Legal Outsourcing: job killer or job creator?

By Sharon Golec on Thursday, September 9th 2010
Management des Cabinets d'avocats

Like it or not, outsourcing of legal work to less expensive markets, notably India, has become a fact of life for many legal departments and law firms, including even Magic Circle firms such as Slaughter and May (as reported in The Lawyer, October 5, 2009). Some of the work shift has come at the expense of newly-minted lawyers, who traditionally spend at least part of their time doing outsourceable work such as reviewing and drafting of standard documents. Conversely, outsourcing has created new job opportunities for Indian and other developing market lawyers.

What is less known, however, is that the growth of outsourcing has created interesting career opportunities for a small but growing number of U.S. and U.K.-trained lawyers. According to Heather Timmons of the New York Times, « legal outsourcing firms in India are actively recruiting experienced lawyers from the West. And American and British lawyers – who might once have turned up their noses at the idea of moving to India, or harbored an outright hostility to outsourcing legal work in principle – are re-evaluating the sector. » (« Outsourcing to India Draws Western Lawyers », The New York Times, August 4, 2010). U.S. lawyers quoted in Ms. Timmons’ article left traditional legal jobs to take on managment roles in India based outsourcing firms, citing the challenges of developing a business in a rapidly-growing field (according to Valuenotes, a consulting firm in Pune, India, as cited by Heather Timmons, revenue from Indian outsourcing firms is expected to reach 440 million dollars in 2010 ) and of managing large teams.

« Onshoring » (outsourcing to less expensive domestic markets) is also creating new opportunities in some unlikely places. The legal outsourcer Integreon, for example, has offices in Bristol, United Kingdom and Fargo, North Dakota as well as in India, the Philippines and South Africa. Clients benefit from the costs in Bristol and Fargo, significantly lower than those in London and New York, and are reassured by working with domestic lawyers who are a « known quantity ». The cost of onshoring, however, is typically at least twice as high as that of outsourcing overseas. (« Why too much onshoring could create a headache for LPO providers, » Margaret Taylor, The Lawyer, July 19, 2010).

Outsourcing and onshoring are but two manifestations of the legal market’s increasing fluidity. In another example, U.K. based firms such as Herbert Smith, Linklaters, SJ Berwin and Norton Rose have developed relationships with Indian universities and are hiring a growing number of their law graduates to work in the U.K. (Husnara Begum, « Norton Rose faces hiring battle in wake of new Govt visa quota, » The Lawyer, August 16, 2010). Skilled Indian and other lawyers working in outsourcing firms seem poised to take on progressively more complex work as clients become more comfortable with outsourcing. In addition, some U.K. firms are asking outsourcing firms to develop teams dedicated to their firm, able to adjust to client needs (see « Outsourcing to India Draws Western Lawyers » cited above).

All of these trends show that the law firm of the future will be increasingly focused on providing the expertise best adapted to clients’ specific needs in the most cost efficient way, wherever that expertise is located. Lawyers will have to adapt to the new reality, by focusing even more on adding value, providing advice and services that cannot be outsourced. Their added value will derive from their in-depth knowledge of their clients’ strategies, activities and markets. Firms may hire fewer new law graduates, who will have to move up the learning curve as quickly as possible to be able to provide this type of value-added service. For those legal services that can be outsourced, firms will provide value by developing partnerships with the best outsourcers, training them and integrating them into the firms’ service offers. Training and managing outsourced ressources will open up interesting career opportunities for geographically mobile and / or technology savvy lawyers willing to work in non-traditional structures. Outsourcing will therefore reshape the legal job market in some unexpected ways.

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