-- A growing number of legal firms are breaking ground by outsourcing some costly legal work to India — including the one representing the film studio that produced Borat.
Indians have long worked in call centers fielding requests for computer help or taking orders from American shoppers. Now some firms are tapping India's professionals, including lawyers and architects, for intellectual outsourcing that they hope will reduce consumer costs.
"You could call it 'Outsourcing 2.0' or maybe even '3.0.' Now firms are increasingly trying to leverage expertise," says Saikat Chaudhuri, an assistant professor in the business school at the University of Pennsylvania. Legal outsourcing is "growing very, very quickly."
Professional outsourcing jumped from a $260 million industry in 2001 to a $3.05 billion industry in 2007. It will reach a projected $11.2 billion by 2011, says a report from the India Brand Equity Foundation, a public-private partnership. Legal research, which the group didn't track in 2001, contributes about $95 million.
The Indian lawyers cannot give legal advice and must be supervised by a U.S. attorney but can handle duties that U.S. firms give to paralegals or first-year law associates. Among them: researching cases, managing contracts and preparing mortgage foreclosure documents. Some charge as little as $25 an hour for work that would cost more than $125 an hour in the United States.
The savings can help individuals and small companies sue large companies, which can cost millions, says Jay Ellwanger, an Austin lawyer. "You have to find ways to level the playing field," he says.
Yet some paralegals cite concerns about confidentiality, unauthorized practice of law and language barriers. "If work is to be outsourced, it should first be outsourced to qualified and competent paralegals within the attorney's local community," the National Federation of Paralegal Associations says in a statement.
The American Bar Association this summer formally acknowledged the practice in an ethics opinion. It emphasized that a U.S. attorney must supervise any foreign lawyer.
Examples of legal outsourcing:
• Lawyers in India employed by the Tusker Group in Austin reviewed about 400,000 documents for $25 an hour when Ellwanger's firm represented Bluecurrent, a small technology company that sued Dell over trade secrets. The case settled in October 2007 for an undisclosed sum.
• The New York law firm SmithDehn, which represents the Borat production company, outsourced research on contract law, privacy and publicity rights for the film to its Indian subsidiary SDD Global Solutions, founder Russell Smith says. SDD Global, launched in 2002, now draws more business than the law firm.
Firms are beginning to see the value of outsourcing as the economy dips, says Smith's partner, Frank Dehn. Clients "want to know why they are paying the associate $300 an hour to do something any smart person can do," he says.