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Legal outsourcing: Another billion dollar industry

By Himanshu Kumar Singh

Surging business

Virtually unheard 10 years ago, the term “outsourcing” has emerged as a phenomenon in the business of the present day world. It has become the backbone of Indian service sectors. In the last fiscal India earned $6.7 billion by providing services in software, technology and manufacturing outsourcing.

Now the BPO companies have turned their eyes on legal outsourcing. According to a study by the US-based Forester Research, the current annual value of legal outsourcing which is worth $80 million can rise up to $4 billion and can produce 79,000 jobs in India by 2015. National Association of Software and Service Companies (NASSCOM) also projected that Legal Processing Outsourcing providers (LPOs) in India will soon rise up to $3-4 billion. This heralds the opening of new vistas for law professionals whose number is increasing incessantly.

According to Forrester Research report, “The benefit of the outsourcing companies in the US would translate into a cost saving of about 10-12 per cent. The potential of the Indian resources to absorb the increasing demand in legal outsourcing is because India enjoys the economic advantages of the wage difference and less perks and overheads.”

Nature of work

In the beginning the works which are being outsourced to India are “of secretarial nature and includes patent drafting, legal research, contract review and monitoring,” says Mr. Ravi Shankar S. of 21 st Century Law Firm. But it is set to expand with the enlarging knowledge of Indians regarding the foreign laws. Experts are hoping to receive high-end sophisticated contracts, which require a strong legal base of international standards.

Challenge ahead

The most important challenge to the newly-born sector is the need for Indian lawyers to pass US Bar exams, conflict of interest rules and data security. According to Mr. Ravi Shankar, “As far as qualifications of Indian lawyers regarding handling of foreign legal jobs are concerned, it should be pointed out that the nature of jobs at the lower level is almost the same. So no special qualification is needed to handle them.”

But notwithstanding the optimism prevalent in the legal business, there are a plenty of hurdles which can hamper the growth of this sector. For example the Indian Advocates Act, which deals with the professional conduct of lawyers, does not support work for other countries. Even, in specific laws governing companies and trade in securities, which hugely differ from one country to another, may constrain LPOs to paralegal and secretarial work.

But on the bright side, certain branches of law, which are of a global nature, like Intellectual Property laws (patents and trademarks) can give Legal Process Outsourcing Providers (LPOs) a fillip in their endeavour.

An Indian lawyer can be as good as his American counterpart in US Federal laws if properly trained in US law. What is required of an attorney, either Indian or American, is not that he should be aware of all laws and regulations but that he should be ready to acquire that knowledge.

Rush to grab the opportunity

It is the effect of this optimism that not only established BPO companies but also several legal firms have thrown themselves open to this lucrative opportunity. In fact, American conglomerate, General Electric, was one of the first to set up its captive BPO Gecis in India, which included LPO. Other technology companies, too, farmed out work to their Indian captive units.

Khaitan & Co, a leading law firm from Kolkata has already started an LPO by floating a new company 'Neoworth' and engaged 10 US-enrolled lawyers.

There is a strong political opposition in the US against outsourcing as it may affect the livelihood of US attorneys and may also serve as a roadblock. Despite of that feeling, legal firms are more than willing to outsource their jobs to India. That's because like other BPO activities, Indian lawyers come cheap. An associate lawyer in the US comes with a $225 per hour tag in the first year. By the eighth year, it goes up to $450 an hour. In India, the rates are barely 10 per cent to 15 per cent of that. Moreover, with the time lag between India and the US and the UK, the turnaround time is 24 hours.

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