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Law Firms Outsource Jobs Offshore

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The debates is the controversial issue of outsourcing jobs overseas, a route pioneered by the IT industry. The outsourcing company provides legal support services

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									MARKET WATCH                                                                                                                       1. 800. 973.1177




Law Firms Outsource Jobs Offshore
[by Anayat Durrani]
These days, jobs and the economy are on the minds of most voters as Election Day has come and gone. A political hot topic that surfaced during the debates
is the controversial issue of outsourcing jobs overseas, a route pioneered by the IT industry. But as Election Day has passed, the spotlight is expected to fade
on the issue, as a number of corporate law departments and law firms, prompted by a weakened economy, increasingly look to outsourcing work offshore to
manage costs and increase profitability.




Now that the election is over, law firm off-         India, the location of Intellevate’s support          Hollywood, CA, is not considering outsourc-
shoring will continue to accelerate, accord-         center. The fact that “India works while we           ing patent work overseas. Marc Hankin, the
ing to Leon Steinberg, CEO of Intellevate,           sleep” results in work being done 24 hours a          company’s founder, believes doing so could
a Minneapolis-based outsourcing company              day and yields a faster turn around time, he          prove problematic, and not merely because
that provides legal support services, such           said. Mr. Steinberg also said the cost savings        of language barriers or time zone differ-
as paralegal, docketing, technical research,         and the reduction in risk were other advan-           ences. “First, there is the security issue.
and/or bookkeeping functions to its clients.         tages. “Because wages are lower, through              Technology may not be exported to other
“Law firms are political animals, and many           India more time and care can be taken.”               countries without express permission of the
of them are unwilling to put a stake in the                                                                U.S. government. Even were that available,
ground until the elections are over.”                India has become the center of outsourced             there is the issue of our client getting ripped
                                                     work, especially in such cities as New Delhi,         off and having little chance to discover it, and
In recent years, outsourcing has become big          Bangalore, Mumbai, and Hyderabad. Mr.                 less of a chance to do anything about it.”
business for legal outsourcing groups like           Steinberg, whose legal-services support cen-
Intellevate LLC, Mindcrest, and Office Tiger.        ter is located in New Delhi, said his company         Mr. Hankin also stressed the issue of quality,
Industry participants estimate the potential         chose India because of its high population of         saying that the majority of the work they do
for orders from U.S.- and U.K.-based law             advanced degree holders who receive their             for their clients requires thorough working
firms could range between $2 billion and $4          education in the English language. Steinberg          knowledge of American law and the nuanced
billion a year, according to a report by Dow         also noted that the prevailing wage in India          cases of the United States Court of Appeals
Jones. The bulk of the work being outsourced         is 25% of the prevailing wage in the U.S. For         for the Federal Circuit. “There are other,
is “back-office” work such as legal research         example, a patent lawyer with little US pros-         subtle, legal parameters as well. I find it
services, word processing, copying, legal            ecution experience may make over $80,000 in           hard to believe that someone outside the
transcription, accounting, and other admin-          the U.S. and less than $20,000 in India,” said        U.S. would understand these enough to do
istrative support. Based on industry data, top       Mr. Steinberg. Another advantage of India, he         a good job avoiding the pitfalls…I doubt that
200 U.S. law firms spend nearly $20 billion          said, is that its legal system is based on the        I would entrust my clients’ work to anyone
annually on operating costs, with office             British model, as is the United States. This          overseas.”
operations and documentation management              has led many corporate law departments and
making up 46% of total expenses, the report          law firms to rely on lawyers in countries like        Trojan Law Offices, a patent and trademark
said.                                                India, New Zealand, and other similar Brit-           litigation law firm based in Beverly Hills,
                                                     ish-modeled countries to cut costs.                   does not currently outsource work overseas
Mr. Steinberg said Intellevate has doubled in                                                              but is considering it as long as it is properly
size in the last year and expects to double in       Despite its seemingly growing trend, law              supervised by U.S. counsel.
size again in another 6 months. Intellevate is       firms who do outsource are not always will-
majority owned by shareholder attorneys at           ing to disclose it, and the companies helping         In the meantime, outsourcing remains a
Schwegman Lundberg Woessner & Kluth, a               them outsource are also mum on the subject.           lucrative business for companies like Office
nearly 60-lawyer patent firm in Minneapolis,         Then there are others who oppose outsourc-            Tiger and Hildebrandt, who began a joint ven-
a firm that also is a customer of Intellevate’s      ing and feel it may not be the best option for        ture in June to provide “back-office” support
services, according to Minnesota’s Pioneer           some law firms.                                       services to leading U.S. and U.K. law firms.
Press. Mr. Steinberg cited several advantag-                                                               One of these firms includes U.K.-based Allen
es to outsourcing legal work to countries like       Hankin Patent Law, a firm based in West               & Overy, which has some 3,300 partners and




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MARKET WATCH                                     1.800. 973. 1177




staff and operates in 20 countries.


“When we began this venture, our expecta-
tions were high and we are still surprised
by the interest in firms’ leaders and the
desire to learn more about outsourcing and
figure out how to apply it to their practice,”
said Michael Short, Director of Hildebrandt
International, a law firm consulting group.


OfficeTiger has operations centers in Chen-
nai, India, with more than 2,000 trained
professionals including MBAs, PhDs, and
chartered accountants. Some of the ser-
vices Office Tiger-Hilderbrandt provides for
its clients include document processing,
business and legal research, risk manage-
ment, professional support, HR, finance
and accounting services. “The kind of work
varies by size of firm, culture of firm and
general reception of the firm’s management
towards the concept of outsourcing,” said
Mr. Short.


While the concept of outsourcing begins to
gain more buzz among law firms, Mr. Short
believes outsourcing will in time become
more mainstream. “In the near future when
the Baby Boomers retire, the demograph-
ics of the U.S. workforce will create a huge
change in supply and demand. It is a good
idea for law firm leaders to start thinking
about outsourcing now rather than later
so that they can ease into the outsourcing
transition.”




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