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The source on outsourcing

Law, too, is going offshore. Two Harvard Law students are getting a firsthand look.

Shaun Mathew

Mahesh Bhat, Getty Images

Shaun Mathew, 3L, was welcomed to QuisLex in Hyderabad in August, with a garland and a mark of red turmeric.

No American politician is likely to make the loss of lawyers’ jobs to New Delhi a hot-button issue during upcoming elections. Yet over the past few years, legal work has joined the list of services—from IT support, to radiology, to debt collection and even health care—being sent overseas.

The work ranges from document processing and litigation support to patent applications, contract drafting and even brief writing—including a brief for a tax case that went before the U.S. Supreme Court.

It’s more of a trickle than a wave: Twelve thousand legal jobs (half lawyer, half paralegal or research) went overseas in 2004, according to the firm Forrester Research. Much of it is going to India—$61 million worth last year, according to one account. That’s a small fraction of the estimated $192.7 billion spent on legal services in the U.S. over the same period.

But for 3Ls Shaun Mathew and Vikram Thomas, the fact that legal offshoring is in its infancy makes this the right time to study it. And, as children of professionals who emigrated from India to the U.S., they have their own experience with an earlier chapter of globalization.

“Our idea was to go to India and see firsthand what the industry looks like today,” said Mathew.

Friends since their 1L year, and sharing interests in law and business, they approached Professor David B. Wilkins ’80, head of the school’s Program on the Legal Profession and its new Center on Lawyers and the Professional Services Industry.

Wilkins saw the project as a perfect fit. “The center we’ve started is trying to understand the way professions like law are being reshaped by large-scale forces like globalization,” he said. “And offshoring has, of course, been one of the most important new developments in the global economy.”

The Supply

To begin to grasp the supply side of the business, Thomas and Mathew got on a plane to India in January and interviewed law students, attorneys at top corporate firms, venture capitalists and India’s second-ranking solicitor general. They also visited the cubicles where legal work is being done at a fraction of the going U.S. rate.

Although the offshoring business hasn’t been around very long, they found several models. In 2001, a division of General Electric set up a small operation near New Delhi staffed with Indian lawyers. Since then, some Indian corporate law firms with international practices have begun exploring the idea of handling American legal work.

But the more common approach—and the one Mathew and Thomas found the most promising—is the independent firm started by an entrepreneur, often an Indian-American lawyer who supervises the work of Indian-trained attorneys. So far, their clients are primarily corporations and small law firms.

Most of the CEOs the students interviewed were not forthcoming about finances or the names of clients. “One of their selling points has to be confidentiality,” explained Thomas. But they discussed business strategies and invited Thomas and Mathew to speak with their employees.

“Obviously, these firms are still in the client-building mode,” said Thomas, “and there’s a lot of spin.” One example is the claim that a firm hires only graduates of the national law schools—a pool of less than 1,000 law students out of tens of thousands matriculating in India each year. In fact, Thomas and Mathew found few top law school graduates working in the firms.

The companies also claim they are focused on high-end legal work, says Mathew. In fact, although many of the firms they visited aspire to take on more complex tasks as they gain client confidence, right now most offer only document preparation and litigation support for corporations.

The firms that specialize in patent assistance are an exception. Tapping into graduates from India’s highly respected engineering schools, they supply a range of services to American companies, stopping short of filing the patents. It was reported in The New York Times that a patent application that would cost $11,000 in the U.S. can be prepared by an Indian lawyer for an American attorney’s review for $5,000 or less.

Thomas and Mathew have both worked at New York law firms over the past two summers. Before starting the project, they wondered why experienced attorneys would be willing to do the sort of repetitive tasks that are usually the training fodder of junior associates or the domain of paralegals.

In fact, one of the things that they found most striking in their on-site interviews was the visible enthusiasm of the employees.

That was true at Pangea3, a firm in Mumbai, India, whose clients include Fortune 500 companies such as Yahoo. An attorney who had worked in corporate law for 14 years—before being hired by Pangea3 to manage contract drafting—said the opportunities she got at the company could not be matched by Indian law firms, many of which are still family-run and offer little flexibility or chance of promotion. One intern was clearly excited to be involved in international work. He called his job “paradise.”

The students learned that the costs of training employees who prepare patents can run as high as $9,000 per worker, whereas salaries average around $12,000. When they questioned how the firms’ business models were sustainable in the face of these numbers—attrition is notoriously high in other sectors of the offshore economy—the best answer seemed to be employees’ enthusiasm, at least until the Indian legal world can offer better opportunities.

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