPO industry has matured and evolved an incredible amount since I joined Pangea3 two years ago. This is due in large part to the hard work and dedication of my colleagues at Pangea3, our peers within the other leading LPOs and ? most importantly ? our incredibly skilled and dedicated attorneys, engineers and other professionals in India. But, when I see situations like Mr. Cutshaw’s veiled promotion of his personal LPO interests in the ACC Docket, it reminds me that there are still some elements within our industry that have the potential to discredit all of us.

Going forward, I can only hope that market forces (led by our sophisticated clients and peer LPO providers) will educate, or weed out and silence, those entities and individuals who seek to misuse the media’s interest in the LPO industry for their own personal gains.

Recession is on everyone’s mind, but the word everyone is trying to avoid saying. For starters, let’s acknowledge what we all know: The U.S. economy is in very bad shape, and it’s going to either get worse or stay this way for the rest of 2008, and perhaps much longer. The question on everyone’s mind in the legal process outsourcing industry, and in the outsourcing industry in general, is whether this will have a positive or negative impact on 2008 for LPO and for other outsourcing players. I just returned from India, and everyone on our team was talking, often softly but always inquisitively, about the U.S. economy. Not less than three of Pangea3’s team members, one in each of our Patent, Litigation and Corporate channels, asked me largely the same question: “David - is the recession good for Pangea3 or bad for Pangea3? And what are our plans for continuing to grow in this recession?”

First, I’m always impressed that young professionals thousands of miles away appreciate and think about the global impact of the U.S. economy, both generally and on India outsourcing businesses specifically. Second, the question forces LPO players to think both about how we will be impacted and what we can do to make lemonade out of lemons.

In my humble opinion, the recession is going to be both bad and good for outsourcing and legal outsourcing businesses, depending on their size, market footprint, industry base and the amount that their clients spend on outsourcing as a proportion of the total amount spent on that function (such as finance, HR, legal, technology, etc.).

In short, I predict that the recession will have
(1) a positive impact on the LPO industry,
(2) a decidedly mixed-to-negative impact on the more developed areas of the outsourcing industry, such as technology and BPO and
(3) disastrous impacts for small players in all industries.

Here’s why:
Cash is King: In a recession, cash is king, as companies undertake measures to bolster and protect the current assets portion of their balance sheets. In that environment, companies will cut spending in traditional areas, such as marketing, IT and R & D, but also look for ways to cut spending in more rarely touched cash-consuming cost centers, of which the corporate legal department is among the worst offenders. Moreover, because legal outsourcing is so new, most in-house legal departments have not yet taken advantage of the cash-preservation opportunities afforded by LPO. When those in-house legal departments get squeezed to spend less cash, as they surely will, legal outsourcing will offer them the opportunity.

Litigation: In this recession, everyone is looking for a culprit, and the litigation bloodbath is just beginning. Witness shareholder and related litigation on just the Bear Stearns debacle alone. Litigation activity related to the recession will increase, and the resulting litigations will be, not surprisingly, discovery heavy. Combine this increase in litigation with the need to preserve cash, and litigants will look to India as a discovery solution. It’s happening already, as most of the top LPO providers have seen a marked increase in litigation business in the last six months.

Market Awareness: Coincidentally, this recession is hitting at exactly the same time that market awareness of LPO is exploding, along with the growing acceptance by law firms that they simply must find ways to help their clients reduce spending, especially on litigation. So the demand to cut legal costs, together with the increasingly widespread awareness and acceptance of outsourcing to India as a viable and desirable option, will move both in-house legal work and law firm work to India based legal outsourcing companies. Thus, I expect that legal outsourcing providers (at least the good/big ones) will see a spike in business in this economic environment. However, two types of outsourcing providers will suffer:
(1) small LPO providers and
(2) providers of outsourcing services where the client spend on that service is going to be cut, along with other expenses.

Small LPO’s: Pangea3 and its peer LPO’s are already seeing a massive influx of resumes from smaller LPO players - those same players that just last year were enthusiastically recruiting and creating wage inflation in the Indian legal services market. In a market like this, two dynamics work against a smaller/newer player. First, US and European companies flee to quality, because outsourcing legal services to India is no longer viewed as an experiment - it is a business imperative, for those companies going this route. Second, the market itself has delivered a double-whammy to LPO providers: (1) wage inflation, which was largely created by the new entrants themselves, and (2) a strong Indian Rupee. Combine those two factors with the relative glut of small players and an inability of those players to demonstrate true quality and staying power (both of which big law firms and in-house legal departments demand) and it’s game over for many of them. All new and dislocative industries go through rapid growth followed by consolidation, and I think we’re in the beginning of the consolidation phase. I lived through just this dynamic in the online recruitment industry while at Monster.com, from 1999 through 2004, and history tends to repeat itself - as least economic history. I’m not suggesting that we will see acquisitions or mergers of legal outsourcing providers this year, but I submit that there will be fewer players at the end of 2008 than there are now, but that the leaders and high-quality providers will emerge bigger, faster and stronger. The same thing occurred during our last recession, with the winners in Indian IT and business process outsourcing emerging as major global companies. The blogosphere has a long memory, so let’s re-visit this a year from now.

Other Outsourcing Companies: The story is going to be slightly different for outsourcing companies outside of legal services outsourcing. In certain other outsourcing industries, outsourcing to India, the Philippines and other global destinations has become the norm rather than the exception. In those cases, the budgets being spent on outsourcing will be cut alongside the budgets for that function in general, such as IT, marketing and HR, to name just a few. So the consumers of those outsourced services certainly prefer buying those services offshore to onshore - but they’ll cut the entire budget, including the offshore component. Witness the cancellation of certain big outsourcing contracts already, and expect more such cancellations and modifications. The exception will be those outsourcing companies that are perceived as best-in-class, which companies will be able to land more new business from clients that have not yet offshored core cost center services, and who will do so in 2008 and 2009 as a way to . . . preserve cash. So the best players (not necessarily the biggest) should stand to gain, while the mammoths run the risk of being the victim of contract cancellations. That’s a long answer to a difficult but important question. However this plays out, 2008 is going to be a very bumpy year, with a lot of pain for a lot of people. But ultimately, expect to see LPO much bigger, much stronger and much more mainstream come Spring 2009.

Sanjay Kamlani, co-CEO Pangea3, will speak on a panel discussion on Legal Process Outsourcing at ITechLaw International Asian Conference to be held at Hotel Leela Kempinski in Mumbai on February 7-8, 2008. Reuben Buck of Cisco will lead the panel which will be focused on Globalisation of the In-House Law Department - Using Technology for Effective Collaboration. The panel also includes Suchorita Mookerjee of Bodhi Global Services, Sirisha Gummaregula of QuisLex, and Manish Vig of Kochhar Lexserve. The panel will be moderated by Karlyn Stanley of Infosys Technologies Limited, Washington DC.

This two-day Conference will showcase recent developments in technology law including media, telecom, biotechnology and new internet issues and outsourcing, and will feature presentations from leading legal practitioners and industry experts from around the world.

To be kicked off by esteemed keynote speaker Peter Dengate Thrush, Chairman of the Board for the Internet Corporation for Assigned Names and Numbers (ICANN), the two-day, multi-track conference is supported by several of the largest global law firms and associations, and features more than 60 international and domestic speakers.

Last year’s event attracted hundreds of attendees from around the world and included presentations from leading legal practitioners, regulators and industry experts. This year, delegates from every continent are coming together at the Leela Kempinski Hotel in Mumbai for this event.

For more information, visit the ITechLaw Web site at
www.itechlaw-india.com/2008/index.htm

?The Indian legal services industry will more than quadruple to $640 million by 2010 from $146 million in 2006?
?ValueNotes

Forrester Research forecasts that the value on legal outsourcing to India will grow from the current figure of $80 million to $4 billion by 2015. Legal Process Outsourcing, or LPO as it is popularly called, is the latest trend in outsourcing. The impact of globalization along with the significant cost savings and increases in productivity and efficiency which can be realized, are but a few of the reasons why both law firms and in-house counsel are shifting operations abroad.

Yet despite growing enthusiasm within the market, there is still resistance. Unanswered questions and concerns are centered on which departments should take advantage of outsourcing. What are the actual benefits to law firms and their clients? What are the ethical implications? What implications does outsourcing have on client confidentiality and the security and control of client information?

The most important criteria is for law firms, corporations, insurance companies and legal organizations to understand how to source and operate globally so as to optimize efficiency, reduce their cost structure, while increasing revenues, and gain competitive advantage.

ACI?s India LPO Summit has been specifically designed to answer your questions and present best practice solutions regarding the innermost workings of a legal services outsourcing arrangement. Providing real-life case studies, corporations and law firms that are successfully outsourcing legal services & market experts will share their first-hand experiences, exchange ideas on how best to develop a global strategy, identify what to look for when negotiating an outsourcing contract, and ways to optimize the ongoing management of that relationship. And, Pangea3 is proud to be part of it. Representing the leading legal outsourcing firm in India, David Perla, co-CEO Pangea3, will moderate at the panel discussion: First Hand Experiences on Making the Business Case for Outsourcing Offshore ? Qualifying the Viability and Benefits to Overcome Stakeholder Resistance

Topics covered include:

• Identifying the types of work that are susceptible to outsourcing
• Understanding the various reasons why corporations
  and law firms outsource
• Taking into account the various factors that need
  to be kept in mind before outsourcing legal services
• Considering the viability of near shoring vs. outsourcing

Click here for more information & registration details.