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INDIA BECOMING GLOBAL COUNSEL
80,000 legal jobs will shift from the US to India by 2015. a number that can make you sit up and take notice-of LPO that is. The case for legal process outsourcing-read LPO-is fairly straightforward. Reduction in costs and streamlining of operations by major global corporations, like any other stream of offshoring, are the obvious drivers. What’s exciting about LPO, till now a small component of the overall BPO industry, is the future potential, especially vis-à-vis India. “We expect dramatic and exponential growth, based both on the cost pressures currently faced by the US and UK legal markets, and the traction that we are seeing across all of our service lines,” says Sanjay Kamlani, co-CEO of legal offshoring outfit Pangea3.
Dittos Jason Brennon, director-legal services, OfficeTiger which offers legal offshoring services in partnership with Hilder Brandt International: “The future of the LPO market is promising. In the US alone estimated current spending for support services totaled $19.92 billion in 2004. Assuming a very conservative outsourcing potential of 10%, the resulting opportunity is about $2 billion. Of this, I believe India can capture a substantial share.”
A survey of corporate law departments conducted by the American Corporate Counsel Association suggests that 86% of respondents cited external legal costs as their top concern. This has been the contributing factor in beginning an aggressive search for alternative sourcing methods.
“The trend towards outsourcing-well under way in the IT services and finance sectors-is thus beginning to make its presence felt in the legal industry as well” points out an industry analyst. Outsourcing helps the in-house counsel focus on core legal issues while research and managerial aspects are taken care of at lower costs.
A number of US companies, including those part of the Fortune 500, and some of US’ largest law firms are now outsourcing legal work to India. GE began utilizing in-house attorneys located in India as early as 2001, and by 2004, various divisions within GE were each reporting savings in legal costs ranging from $250,000 to $700,000 annually. GE, Citigroup, Dupont, Oracle and Cisco are already outsourcing legal services to India. Even some state and Federal departments in the US have joined the fray.
What’s LPO
Legal outsourcing entails supporting the working of corporate legal departments, large law firms and even individual lawyers through activities like drafting contracts, online research, reviewing and reporting documents, litigation support, intellectual property researching and drafting and applying for patents.
Why India?
One of the reason why India has been the main beneficiary of this offshoring drive is the large number of legal professionals available (85,000 at last count)-most of whom are trained in a legal system consistent with US and UK laws. If number could win the LPO battle, India’s competitiors in this space are no match: Philippines had 44,000 lawyers according to the country’s 2003 Law List while Australia’s 12 bar associations and law councils comprised only 42,206 members.
Quality of service and the speed of delivery are a big draw too. While LPO is gaining in China and South Korea too, the level of Indian attorneys is much better. “International attorneys are impressed not only by the labor cost differential, but the speed and quality offered here,” says a senior lawyer. Most LPO outfits like Pangea3, OfficeTiger and Intellevate are staffed 24x7. “By outsourcing to destinations like India, OfficeTiger’s clients have seen an increased improvement in operational efficiencies. It allows for 24x7 access to a dedicated staff of legal experts,” says Brennan.
Cost saving is another plus. “It costs a company on average between $20,000 and $30,000 to file a patent application in the US. When Pangea3 delivers the same patent application at a price of $5,000 to $6,000, a company is suddenly able to file multiple patents within the same budget. Each filed patent generates a whole chain of additional activity including additional legal activity-thus expanding the market,” explains Sanjay Kamlani.
The lower costs allows for more diligent quality control process than is affordable in the US and enables clients to accomplish more within the same or even lower legal budget. “India is a natural fit for this increasing interest in alternative sourcing. India combines a highly-educated and hardworking population, English language capabilities and a stable and continuously improving infrastructure,” says Brennan of OfficeTiger.
The Potential & The Problems
On the face of it, the future potential of Legal Process Outsourcing in India is bright. But some are not so sure as to how many of the legal jobs in the US would actually shift to India. For example, while Forrester Research said over 12,000 legal jobs were expected to shift from the US by the end of 2004, apex software body NASSCOM estimates less than a few hundred would have actually moved. Forrester predicts that these 12,000 jobs would triple by 2010 and further double by 2015. Which, in effect, means 80,000 legal jobs shifting to India by 2015.
But experts feel that if the quality of legal education is not further improved, it could stymie the flow. The other deterrent could be FDI norms governing legal services and the existing partnership laws. NASSCOM feels India needs to open up its legal services and amend its Partnership Act.
