The Threat of Legal Process Outsourcing to American Law Firms and What We Can Do to Save Our Industry by Seth G

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The Threat of Legal Process Outsourcing to American Law Firms and What We Can Do to Save Our Industry By Seth G. Rowland, Esq. November 30, 2010

ow would you like a Lawyers have finally begun to to LexisNexis and Westlaw, any- Tim Ferriss-style four realize that our legal system is one anywhere can conduct legal hour work week? Im- undergoing a transformation. research. With the emergence possible you say? Not Once a regional business man- of VoIP telephone service, Web withH legal process outsourcing. aged by local and state bar as- conference services such as Go- Just send that multi-state re- sociations, the practice of law ToMeeting and WebEx and Cis- search memo to India and your has officially become interna- co’s TelePresence, virtual teams eDiscovery review to the Phil- tionalized. Thousands of law- can work together at practically ippines. Why hire overpriced yers in Mumbai as well as Aus- no cost. Using a virtual PBX sys- American associates when you tralia, China, South Korea, New tem like 8x8 with a “SoftPhone”, can outsource to cheap, Eng- Zealand, Sri Lanka, Israel, and you can dial extension 10 for lish-speaking lawyers overseas? the Philippines are busy drafting Mumbai, and extension 11 for Although tempting, legal pro- legal briefs, abstracting leases, New York. cess outsourcing has a dark side coding documents, summariz- that threatens the American le- ing depositions, and conducting This revolution is also made pos- gal industry. In this TechnoFea- due diligence. They are working sible by cultural advancements. ture, document and workflow under the supervision of Ameri- The globalization of “English” automation expert and technol- can lawyers, for American law as a universal language for the ogy consultant Seth Rowland firms and corporations, on mat- conduct of business has re- identifies the major LPO play- ters of American law. sulted in more people speaking ers, explains what they offer, English as a second language and then lays out an alternative than speak it as a first language, strategy that American law firms Once a regional business according to Thomas Friedman can employ to reduce costs and in his book, The World is Flat: compete globally while avoiding managed by local and state A Brief History of the Twenty- the fate of American manufactur- bar associations, the practice First Century. Former British ing companies that outsourced of law has officially become and American colonies like In- themselves into extinction. dia, South Africa, New Zealand internationalized. and the Philippines also share THE WORLD IS FLAT AND a “common law” legal system. THE SUN NEVER SETS With a median salary of $20,000 Every revolution has its tipping This revolution is made possible per year for an Indian lawyer, point. The tipping point for legal by advancements in computer the services of a highly trained process outsourcing (LPO) may technology and telecommunica- lawyer can now be offered for a have occurred two weeks ago tions that allow a virtual world- fraction of the cost of an inex- when Thomson Reuters acquired wide presence for the practice perienced American paralegal. LPO powerhouse Pangea3, of law. Documents, data, and Moreover, the time difference which BigLaw columnist Marin images can be stored in the (10 hours between New York Feldman presciently profiled ear- cloud, accessible securely to and Mumbai), is such that as- lier this year. users around the world. Thanks signments given at the close

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of business in New York, arrive However, when it came to out- 3. Legal research and writing, in- early morning in Mumbai and sourcing word-processing and cluding multi-state surveys, ap- often can be completed by the secretarial work, the service pellate services, and even the time the assigning lawyer in New agreements started to approach preparation of pleadings and York gets back to the office. the core of what lawyers actu- briefs. ally do. LPO does not techni- KNOW THE PLAYERS AND THE cally involve the practice of law. 4. Litigation support services such GAME LPO firms don’t “offer advice” as document review, deposition LPO heavyweights include: but instead work under the “su- abstracting, and eDiscovery. CPA Global pervision” of licensed attorneys, Evalueserve thereby avoiding violation of With the addition of American Integreon ethical guidelines governing the management techniques and Mindcrest “unauthorized practice of law.” American-trained attorneys into Pangea3 the LPO workflow, as well as Quislex special education programs in R.R Donnelly If all the “easy work” Indian Universities, the quality and consistency of these servic- Up and coming players include: is outsourced, how will your es has improved in recent years. Aptara junior associates ever The price is right, and the quality Ius Juris is good. LPO gives you a 24x7 Lason get trained? flexible workforce that enables LawScribe you to replace your “fixed staff- New Galexy ing costs” with “discounted vari- Quatrro BPO What LPO firms do exception- able staffing.” It all seems so in- SDD Global Solutions ally well is identify “repetitive evitable. Is there no alternative? Tusker Group processes” than can be sys- tematized and performed more BEFORE YOU LEAP Forrester Research forecasts efficiently by lower-wage em- Numerous ethical opinions have the LPO market will reach $4 ployees without sacrificing sanctioned LPO outsourcing so billion by 2015 and over 79,000 work quality. These services are long as the work is done un- outsourced jobs. (See The Ben- “bundled” together with a spe- der the supervision of an attor- efits of Legal Outsourcing, ACC cially trained and supervised ney and disclosed to the client. Docket, August 2009). workforce that is made available (See, e.g. Assoc. of Bar of City on a “need to use” basis. Not of New York, Opinion 2006-3). Law firm “outsourcing” initially only are the services substan- Apart from the generalized dan- was no different than general tially cheaper, you only pay for ger to our economy from further business outsourcing. Those what you actually use. losses of high-paying skilled functions that were not central jobs, other factors may also mil- to the “practice of law” were At present, LPO work falls into itate against using an LPO. the first to be outsourced. Pay- 4 areas: roll and financial services were If everyone outsources to the taken overby human resources 1. Secretarial, word-processing, same “top 5” LPO firms, will specialists. Housekeeping, jani- and other forms of document any one firm obtain a competi- torial, food services, marketing, preparation. tive advantage? The gains from etc. soon followed. More recent- outsourcing may be short-lived. ly, law firms have outsourced in- 2. Contract management — con- As an associate or junior partner, formation technology, signing up tract drafting and review, in- in working with an LPO firm, are for long-term managed services cluding analysis and abstract- you not training and educating contracts. ing, as well as due diligence. your replacement? Can the firm

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properly manage the quality and ALTERNATIVES TO LPO draft legal pleadings. In defin- level of service? Where is the I am not a fan of “inefficiency” or ing these processes they could inspiration and moments of bril- the billable hour. The days of “le- use process-mapping tools like liance that are the stuff of legend verage” on the backs of associ- AllClear or MindManager and and profits? If all the “easy work” ates and staff should end along Mindjet Catalyst. is outsourced, how will your ju- with the padding of hours, junior associates ever get trained? nior lawyers working on projects AdvologixPM, a cloud-based What about the professional paralegals could handle, and the practice management system paralegals and highly skilled le- endless memos to file. But in- based on Salesforce.com en- gal secretaries who play a key creasing productivity should not ables law firms to build sophis- role in a well-run law practice? require sending our legal jobs ticated workflow, task assign- overseas. ment, and approval systems to There are long-term hidden dan- coordinate the work of virtual gers from outsourcing. There is a Many applications exist that teams in multiple locations. De- risk that the legal industry could could “save jobs” and increase velopment of these workflow and suffer the same fate as American profits. Document assem- automation systems in-house manufacturing companies and be- bly technology offered by Ex- would bring cost-saving efficien- come the “marketing” and “prod- ari, HotDocs, Dealbuilder, and cies while at the same time cre- uct development” arm of overseas XpressDox, some of which I ating competitive advantages. LPO firms. The long-term damage have reviewed in this newsletter, By keeping the knowledge in- to law firms from removing multiple provide such a level of efficiency house, the long-term viability of layers of skill and service could be and quality control, that there the firm is preserved. irretrievable. While partner profits should be no need to outsource may increase in the short term, most transactional work. LPO could transform the very na- The sky has not fallen yet. ture of the legal profession. Moreover, the use of these “ex- We still have time to save the pert drafting systems” in con- junction with databases, would American legal industry. While a 10-hour time obviate much of the need for much contract management and difference works for contract analysis services. In the Moreover, some of the tech- overnight assignments, area of litigation support, cloud- nologies that have fueled LPO it doesn’t work for realtime based services like Lexbe of- in overseas countries could be fer powerful litigation document used to support “homegrown” collaboration. management services for under companies, “in-sourcing” or $99/month. And cloud-based “home-sourcing” to parts of the document services like NetDoc- United States with lower cost- There are also cultural and lan- uments, Box.net, Google Apps, of-living and consequently lower guage differences. The goal of and Microsoft Office 365, enable fees. While a 10-hour time dif- the foreign outsourced worker virtual teams and wholly virtual ference works for overnight as- is to meet targets and efficiency law firms to share documents signments, it doesn’t work for standards that may differ from and collaborate in realtime. realtime collaboration. There an American lawyer’s goals. Cre- are many talented lawyers (and ative collaboration and excel- American law firms could per- paralegals) who live in or would lence might be replaced by con- form the intense analysis of the like to live and work in the Mid- sistency and standards (think legal business process, evaluat- west and Mountain states. Pres- The French Laundry versus Mc- ing the minute steps required to tigious law firms could shed Donald’s) to the possible detri- wage document-intensive litiga- much of their “real estate” bud- ment of client service. tion, conduct due diligence, and get for expensive office space,

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while preserving a corpus of tal- nology, these firms have built sion” of law to recognize what ented, productive, and happier teams that take advantage of the Ed Poll calls “The Business of attorneys working in alternative lower costs of operation in the Law.” Law firms are under pres- environments. “middle” of the country, includ- sure to act like businesses. That ing use of home-based workers. means cutting costs and making There are also “virtual parale- Homesourcing has gained great- charges more predictable. The gal” services cropping up in this er acceptance because it avoids sky has not fallen yet. We still is country staffed by talented indi- the cultural differences inherent time to save the American legal viduals with years of experience, in outsourcing work to a foreign industry. The same business pro- such as Thompson Paralegal country — even if they do speak cess modeling used by LPO firms Services and StarrParalegals. A English. when combined with the appro- number of Midwest and Moun- priate technology can transform tain-state law firms have opened CONCLUSION our law firms into sleek efficient, branch offices on the coasts in Our legal system is being given productive, innovative and highly New York, Boston, D.C., San a wake-up call. The pressure of profitable companies that serve Francisco and LA. Through tech- the market is forcing the “profes- as a model for the world to follow.

Seth Rowland, Esq. was named TechnoLawyer Consultant of the Year in 2002 for his contributions to TechnoLawyer on the subject of document assembly and law practice automation. He is a nationally known technologist whose company, Basha Systems LLC, has helped many law firms build customized practice management and workflow solutions. He has worked at Cravath, Swaine & Moore and Kramer Levin, and his clients have included Proskauer Rose LLP; Orrick, Herrington & Sutcliffe LLP; Sidley Austin LLP; Husch Blackwell LLP; SNR Denton; Emmett Marvin & Martin, LLP; Shipman & Goodwin LLP; Bradley Arrant Boult Cummings LLP; and Honigman Miller Schwartz and Cohn LLP. Please feel free to visit his blog for the latest on document assembly and practice management.

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