Even law research can now be outsourced

how we live — By Bob Riel on April 9, 2008 at 7:20 am

It sometimes seems as if there is no end to the type of work that can be outsourced these days. Businesses have been outsourcing labor for years, and individuals have figured out how to outsource personal tasks, nursing home care and even pregnancies. Now comes word of the latest work that is being outsourced – legal research. Time Magazine has the story.

Mark Alexander, a Dallas attorney, says he’s ethically obligated to do what’s best for his clients, “and that includes saving them money.” So when one of them asks him to research a securities-fraud topic, for example, or breach of contract, he doesn’t even think about applying his $395 hourly rate. Instead, he calls Atlas Legal Research, an outsourcing company based in Irving, Texas, that uses lawyers in India to provide the service for $60 per hr. “When a client pays me a $25,000 retainer and I can save them money, I will do so,” says Alexander. Handing off the work to a $225-per-hr. junior associate is not an option. “They don’t even know where to stand in the courtroom,” he says.

While the Americans learn, well-trained lawyers in secure offices in Mumbai (formerly Bombay), Bangalore and Gurgaon (outside Delhi), who typically earn $6,000 to $30,000 annually, do legal grunt work…The considerable savings is perhaps one reason Forrester Research, based in Cambridge, Mass., has projected the offshoring of 29,000 legal jobs by the end of the year and as many as 79,000 by 2015.

Perhaps we should call it Outsourcing 2.0, as it’s being described as the next logical step in outsourcing, from lower skill to higher skill jobs. There is obviously a limit, though, as to how much of this work can be done from abroad, which at the moment is limited to legal reseach and document review.

It’s part of India’s inevitable move up the corporate food chain, from lower-value business process outsourcing–like call centers–to knowledge process outsourcing (KPO). The latter category encompasses higher-skilled jobs, such as engineering and medicine, and relies on the KPOs to behave more like branch offices of U.S. companies.

ValueNotes, a business-research firm based in Pune, India, says a subset of KPO called legal process outsourcing (LPO) has grown revenues 49% from 2006, to $218 million last year. The figure will nearly triple, to $640 million, by 2010, it says…

TransUnion, in Chicago, has successfully outsourced legal work for four years, according to general counsel John W. Blenke. “Every law firm is really an outsourcer. One lawyer usually can’t do it all,” he says. Indian attorneys are currently reviewing more than a million litigation e-mails for the company, which costs less than $10 per hr., he says. He would pay $60 to $85 per hr. to a U.S.-based legal-staffing company for the job.

Blenke says he’s cautious, however, about the work he outsources. “You can only do it with a few things. It has to be an area that you know well, so you can build processes around that,” he says.