Tuesday, December 26, 2006

Legal Outsourcing in India - A Billion Dollar Prospect


India's lawyers are fast becoming a darling for US and UK-based law firms. Legal eagles of United States and England are apparently taking comfort from the country's elaborate, British-modeled legal structure, which they want to exploit for paralegal work and research support.
In the US alone, the potential for such outsourcing orders could be as high as $2 billion annually, most of which could land in India, estimates Legal Service India one of India’s most successful legal Outsourcing Firm. Top 200 US law firms spend about $20 billion annually on office operations and documentation, a cost they cut via outsourcing for the sake of operational efficiencies.

Legal services are thus beginning to join a swelling list of functions-customer contact, transaction services, debt collection, and payroll processing. The West is looking to migrate to the subcontinent. And, similar to the earliest suite of services sent offshore, legal support may mean attractive deals for local Law firms and independent lawyers marketing themselves as the world's back office.

India's pool of poorly paid lawyers can offer US and UK-based law firms’ savings of as much as 40-60 percent in documentation, research, and drafting of case. The savings depend on the type of the service outsourced.

It is estimated that support services are a substantial cost factor for the top 200 US law firms. For example, American Law firms typically spend $2.9 million annually on word processing and secretarial jobs alone. The budget for legal recruiting is $350 million and human resources departments can cost $200 million. The supplier, which last year won a $52 million investment from private-equity firm Francisco Partners Management LLC, is one of the US suppliers tapping into Indian talent for servicing corporate America's legal services needs.
Assuming a very conservative outsourcing potential of 10 percent (of the $20 billion spent by US law companies on office operations), the resulting market opportunity is about $2 billion. Of this, India will have the largest share, offering both transactional and high-end services, says the executives from Legal Service India, whose Indian operations are based in 14 cities.
What is interesting for India is that within the British Commonwealth, there are 54 countries that have similar legal processes. This fits into the whole idea of knowledge process outsourcing.
Early MoversMuch like Legalserviceindia.com offers the "office next door" to legal wings of US companies and law firms. The company deals largely in patent and trademark paralegals for its UK clients and supports them with research, documenting, and database services; they run a night shift in India to provide its clients with an "always on" service.
India's lower salary base allows, US Legal Companies to get their work done at $20-$40 an hour, significantly less than the $100-$250 an hour that companies charge for similar services in the US. The real trend is that many US legal departments of major corporations are realizing the value of using offshore resources. They are looking at the full spectrum of services from data entry to sophisticated analysis.

The size of the patent drafting and support services market potential is $50 million a year. Most of that comes to India. The demand is helping the law companies grow, which wills more than double in a year. Law Firms like Legal Service India has been exclusively doing high-end work, such as drafting complex legal briefs that are submitted in US courts. They have written legal briefs for all kinds of cases-from dog bites and divorces to medical malpractice, trademark, and federal securities. As a result more and more law firms around the country are following their lead.

Hiring Indian LawyersIn countless courts spread across India, hundreds of cases come up each day for hearing, with vast armies of lawyers probing the progress of their long-to-conclude arguments. The vast majority of these lawyers does not make it to the top of the professional pyramid and are scouting for meaningful employment. That means very few of the 298,000 law school graduates joining the pool annually can aspire to participate in high-profile civil or criminal cases.

The cavernous stone corridors of Indian law courts could emerge as the recruiting campuses for outsourcing companies looking to hire legal professionals. The upcoming lawyer can make big time money.

Some WorriesThe opportunities are immense, but India needs to move cautiously, weeding out practices that may raise concerns over data security and service quality in buyers' markets according to industry members. Although India now has joined the elite League of Nations with a WTO-compliant patents system, intellectual property and data may not always be tamper-proof within Indian Territory.

Lawyers also have other issues such as rationalizing any conflict of interests. Since Lawyers cannot represent two businesses on opposing sides of a legal dispute unless both sides waive the conflict of interest prohibition. That could impact their ability to outsource. For the time being, suppliers and buyers will have to be content with paralegal work being performed in India in a win-win situation for all.

When you need to outsource your legal work www.legalserviceindia.com is the place.


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SOME USEFUL ARTICLES ON LEGAL OUTSOURCING:

"WNS bets on legal outsourcing"
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