Editor's note: This article is part of a weekly series from The Legal Intelligencer examining how law firms adapted during the last two years and where they are headed as the economy recovers.
Between new players looking to provide legal services and pushback from clients over paying for routine work, law firms potentially have less to do.
In response, some firms have looked to retool their business models, adjust the roles they play for their clients and, in some instances, get out of certain businesses altogether. For many firms, staying ahead of the curve will mean recognizing these challenges and figuring out creative ways to adapt, consultants say.
"Underestimating your opposition is a really bad idea," Edge International consultant Jordan Furlong said.
Furlong recently heard a general counsel say that her job is not to produce or deliver services to her clients but to manage solutions -- a role law firms would be served well by if they chose to embrace the concept, he said.
Firms should think of themselves as the managers of solutions and recognize they will do some of the work and send some out to other providers, he said.
"Smart firms will say they still want to manage the process and sit at the client's right hand," Furlong said, adding however, that they need to realize there are some things the firm is good at and other things a legal process outsourcer (LPO) may better handle.
The real battleground for law firms in the near future will be over who will serve as the quarterback, or the solutions manager, Furlong said.
Law firms in the United Kingdom seem to have been the early adopters of this model. Furlong pointed to Lovells, now Hogan Lovells since its merger with U.S.-based Hogan & Hartson. Lovells had gone out to find regional firms to do certain work at a lesser charge while Lovells would serve as the guarantor of the smaller firm's quality and liability.
Hogan Lovells London-based partner Michael Stancombe said the firm created what it calls its WAVE process eight years ago after some large clients started asking for some of the "smaller" work to be handled in a more cost-effective fashion while keeping Lovells involved in the oversight of the whole matter
The firm came up with the idea of having clients give it all of the work, as opposed to the portion it had prior, and the firm would manage it with the goal of decreasing the client's legal spend by 20 percent. All matters came through Lovells and anything below a certain threshold would be sent out to two pre-selected regional firms to handle at a lower cost. In turn, Lovells was able to increase its rates for the high-end work it was doing given the fact that the clients were still saving money. That also made up for sending out some of the work, Stancombe said.
The clients could theoretically just contract with the two smaller firms and cut out Lovells, but they want the management capabilities and high-end work from the firm, he said. The key factor in the WAVE concept is that the lead firm maintains oversight of the entire matter. So far, around 9,000 matters have been handled under this system, Stancombe said.
Since Lovells merged with a U.S. firm, WAVE is still implemented, and Stancombe said his legacy firm is working with its new colleagues across the Atlantic to see if such a system might make sense for their clients.
London-based Berwin Leighton Paisner took that concept a step further. Rather than utilizing a variety of lower-cost regional firms, Berwin Leighton created one that it controls. Lawyers on Demand is a subsidiary of Berwin Leighton that provides less expensive, though still highly trained, lawyers to serve on an interim basis within a client's law department. The freelance attorneys have the support of, and are under the control of, Berwin Leighton, but they operate under a different cost-structure
"We understand that work volumes are increasing yet many clients are coming under pressure to reduce legal costs," the firm said on its website. "All LoD fees are agreed in advance using a daily rate that reflects the expertise of the lawyer."
Other firms in the United States are using a distinct, internal attorney tier in an effort to reach a similar result. Adam Smith Esq. partner Janet Stanton called the concept a "light division" of attorneys. These lawyers are still part of the same firm but are perhaps resident on a different floor or office building and have no anticipation of becoming partner.
The idea is to combat the competition from temporary staffing agencies and keep as much of the commodity work in-house as possible, Stanton said. But this is just one type of service model and not suitable for every firm, she said. Some firms may choose to give up that work altogether and let the LPOs handle it.
Other firms are providing certain outsourced services themselves rather than let an e-discovery or document review LPO do it, Stanton said. They have created "e-discovery mills" or information centers in which lower-cost attorneys are working in lower-cost markets to handle work formerly done by more expensive junior and senior associates.
In an effort to make the work of junior associates more palatable to clients, the Practical Law Company is looking to team up with firms rather than work against them. Ian Nelson, head of the company's U.S. business development, wouldn't jump to call his company an LPO and said it has never looked to compete with law firms, though it does have some law department clients.
PLC provides online support for law firms, mainly in the transactional realm, that includes drafts of documents such as letters of intent, acquisition agreements or closing checklists. The goal is to stop lawyers from spending hours of research on how to draft these documents and instead focus on the legal services that can't be outsourced.
"There's a level of information that all lawyers at a certain level should have," Nelson said. "Clients shouldn't be paying for it."
Most of PLC's attorneys are former large-firm lawyers. Nelson said this isn't a lesser alternative but just a different way of training and providing services. Now that clients are interested in working with smaller firms, Nelson said, they are still expecting the same caliber of responsiveness and resources. Companies like PLC look to get lawyers up-to-speed faster, he said.
As with many LPO services, some firms have found a way to bring this research function in-house. And as with many business of law innovations, the concept hails from the United Kingdom
Professional support lawyers started in the United Kingdom more than 10 years ago and some consultants say they may be migrating into U.S. firms. The role of a professional support lawyer is to serve the firm or a specific practice area by staying up-to-date on changes to the law and assisting or providing drafts of legal documents all in an effort to prevent younger associates from billing the clients for hours spent doing the same thing
This attorney, who isn't billing time and can often work on a flexible schedule, might focus on researching new laws, draft documents and manage document systems, hold training sessions for younger lawyers and answer questions for billing attorneys on institutional knowledge within the firm.
The role is a cost center for law firms, as these positions are generally paid at a senior-associate level, but they can also be viewed as a way to combat the unwillingness of clients to pay for younger lawyers to learn on the job.
In February, London-based Clifford Chance was seeking a professional support lawyer for its New York office to work with the mergers and acquisitions and corporate finance practices. Some of the job descriptors included gathering and disseminating "know-how," collecting precedents and creating, updating and managing standard legal forms.
Regardless of whether firms are bringing the competition in-house, working with outside vendors or holding tight to the traditional law firm model, clients have an increasing number of options when it comes to service providers.
"There used to be one monolithic legal services provider -- the law firm," Furlong said. "Now there are many and clients will choose among them."
The "huge role" for law firms, he reiterated, is the quarterback.
http://www.law.com/jsp/article.jsp?id=1202474333189&rss=newswire
Ankit Rawal
Smaller Firms May Soon See More Laterals, Fewer Young Lawyers by Zack Needles
Just as the recession caused more large companies to turn their attentions toward smaller firms, it had a similar effect on lawyers who traditionally might have been thought of as "big firm material."
Slashes in compensation and questionable job stability at megafirms sent more top-tier law school graduates to midsize and small shops.
Similarly, increasing rate pressure drove some big firm partners to smaller firms.
Still, while the number of young, well-pedigreed job candidates has remained high at small and midsize firms over the past few years, the number of big firm laterals migrating to smaller firms has not reached the heights many first predicted.
But some in the legal community believe the apex of large-to-small lateral market activity is still on the horizon, along with a shift back to big firms for many young lawyers.
LATERAL MOVEMENT? NOT YET
It was widely predicted that the recession would cause a number of large firm partners to jump ship for smaller firms.
The logic was simple: General counsel at big companies would be operating with tighter budgets and big firm lawyers would find it more and more difficult to justify their high rates, so they'd move to smaller shops where there's less overhead.
But some in the legal community reported that, so far, this scenario has played out more in theory than in practice.
Peter R. Spirgel, managing shareholder of Flaster Greenberg in Cherry Hill, N.J., said he's been "surprised" by the lack of big firm lateral interest his firm has experienced over the past few years.
"I'm trying to figure out why and I've called some placement firms we've used and asked, 'Is it me?,'" he said. "But they said no. In fact, they see that partners with nice-sized portable books are less likely to move in troubled economic times. It's just another risk factor they don't want to bear."
Recruiter Frank D'Amore of Attorney Career Catalysts agreed that's part of it.
"Some people have decided, I think, that because of the uncertainties associated with the recession, 'If I can hold my own where I am, maybe now is not the time to take a risk,'" he said.
Both Spirgel and D'Amore said that much of the big-to-smaller firm movement that has occurred over the past few years has involved attorneys who were forced out of big firms because their practices couldn't be supported in tough economic times.
Big firm partners with solid books of business, however, have largely stayed put, according to D'Amore.
Those lawyers, he said, have recently been "protected in a cocoon" in which they've been allowed to offer their clients significant discounts and creative alternative fee arrangements as their firms fought to maintain business and weather the economic storm.
But a healing economy may prove to be worse news for big firms than an ailing one when it comes to losing partners, D'Amore said.
As the economy begins its upswing, he said, megafirms will likely try to return to something resembling their pre-recession selves by scaling back discounts and other client concessions and eventually increasing rates again.
General counsel, however, aren't likely to be as eager to go back to "normal."
If that happens, D'Amore said, partners who stuck it out with their firms over the last few years will have to decide whether they'd be better off somewhere smaller.
"Decision day will come for people who have kind of been in abeyance," he said.
In addition, he said, the recession forced many large firms to define their identities, leading to a market where international, national and regional firms are more clearly demarcated.
Because of this, according to D'Amore, partners with more rate-sensitive practices may increasingly begin feeling like they no longer belong at a firm whose overhead includes, for example, an office overseas.
Partners in certain practice areas may also begin to feel out of place at megafirms.
Patent prosecution and trusts and estates, as well as labor and employment work focusing on the public sector, employment practices liability insurance and individual cases are a few examples D'Amore gave of practices that may become harder to sustain at large firms.
BIG LAW BECKONS AGAIN
While the lateral partner movement has been sluggish, a number of midsize and small firms across Pennsylvania said the last few years have brought a wave of resumes from the type of highly credentialed young lawyers big firms typically scoop up first.
"In this year's summer class of 2010, we had representatives of the University of Virginia, Penn, Duke and George Mason," said David M. Kleppinger, chairman of Harrisburg-based McNees Wallace & Nurick. "In a typical year, we may have seen one or two from those types of schools. This year, it was the entire class."
Spirgel said he's had a similar experience.
"We were always very particular about who we hired," he said, explaining that his firm has long strived to hire attorneys who did well at top-ranked law schools.
The difference now, Spirgel said, is the firm has been hearing from "way more" young lawyers who fit that criteria.
Spirgel attributed this phenomenon to two factors: The shrinking compensation gap and the widening job-security gap between megafirms and smaller firms.
But as the economy begins to recover and large firms become more comfortable, D'Amore said, an increasing number of young lawyers may once again find themselves drawn to big firm life.
D'Amore said a number of large firms are beginning to "wade cautiously" into hiring again, planning summer programs with the hopes of bringing on new attorneys in the fall of 2011 and the fall of 2012.
Likewise, compensation may start to rise again, catching the eyes of both new graduates and young associates currently working at smaller firms, he said.
"When people have been [at a smaller firm] for three or four years and they graduated with a lot of loans and obligations and the market starts to go back, maybe firms won't be going crazy with starting salaries but the edge up will become very attractive," he said.
Kleppinger, however, was reluctant to solely credit the recession with the uptick in well-qualified hiring candidates at smaller firms.
Another component of it, he said, is generational.
"People know that the work requirements in some of the larger city firms are a lot larger than they are here in terms of time commitments and more and more young people are coming out of law school saying, 'I don't want that, I don't need that,'" Kleppinger said.
But D'Amore said that while this can be true, the workloads at midsize firms and large firms are not always that different.
For example, he said, while an attorney at a megafirm may be obligated to bill significantly more hours than a smaller firm counterpart, it will often be easier for the large firm attorney to find time to bill.
So the amount of effort required by each attorney in that scenario is basically equal, according to D'Amore.
More solid selling points for smaller shops hoping to sway young lawyers from going to big firms, he said, are the ability to offer more hands-on experience, a faster partnership track and greater flexibility in terms of work schedules.
http://www.law.com/jsp/article.jsp?id=1202474331627&rss=newswire
Slashes in compensation and questionable job stability at megafirms sent more top-tier law school graduates to midsize and small shops.
Similarly, increasing rate pressure drove some big firm partners to smaller firms.
Still, while the number of young, well-pedigreed job candidates has remained high at small and midsize firms over the past few years, the number of big firm laterals migrating to smaller firms has not reached the heights many first predicted.
But some in the legal community believe the apex of large-to-small lateral market activity is still on the horizon, along with a shift back to big firms for many young lawyers.
LATERAL MOVEMENT? NOT YET
It was widely predicted that the recession would cause a number of large firm partners to jump ship for smaller firms.
The logic was simple: General counsel at big companies would be operating with tighter budgets and big firm lawyers would find it more and more difficult to justify their high rates, so they'd move to smaller shops where there's less overhead.
But some in the legal community reported that, so far, this scenario has played out more in theory than in practice.
Peter R. Spirgel, managing shareholder of Flaster Greenberg in Cherry Hill, N.J., said he's been "surprised" by the lack of big firm lateral interest his firm has experienced over the past few years.
"I'm trying to figure out why and I've called some placement firms we've used and asked, 'Is it me?,'" he said. "But they said no. In fact, they see that partners with nice-sized portable books are less likely to move in troubled economic times. It's just another risk factor they don't want to bear."
Recruiter Frank D'Amore of Attorney Career Catalysts agreed that's part of it.
"Some people have decided, I think, that because of the uncertainties associated with the recession, 'If I can hold my own where I am, maybe now is not the time to take a risk,'" he said.
Both Spirgel and D'Amore said that much of the big-to-smaller firm movement that has occurred over the past few years has involved attorneys who were forced out of big firms because their practices couldn't be supported in tough economic times.
Big firm partners with solid books of business, however, have largely stayed put, according to D'Amore.
Those lawyers, he said, have recently been "protected in a cocoon" in which they've been allowed to offer their clients significant discounts and creative alternative fee arrangements as their firms fought to maintain business and weather the economic storm.
But a healing economy may prove to be worse news for big firms than an ailing one when it comes to losing partners, D'Amore said.
As the economy begins its upswing, he said, megafirms will likely try to return to something resembling their pre-recession selves by scaling back discounts and other client concessions and eventually increasing rates again.
General counsel, however, aren't likely to be as eager to go back to "normal."
If that happens, D'Amore said, partners who stuck it out with their firms over the last few years will have to decide whether they'd be better off somewhere smaller.
"Decision day will come for people who have kind of been in abeyance," he said.
In addition, he said, the recession forced many large firms to define their identities, leading to a market where international, national and regional firms are more clearly demarcated.
Because of this, according to D'Amore, partners with more rate-sensitive practices may increasingly begin feeling like they no longer belong at a firm whose overhead includes, for example, an office overseas.
Partners in certain practice areas may also begin to feel out of place at megafirms.
Patent prosecution and trusts and estates, as well as labor and employment work focusing on the public sector, employment practices liability insurance and individual cases are a few examples D'Amore gave of practices that may become harder to sustain at large firms.
BIG LAW BECKONS AGAIN
While the lateral partner movement has been sluggish, a number of midsize and small firms across Pennsylvania said the last few years have brought a wave of resumes from the type of highly credentialed young lawyers big firms typically scoop up first.
"In this year's summer class of 2010, we had representatives of the University of Virginia, Penn, Duke and George Mason," said David M. Kleppinger, chairman of Harrisburg-based McNees Wallace & Nurick. "In a typical year, we may have seen one or two from those types of schools. This year, it was the entire class."
Spirgel said he's had a similar experience.
"We were always very particular about who we hired," he said, explaining that his firm has long strived to hire attorneys who did well at top-ranked law schools.
The difference now, Spirgel said, is the firm has been hearing from "way more" young lawyers who fit that criteria.
Spirgel attributed this phenomenon to two factors: The shrinking compensation gap and the widening job-security gap between megafirms and smaller firms.
But as the economy begins to recover and large firms become more comfortable, D'Amore said, an increasing number of young lawyers may once again find themselves drawn to big firm life.
D'Amore said a number of large firms are beginning to "wade cautiously" into hiring again, planning summer programs with the hopes of bringing on new attorneys in the fall of 2011 and the fall of 2012.
Likewise, compensation may start to rise again, catching the eyes of both new graduates and young associates currently working at smaller firms, he said.
"When people have been [at a smaller firm] for three or four years and they graduated with a lot of loans and obligations and the market starts to go back, maybe firms won't be going crazy with starting salaries but the edge up will become very attractive," he said.
Kleppinger, however, was reluctant to solely credit the recession with the uptick in well-qualified hiring candidates at smaller firms.
Another component of it, he said, is generational.
"People know that the work requirements in some of the larger city firms are a lot larger than they are here in terms of time commitments and more and more young people are coming out of law school saying, 'I don't want that, I don't need that,'" Kleppinger said.
But D'Amore said that while this can be true, the workloads at midsize firms and large firms are not always that different.
For example, he said, while an attorney at a megafirm may be obligated to bill significantly more hours than a smaller firm counterpart, it will often be easier for the large firm attorney to find time to bill.
So the amount of effort required by each attorney in that scenario is basically equal, according to D'Amore.
More solid selling points for smaller shops hoping to sway young lawyers from going to big firms, he said, are the ability to offer more hands-on experience, a faster partnership track and greater flexibility in terms of work schedules.
http://www.law.com/jsp/article.jsp?id=1202474331627&rss=newswire
The City slowly discovers legal process outsourcing (LPO)
Following in the footsteps of the banking industry and their counterparts on Wall Street, a number of leading City law firms are beginning to seriously consider outsourcing as a way to further cut costs. However and while adopting some form of business process outsourcing (BPO) has become increasingly the norm, legal process outsourcing (LPO) has yet to significantly catch on.
According to a recent article in Legal Week, eight firms among the top 30 City firms are or were currently looking at introducing some aspects of LPO. These firms included Allen & Overy (A&O), Eversheds, Freshfields Bruckhaus Deringer, Linklaters, Lovells, Pinsent Masons, Wragge & Co and Simmons & Simmons while CMS Cameron McKenna and SJ Berwin are in the process of identifying what areas they would like to outsource. Meanwhile, another eleven of the top 30 firms said they had no plans to begin any type of LPO work and some of these firms had already looked at LPO as an option and had discounted it. Nevertheless, more than half of the firms in the top 30 had told Legal Week that they already outsource at least some of their back office functions.
So why is BPO more popular than LPO among City firms? A recent (November 2009) Legal Week Big Question Survey of partners from City firms in London found that half of those surveyed thought that the general standard of work on offer by LPOs could be better. In fact, no one rated LPO services as excellent while 14% rated such services as good, 27% thought they were ok and 7% rated the services as poor. Meanwhile, 36% of responding partners thought that service levels were “much better” in the UK than the standards abroad and another 38% thought that such services were merely “better” while 19% thought there would be “no difference” in terms of outsourcing location.
Despite some doubts though, a clear majority of City partners thought that the traditional law firm model will need to change or evolve substantially. In fact, 58% of City partners said that law firms will need to re-engineer their business models by considerably improving IT infrastructure and process management over the next 10 years while 24% foresee a “massive need” for such changes. However, there was unanimous agreement that outsourcing legal work as opposed to back office functions was much harder to credibly outsource. Hence, only 13% of City partners saw major prospects for the expansion of LPO into commercial legal services and another 34% predicted “considerable” expansion while 53% expected little to no growth.
However, The Times has recently pointed out that attitudes are likely to change given that a new recruit at a leading City law firm can expect a starting salary of about £60,000 which can rise to more than £90,000 at the best paying firms. The Times pointed out that there are studies that suggest that there are already 10,000 lawyers in India who are working for outsourcers and the total revenue for the LPO sector is expected to double in 2010 to US$1 billion and rise to US$4 billion within five years
In other words, LPO will likely catch on in the near future as the recent Legal Week piece had quoted one City law firm partner as saying that the days of paying for all types of work by the hour and having all of those hours under the same roof no matter what the task was are long gone. In fact, the partner even went on to say that there will only be one “profession” (the world’s oldest!) that will soon be left doing that.
http://outsourceportfolio.com/city-slowly-discovers-legal-process-outsourcing-lpo/
According to a recent article in Legal Week, eight firms among the top 30 City firms are or were currently looking at introducing some aspects of LPO. These firms included Allen & Overy (A&O), Eversheds, Freshfields Bruckhaus Deringer, Linklaters, Lovells, Pinsent Masons, Wragge & Co and Simmons & Simmons while CMS Cameron McKenna and SJ Berwin are in the process of identifying what areas they would like to outsource. Meanwhile, another eleven of the top 30 firms said they had no plans to begin any type of LPO work and some of these firms had already looked at LPO as an option and had discounted it. Nevertheless, more than half of the firms in the top 30 had told Legal Week that they already outsource at least some of their back office functions.
So why is BPO more popular than LPO among City firms? A recent (November 2009) Legal Week Big Question Survey of partners from City firms in London found that half of those surveyed thought that the general standard of work on offer by LPOs could be better. In fact, no one rated LPO services as excellent while 14% rated such services as good, 27% thought they were ok and 7% rated the services as poor. Meanwhile, 36% of responding partners thought that service levels were “much better” in the UK than the standards abroad and another 38% thought that such services were merely “better” while 19% thought there would be “no difference” in terms of outsourcing location.
Despite some doubts though, a clear majority of City partners thought that the traditional law firm model will need to change or evolve substantially. In fact, 58% of City partners said that law firms will need to re-engineer their business models by considerably improving IT infrastructure and process management over the next 10 years while 24% foresee a “massive need” for such changes. However, there was unanimous agreement that outsourcing legal work as opposed to back office functions was much harder to credibly outsource. Hence, only 13% of City partners saw major prospects for the expansion of LPO into commercial legal services and another 34% predicted “considerable” expansion while 53% expected little to no growth.
However, The Times has recently pointed out that attitudes are likely to change given that a new recruit at a leading City law firm can expect a starting salary of about £60,000 which can rise to more than £90,000 at the best paying firms. The Times pointed out that there are studies that suggest that there are already 10,000 lawyers in India who are working for outsourcers and the total revenue for the LPO sector is expected to double in 2010 to US$1 billion and rise to US$4 billion within five years
In other words, LPO will likely catch on in the near future as the recent Legal Week piece had quoted one City law firm partner as saying that the days of paying for all types of work by the hour and having all of those hours under the same roof no matter what the task was are long gone. In fact, the partner even went on to say that there will only be one “profession” (the world’s oldest!) that will soon be left doing that.
http://outsourceportfolio.com/city-slowly-discovers-legal-process-outsourcing-lpo/
Legal Process Outsourcing (LPO): Giving lawyers a case of their own medicine?
For certain the legal profession, long despised for its sky high fees, is one profession that few Americans would be sorry to see outsourced to India resulting in large scale job losses – at least for lawyers that is. Hence, will the emergence of Legal Process Outsourcing (LPO) finally cut the legal profession and its fees down to size? Maybe. Or maybe not.
Fortunately or unfortunately depending on how much you love lawyers, the legal profession is one profession that seems to be largely protected from the full blown effects of outsourcing. After all, a lawyer in one country generally cannot practice law in another country as the legal profession is governed by intricate licensure and ethical rules that are set by jurisdiction. Hence, Forrester Research is quoted in the Wall Street Journal as estimating that only 35,000 USA based legal jobs will be moved offshore by 2010 and 79,000 by 2015 – only a tiny fraction of the estimated 1.2 million lawyers in the country.
Moreover, don’t expect any US$500 an hour lawyer to have his or her job outsourced to India any time soon as the brunt of any job shift will be felt by paralegals and junior lawyers as LPO type of work typically includes basic legal research, documentation writing and review and the drafting of legal briefs and pleadings. In other words, routine legal and corporate secretarial type of work that no US$500 an hour lawyer would do themselves.
However, the potential cost savings from LPO are enormous with a recent USA Today article stating that some LPO companies will charge only US$25 an hour for work that would otherwise cost more than US$125 an hour if it were done in the USA. Moreover, starting salaries for new associates at big law firms in the USA can be more than US$200 an hour or US$160,000 per year at large and prestigious law national firms while the national average annual salary for lawyers according to a 2007 Altman Weil survey is US$318 per hour and US$550 per hour at large New York City law firms. However, an experienced lawyer in India can be bill at US$75 to US$100 per hour, roughly what some experienced USA based paralegals charge; while a indian lawyer with five years of experience can be hired for just US$30,000 a year including benefits, half of what an experienced USA based corporate paralegal would earn. And not to mention there is the cost of office space in New York verses Mumbai or Manila.
Nevertheless, don’t expect much in the way of cost saving to trickle out of large law firms or the legal departments of large multinationals. However, LPO does have the potential to significantly level the playing field for smaller law firms, smaller companies and individuals who can now have an amount of legal work done that could not be affordably attained in the USA. In other words, LPO has the potential to free up and leverage resources that will allow lawyers and Americans in general to do what they have almost always done best: sue each other.
http://outsourceportfolio.com/legal-process-outsourcing-lpo-giving-lawyers-case-medicine/
Fortunately or unfortunately depending on how much you love lawyers, the legal profession is one profession that seems to be largely protected from the full blown effects of outsourcing. After all, a lawyer in one country generally cannot practice law in another country as the legal profession is governed by intricate licensure and ethical rules that are set by jurisdiction. Hence, Forrester Research is quoted in the Wall Street Journal as estimating that only 35,000 USA based legal jobs will be moved offshore by 2010 and 79,000 by 2015 – only a tiny fraction of the estimated 1.2 million lawyers in the country.
Moreover, don’t expect any US$500 an hour lawyer to have his or her job outsourced to India any time soon as the brunt of any job shift will be felt by paralegals and junior lawyers as LPO type of work typically includes basic legal research, documentation writing and review and the drafting of legal briefs and pleadings. In other words, routine legal and corporate secretarial type of work that no US$500 an hour lawyer would do themselves.
However, the potential cost savings from LPO are enormous with a recent USA Today article stating that some LPO companies will charge only US$25 an hour for work that would otherwise cost more than US$125 an hour if it were done in the USA. Moreover, starting salaries for new associates at big law firms in the USA can be more than US$200 an hour or US$160,000 per year at large and prestigious law national firms while the national average annual salary for lawyers according to a 2007 Altman Weil survey is US$318 per hour and US$550 per hour at large New York City law firms. However, an experienced lawyer in India can be bill at US$75 to US$100 per hour, roughly what some experienced USA based paralegals charge; while a indian lawyer with five years of experience can be hired for just US$30,000 a year including benefits, half of what an experienced USA based corporate paralegal would earn. And not to mention there is the cost of office space in New York verses Mumbai or Manila.
Nevertheless, don’t expect much in the way of cost saving to trickle out of large law firms or the legal departments of large multinationals. However, LPO does have the potential to significantly level the playing field for smaller law firms, smaller companies and individuals who can now have an amount of legal work done that could not be affordably attained in the USA. In other words, LPO has the potential to free up and leverage resources that will allow lawyers and Americans in general to do what they have almost always done best: sue each other.
http://outsourceportfolio.com/legal-process-outsourcing-lpo-giving-lawyers-case-medicine/
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