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Introduction to Legal Process
Outsourcing (LPO) in India
Author: Katarzyna Trazpiola
Date: 27-12.2010
Legal Process Outsourcing (LPO) involves outsourcing legal work to geographic areas where it can be done at a reduced cost. India has emerged as a primary destination for LPO, with its number of legal outsourcing companies growing rapidly from 40 in 2005 to more than 140 by the end of 2009. Revenue from India’s LPO sector is expected to grow to $440 million in 2009 and surpass $1 billion by 2014, with further predictions indicating $4 billion in legal work may flow to India by 2015.
Key Players in the LPO Industry
Several international companies and law firms are leading the way in outsourcing legal work to India:
- Pangea3 (based in New York): One of the largest LPO firms with 240 lawyers across three Mumbai offices. It received significant investments, such as $4.4 million from GlenRock Capital in 2006 and $7 million from Sequoia Capital in 2009.
- Intellevate: Provides services like paralegal support, docketing, research, and bookkeeping for the legal departments of Fortune 100 companies.
- Quislex: Based in Hyderabad, with 130 lawyers, it entered a joint venture with Strategic Legal Solutions in 2009 to offer offshore and onshore outsourcing.
Outsourcing by International Law Firms and Corporations
Several global corporations and law firms are increasingly outsourcing legal work to India to reduce costs and improve efficiency. Examples of businesses outsourcing their legal operations include:
- General Electric (GE): The first foreign conglomerate to offshore legal work to India in 2001, saving significant amounts through its GE Plastics unit.
- Microsoft: Outsourcing patent work to attorneys in Bangalore.
- Morgan Stanley: Outsourced legal operations like document compliance checks.
- American Express: Partnered with Indian lawyers for various legal tasks.
Several major international law firms, including Allen & Overy, Clifford Chance, Bickel & Brewer, and others, also outsource work to India.
Types of Legal Services Outsourced to India
LPO companies in India provide both high-end and low-end legal services, such as:
- Secretarial Documentation Services: Preparing board meeting agendas, notices, memorandums, and corporate governance documents.
- Legal Support Services: Includes document management, internal investigations, corporate due diligence, and creation of searchable electronic files.
- Legal Research Services: Involving searching legal databases such as Lexis Nexis and Westlaw for detailed legal research and reports.
- Legal Drafting Services: Drafting legal documents such as contracts, memoranda, legal briefs, and trial preparation documents.
- Intellectual Property Services: Includes patent drafting, patent searches, patent mapping, and prosecution, often involving specialized scientists and engineers.
- Document Processing Services: Such as immigration visa processing, health insurance claims, and other specialized document services.
Advantages of Legal Process Outsourcing to India
India has several advantages that make it an attractive destination for legal outsourcing:
- Cost Savings: Indian lawyers are typically paid far less than their Western counterparts, allowing firms to save on legal costs.
- Increased Efficiency: Outsourcing legal tasks allows onshore lawyers to focus on higher-value activities while offshore teams handle routine tasks. The time difference between India and the United States also facilitates 24/7 work.
- Large Pool of Skilled Lawyers: India produces a large number of English-speaking, highly educated lawyers who are well-versed in common law principles.
- Quality of Work: Many LPOs in India claim to provide higher-quality services than some Western law firms, particularly in document review and legal research.
- Round-the-clock Operation: The time zone difference allows legal tasks to be completed overnight, further enhancing efficiency.
Challenges and Ethical Considerations
While outsourcing to India offers several advantages, there are several challenges and ethical concerns that must be addressed:
- Quality Control: Law firms need to ensure the quality of work being outsourced, requiring thorough vetting and ongoing supervision of offshore teams.
- Confidentiality: Concerns around the protection of sensitive client data are paramount. However, measures like secure data transfers and access controls are implemented to maintain confidentiality.
- Conflict of Interest: Law firms need to ensure that no conflict of interest arises, such as outsourcing work for clients with opposing interests.
- Unauthorized Practice of Law: Outsourcing non-legal tasks to non-lawyers in India is generally permitted if done under proper supervision by a licensed attorney.
- Intellectual Property Issues: Contracts must clearly define the ownership of intellectual property created during the outsourcing process, particularly when dealing with software development or business processes.
Legal and Ethical Guidelines for LPO
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American Bar Association (ABA) Opinion (2008): States that a lawyer may ethically outsource legal services to non-lawyers overseas as long as the lawyer supervises the outsourced work, maintains client confidentiality, avoids conflicts of interest, and ensures competent representation of the client.
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UK Solicitor Regulation Authority (SRA) Rules: Outlines that law firms must ensure compliance with all relevant rules when outsourcing work to non-law firms. This includes maintaining confidentiality, client care, and transparency in the outsourcing arrangement.
Key Ethical Concerns
- Quality: Indian LPOs attract some of the brightest young lawyers, offering competitive salaries and modern working environments that are often more appealing than traditional Indian law firms. As a result, LPOs can deliver high-quality legal work.
- Confidentiality: The main concern with outsourcing legal work to non-lawyers is protecting confidential client information. However, Indian LPOs take proactive steps to ensure data security, including secure data transfers and controlled access to sensitive information.
- Intellectual Property: Clear agreements must be established regarding the ownership of any intellectual property created during outsourcing. This includes managing the rights to use third-party intellectual property and ensuring proper licensing.
- Unauthorized Practice of Law: As long as the work is properly supervised by licensed attorneys, outsourcing non-legal tasks to non-lawyers does not pose a significant risk of unauthorized practice.
- Conflict of Interest: Law firms must ensure that service providers working for competing clients do not create conflicts of interest, which may require appropriate screening processes.
Conclusion
India’s Legal Process Outsourcing (LPO) industry has experienced significant growth and presents numerous advantages for law firms and businesses worldwide, including cost savings, efficiency gains, and access to a large pool of highly skilled, English-speaking lawyers. However, firms must carefully evaluate service providers based on factors like quality, confidentiality, intellectual property management, and potential conflicts of interest. By adhering to legal and ethical guidelines, such as those outlined by the American Bar Association and the UK Solicitor Regulation Authority, companies and law firms can successfully outsource legal work to India while maintaining high standards of legal practice.
