Legal process outsourcing: The next big thing

After outsourcing revolutionised the careers and lifestyles of Indian call centre operators, healthcare professionals and scientists, here comes a trend that presents great opportunities for the country's legal eagles.

Legal Process Outsourcing (LPO) is the industry in which in-house legal departments or organisations outsource legal work from areas where it is costly to perform, such as the United States or Europe to areas where it can be performed at a significantly decreased cost like India. This is a high-end industry and it has exploded in recent years.     

While few actual law firms from America or Canada have set up offices here -- SDD being the exception to the rule -- many Indian firms offer their services to US-based clients.

Why are American companies outsourcing their work to India?
~ There are over a million English-speaking lawyers and 80,000 English speaking law graduates being produced every year.

~ India has a lower cost of living which means lower salaries.

~ Furthermore, real estate is much, much cheaper here. In the US, rent forms the main cost of the law firm. In Mysore, however, office space is 1/43rd the cost of an equal area in the uptown city-areas where American law firms set up shop. The firm passes on the savings to the clients: 'Our clients pay for legal services, not real estate!' says Russell Smith, president and chairman of SDD Global Solutions.

~ India shares the same, British-based, "common law" legal system that is present in the US and UK, so Indian law graduates do not find it hard to learn Western legal skills.

~ Lawyers in India are also much more sincere than their US counterparts. 'Unlike most American lawyers, they like their job!' says Smith.

~ The time difference actually works to our advantage in this field. When the working day ends in the US, it begins in India. So an attorney could send documents for review before he heads home in the evening and have it ready on his desk first thing in the morning! It's a great timesaver.

Of course, what all this adds up to is that India offers a much cheaper destination for legal work than any American law firm. Take a single example: Sony wanted to make a film. In order to do so it required an 'opinion letter' outlining the activity and risks involved for the insurance firms in order to secure cover for shooting a movie.

Preparing the letter was a 400-man hour job which would have cost $250,000 at a US law firm and Sony gave it a second thought. SSD did the job for in India for merely $43,000.

What kind of work is being outsourced?
The most sought after services are legal research and legal drafting. SDD, for example, researches and writes memos that help clients figure out how to make film and TV productions while avoiding legal issues as much as possible.

Indeed for the bigger LPOs the tasks are similar to what layers do in New York or Boston. Other tasks are include:

~ Online research
~ Reviewing and reporting documents
~ Drafting of briefs and memoranda
~ Litigation support
~ Drafting and application of patents
~ Intellectual property work
~ Coding and indexing
~ Legal diligence

What is the pay like?
A fresher can start out with a salary between Rs 20,000 and Rs 25,000. After one or two years this becomes between anything between Rs 25,000 and Rs 35,000. By the time you've finished your fifth year your salary could be as high as Rs 70,000 pa.

Of course, you have to be very good to get into the better firms. SDD, for example only hired one lawyer for every 900 applicants.

What skills are needed?
Currently, 77 per cent of all LPO work emanates from the US. Therefore proficiency in American English, drafting and research methodology are essential skills. Comfort with workplace technology is another other important pre-requisite as all product creation and delivery is done using computer applications.

Only a tiny percentage of graduating lawyers are equipped with all the skills needed for the LPO industry. Capacity building and re-orientation to the US legal system and methodologies will be the key in ensuring success.

What's the administrative structure?
Like all sectors in the outsourcing industry, LPO has great management prospects. The ranks are as follows, from lowest to highest:

~ Associate
~ Senior Associate
~ Project Manager
~ Senior Project Manager
~ Vice-President
~ President
~ Director

What's the future like?
LPO is a sunrise industry which should see a boom in the next 3-5 years. Forrest Research estimates that there could be a demand for as many a 79,000 LPO professionals in the next 7-8 years.

Already 155 of the top 200 law firms outsource some portion of their work. Critics have predicted that the work will be high volume but low value. However, several firms like Quislex, Jurimatrix and Bodhi Global have business models based on high-volume, high-value opportunities like research, transaction support and case analysis.

In conclusion, the LPO industry is definitely the next big sector as more and more companies see the value of moving away from firms that charge as much as $1,000 per hour to a model where they pay a third of the price for work that is of equally good quality. This is definitely the sector for those with brains and ambition.

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