PANGEA3 LLC

Lately, there has been no shortage of underemployed big firm lawyers. Watching one’s friends, colleagues and law school classmates lose jobs is not pleasant. Negative economic growth is not good for anyone.

Yet as law firms’ deal flow, litigation activity and patent filing volume have all fallen off, law firms are faced with a decidedly difficult question: Once the inevitable layoffs are complete, what does a firm do with underemployed attorneys when offshore legal providers can provide the same work for vastly lower costs?

Legal offshoring is here to stay. In August 2008, the ABA gave guidance on how domestic lawyers can ethically offshore legal work. Pangea3 and several other players have demonstrated that strong vendors are consistently producing offshore work that is fit for consumption domestically. Our long list of Fortune 500 clients will affirm this, and have affirmed it at conferences and in reference checks for years. Firms can no longer plausibly claim to be unaware of successfully outsourced legal work.

In spite of this, can a firm use its own resources even if they are overpriced relative to proven offshore resources? What does the firm tell clients who catch it in the act?

When he knows a less expensive qualified resource is available is it within the ambit of a lawyer’s judgment to use a resource that is twice as expensive? Four times? Ten times? At what point does it cross over into malpractice for the firm to put its own economic interests (keeping expensive associates busy) ahead of a client’s interests (containing costs and obtaining legal work at a fair price)?

Law firms have some rough sailing ahead before the return to fat times. We hope they are thinking about how to navigate these tough ethical questions.