Good luck competing with folks who pay no bar dues, student loans, CLE fees, and work hard for 8 grand a YEAR:
From Bloomberg.com (link: http://www.bloomberg.com/apps/news?pid=20601103&sid=aBo8DnfekWZQ
(Bloomberg) -- Bruce Masterson, chief operating officer of Socrates Media LLC, asked his outside counsel to customize a residential lease for all 50 U.S. states in 2003. The firm's estimate: about $400,000. He rejected that price tag and hired QuisLex, in Hyderabad, India, which did it for $45,000.
``It was good quality,'' said Masterson, whose Chicago-based company publishes legal forms on the Internet. ``We've been working together ever since.''
Clients are pushing law firms like Jones Day and Kirkland & Ellis to send basic legal tasks to India, where lawyers tag documents and investigate takeover targets for as little as $20 an hour. The firms are reacting to a trend that will move about 50,000 U.S. legal jobs overseas by 2015, according to Boston- based Forrester Research Inc.
``The objective is to have only the most valuable people in London or New York, and the others in India, China or Columbus, Ohio,'' said Robert Profusek, co-head of the mergers and acquisitions practice at Jones Day in New York, who sends low-end work to the cheapest locations and plans to open a document center in India. ``Lawyers are service providers. We are not gods.''
Companies with in-house legal departments in India include Wilmington, Delaware-based DuPont Co., San Jose, California-based Cisco Systems Inc., and New York-based Morgan Stanley, according to ValueNotes Database Pvt. The Indian legal services industry will more than quadruple to $640 million by 2010 from $146 million in 2006, Maharashtra, India-based ValueNotes said.
General Electric
General Electric Co. sends about $3 million a year in routine legal work to its Indian affiliate, said Janine Dascenzo, the Fairfield, Connecticut-based company's managing counsel for legal operations.
``India has very talented lawyers,'' she said. ``But it's a misconception that you can just send work there and it gets done. You need proper supervision and security.''
Kirkland & Ellis, the seventh-largest U.S. law firm, works with offshore attorneys at the client's request, said Gregg Kirchhoefer, a senior partner in the firm's outsourcing and technology transaction practice.
``I'm not an advocate of offshoring legal services, but having worked in this area for so long, I understand the value of the model,'' he said. Typically, clients hire a provider and Chicago-based Kirkland helps manage the attorneys, Kirchhoefer said.
Markup Disclosure
U.S. law firms are required under ethics rules to disclose markups on what they pay foreign attorneys who aren't licensed to practice law in the U.S. Such rules don't apply to legal work performed by lawyers admitted to practice in U.S. jurisdictions.
Traditionally, law firms pay U.S. contract attorneys $50 to $65 per hour and bill clients up to three times the fee. For work performed by associates at the law firm, firms typically bill clients about $250 to $400 an hour.
Armed with the knowledge of how little law firms might pay for offshore work, corporations can use the threat of cutting them out and sending legal tasks overseas on their own to force law firms to reduce fees.
``Law firms can earn more by using labor they can mark up without disclosure,'' said Stephen Gillers, professor of legal ethics at New York University School of Law in Manhattan. ``But clients are knowledgeable about costs, and they want to negotiate the markup on these charges.''
Trend
Not every law firm has accepted the trend.
``Some firms are spreading fear, uncertainty and doubt,'' says David Perla, co-chief executive of Pangea3 LLC, an offshore legal services company based in New York and Mumbai. ``They see any competition as bad and they'll raise any issues as to why you shouldn't go offshore.''
Of the 10 highest-grossing U.S. law firms, seven declined to comment on outsourcing. Only one, Chicago-based Mayer, Brown, Rowe & Maw, said it doesn't use the practice.
``I don't think law firms are ashamed of offshoring,'' Perla said. ``The firms that are having success with it aren't talking, because they view it as a competitive advantage.''
Of about 100 third-party legal services providers in India, clients give top marks to Pangea3 and New York-based Integreon Managed Solutions Inc., according to The Black Book of Outsourcing, a survey published in July by Clearwater, Florida- based Brown-Wilson Group Inc.
About 80 percent of Pangea3's clients are corporations and 20 percent are law firms, Perla said.
`In-House'
``Some firms are coming to us because in-house clients suggested it or pressured them,'' Perla said. ``Others want to come to the client first and offer a solution.''
Integreon, which provides legal services in India, the Philippines and Fargo, North Dakota, has long-term contracts with about 45 companies and 15 law firms, said CEO Liam Brown.
Law firms contribute 45 percent to offshore revenue, while corporate law departments contribute 36 percent, ValueNotes said.
Integreon recruits lawyers from second-tier law schools in India and managers from the litigation practices of firms such as New York-based Skadden, Arps, Slate, Meagher & Flom, Brown said. After training in India, managers relocate to New York or Los Angeles.
In India, legal education is based on common law, conducted in English, and requires two or three years of classes. The country produces about 80,000 law school graduates a year, according to ValueNotes, compared with about 44,000 in the U.S.
Offshore companies charge $10 to $25 an hour on low-end work and $25 to $90 an hour on advanced jobs. Junior Indian lawyers might earn as much as $8,160 a year, according to ValueNotes, compared with the $160,000 average salary for associates in major U.S. cities.
Janice D'souza, 26, a lawyer in Pangea3's litigation and research department in Mumbai, says she makes three times as much as she would at an Indian law firm.
``At an Indian law firm, generally your potential is not recognized at an early stage,'' D'souza said. ``Here it's talent- based. In the near future, I think I will be a department manager.''
To contact the reporters on this story: Cynthia Cotts in New York at ccotts@bloomberg.net and; Liane Kufchock in Southfield, Michigan, at lkufchock@bloomberg.net
36 comments:
Once they get to the clients its all over for stateside coders. You see, the key is not to convince the clients to send ALL of their documents to India, but only to send the easiest ones, the daily reports and repetitive non-responsive junk. On a per document basis, the clients are overpaying to have this stuff coded. This wont last.
These types of documents require minimum analysis and can be coded easily and cheaply by Indians, while people in the US take on the more difficult or complex or priv documents.
The main problem with the industry now is that the people making the decisions may not be lawyers or have little or no experience actually coding documents, so they dont understand how to effectively separate out these easy documents in the beginning and dont understand how to
Shouldn't student loan lenders & TTTs be shitting their pants more than anybody about this? When the glut of U.S. JDs can't even get shit work to pay the bills, won't that trigger a subprime style mass default?
Ethically, the penny wise pound foolishness of shipping tons of potentially sensitive personal and corporate data to a third world country with no licensing accountability in the U.S. seems idiotic. Especially when I can't even fucking advise a client in Jersey b/c I only have a NY license.
Of course no one gives a crap about how that personally fucks low level U.S. lawyers; but what about the big money lenders/diploma mills? Don't they see this is game over for their scam? I'm surprised their greed driven self-preservation instincts haven't bought access to bar/gov't resources to end this. They gotta have much more dough than the Perla type start-up scumbags.
Apart from doing smaller scale legal work in a more local setting, I think we can pretty much start writing the obituary on the U.S. legal "profession." We are seeing offshoring in corporate law, M&A, and even patent law. Why did I or anyone else spend 6 figures for a JD at an ABA approved school?
All I can say is thank god I bombed the LSAT back in '05... never thought I'd utter such nonsense.
Do you always copy/paste entire stories? If you are an attorney, surely you must know something about copyright law.
Corporate clients are consumers of legal services, who like any other group of consumers can seek out more for less. There should be no barriers to keep this work in the US. In the abstract, there is no justifiable reason to mandate this legal work remains in the US. I sympathize with the unemployed attorneys whose lives generally are ruined. I am not for protectionism even if it hurts me.
Having said that, in 2010, may all law school administrators (and their enablers at the American Bar Association) who continue to charge ever escalating tuitions suffer a cruel, incurable disease.
There is no justification for the exponential increase in tuition over the last twenty years (other than the fact that the law school administrators CAN freely raise tuition).
This article sums up what I have been saying for years.
Law is a flimsy house built on the billable hour scam. That scam has been exposed. The house of law is now collapsing for almost all who dwell within except for the fortunate few. And we know who they are. Think elitist folks who look like Martha Stewart and Jerry Seinfeld.
They are not the Nigerian doc reviewers, the I-talian sons and daughters of plumbers who made good, black or hispanic americans, poles or other psuedo white ethnic blue collar schlubby types.
That article breaks down the whole scam perfectly. In a recent calendar year I made around $100K doing doc review.
I know from prior firm associate experience that I was likely beging billed out at $250 - $350 per hour. Multiply that by 50 hours a week by 50 weeks a year and subtract the staffing agency cut and see what you get.
But now with the scam exposed that is over. Do the same math for most permanent non shit law associates. They mostly do make work monkey work and can easily be replaced by the Indians.
The lawland money pie is being decimated and most of you will not even be able to taste its crumbs.
Leave law now fools for you are not welcome there. Law is only for the wicked and the few. It is not for most of you.
You have been warned by the great one, the Prophet.
"Traditionally, law firms pay U.S. contract attorneys $50 to $65 per hour..."
Bullshit!
i wonder if lisa has a dental plan there.
This is all a collection of articles that are over a year old. Don't we have anythioung better to report on than the same old crap about Indian outsourcing?
PS: Why give scum like Perla any play?
Only morons would send their work to India to likes of the sleazy David Perla, but the greedy idiots will do it to "save money". It's been proven many times over that outsourcing is yet another scam, which doesn't really save money.
The real reason these companies do it, is to hide documents, falsify discovery, evade taxation, avoid labor, anti-discrimination and environmental laws.
Remember also, African Americans are over represented on doc review gigs, and for many this is their lifeline.
To say that these offsite seatshops can be properly "supervised" by a licensed American attorney (who is on the hook for these unauthorized practitioners of American law) is farcical. Just the Touro grad supervising 450 unlicensed foreigners.
It's going to help destroy the middle class at ever quickening speed. The ABA has ceased to serve any purpose but to butter biglaw's bread. Anyone not a partner in biglaw, should drop their ABA membership immediately.
4:55 I have also become pretty happy that I didn't do that well on the LSAT. Sometimes life's disappointments turn out to not be so disappointing.
4:55, I too have become less disappointed with my average LSAT score as I have realized how much of a waste law school is. Sometimes life's disappointments turn out to not be so disappointing.
I don't understand why legal professionals in this country (USA) tolerate this. There aren't going to be any jobs here pretty soon - we're going to become a third world country. What is wrong with everyone? We're making India and China rich, while we make the people in this country poor. I just don't understand it - it's so upsetting.
I would give anything to be able to get out of the mess I made my going to law school. Student loans have ruined my life. And for what? Absolutely nothing! MISERY!
The game is over. Thank you, ABA "Ethics" Committee, for your wondrous outsourcing opinion. Too bad you and your families were not vacationing in Port-au-Prince on January 12, 2010.
I don't think its all going to India because the super-powerful international law firms have too much to lose.
Stateside doc review is still a cash cow for the powerful NYC agencies and the DLA Pipers and Clifford Chances.
Sending the whole thing to India would reduce firm profits because the firm can't fuck over the corporate client by charging for hundreds of thousands of hours of redundant doc review when Indians do it on the cheap.
This is just a phase. Corporate America is freaking out over the economy, its a knee-jerk reaction that will not last once the economy recovers.
The offshore scum like Perla may be riding high now (but they're still puffing their business model/success), but its all coming back soon, because that bloated NYC equity partner with the bow tie and $3,000,000 a year salary ain't gonna want to downsize his yacht, no fucking way. Plus, the 20 year old piece of ass with the fake tits he's banging wants a 4 carat ring, not a 3 carat one, once he shitcans his wife for her.
These fuckin' partners are as greedy as the Wall Street investment banker garbage.
QuisLex? Enabled by the traitorous Quisling ABA, that wrote an "ethics" opinion giving the OK to send overseas the work that should be done only by American lawyers?
Doc review is low skilled, low end level labor that should actually pay at a lower rate more similar to the Indian end.
Taking out a 6-figure loan to do this line of work does not entitle you to a higher rate. You are still talentless, entitled losers with no employable skills.
Observations about pricing versus quality of services:
a) The Socrates example is interesting because he is discussing a form agreement versus customized negotiations.
I am curious to know whether the agreements are actually any good or not. What we gather from the story is that he saved money, but we won't know whether that is true without accounting for the problems with the agreements.
Often times, in IT, for example, clients will claim to save money, but when you do all the actual accounting they are not saving much money. It is the perception. Don't assume Socrates is rational.
b) Speaking of quality of work product, this will continue to be an issue even as the main stream accepts these outsourcing companies as viable alternatives.
I know from reading practice blogs that people are already discussing the shoddy work.
c) I have mentioned this before: You buy what you pay for.
There is this desire to create a downward pressure on the cost of legal services. But, there is a point where the downward pressure costs you more money in the long run rather than saves you money. It is like buying product at the penny store. It is the illusion of savings.
OT: Take a site like legal zoom (to name one example).
Yes the site is "cheap", but the site also does not provide anything in the form of actual counsel. People are buying forms. I would imagine that, like wise, clients going to India are not buying legal counsel.
Because they can not provide actual counsel, many questions are left out to avoid legal liability for purpose of avoiding being found to have provided legal counsel. This is why I am curious to know how the forms work out for Socrates in terms of any law suits, etc
One trust and estate lawyer I read mentioned this as he said he had picked up 8 cases last year alone from people trying to go the super cheap route, and having to come to him after the damage was done. The result was that he ended up charging them more money to undo the damage as much as he could.
My point?
That cheap and price point in the short term does not tell us what impact, if any, this will have on the quality of services regarding the long term outcomes.
Until we know that- this is an experiment. I can not know whether businesses will want to place their bottom line at risk like this.
My guess is the answer is probably not.
I know I have conflated several strains, but I think this comparing cost to quality is important.
I made the same argument over the number of lawyers pushing down the price and consequently the quality of services.
To me, that's the real disservice of the ABA to the public- that they ensuring potentially worse outcomes for the clients.
So, I am not convinced over the long term that outsourcing works with legal services.
Where do they get this number that contract attorneys get $50-65 per hour?
3:38, the lenders are licking their chops at the default prospects, since default = more fees, more interest, more $$$$$$, more profit.
Yes, the profession is collapsing, but why is this website recycling a Bloomberg article from APRIL OF 2007???
2007 article.
"Doc review is low skilled, low end level labor that should actually pay at a lower rate more similar to the Indian end."
"Taking out a 6-figure loan to do this line of work does not entitle you to a higher rate. You are still talentless, entitled losers with no employable skills."
7:00 AM
7:00 A.M.
Fuck you, sir. Fuck you very much. I hope you fall face first into a puddle of AIDS.
Die.
8:00 AM, Once I had a divorce client come to me after she tried to do some work with a LegalZoom-type website that provided her with a set of forms. Just as you said, she had made a big mess and I was able to charge her substantially more for cleaning up the mess than what I would have if she had just come to me in the first place.
9:17 - Default is default. Can't get blood from a stone. Jack on all the fees, penalties and BS they like; when I die owing $300k they can take my gold fillings but that's all they'll get. Plus, if the capital for lending dries up for even a couple years, TTTs tank.
7:00 AM: You're an idiot. Sure, it ain't hard to plow through reams of unresponsive emails, but that's not all you are paying for, you fucking moron. Projects have fun passing around the drug use, infidelity, "fuck the customer", racist, and otherwise embarrassing emails. But EVERY U.S. LICENSED ATTORNEY KNOWS THEIR LICENSE is toast if it leaves the review room. Just wait til Apu decides he can make 10 times his annual salary by threatening to reveal how many times the CEO has paid for his secretary's abortions.
This is an article from 2007!... http://www.bloomberg.com/apps/news?pid=20601103&sid=aBo8DnfekWZQ
Blame the underwater optic fiber cables you American fools. Now the world's truly flat. You are getting a taste of your own globalization fucking medicine.
Fuck you morons.
The article is from 2007, but it's more relevant today than ever, as with the Great Recession, outsourcing has become a one-way street. The jobs are disappearing to India and NEVER coming back, and they're actually disappearing today at a much faster pace than in 2007.
"Traditionally, law firms pay U.S. contract attorneys $50 to $65 per hour and bill clients up to three times the fee."
Try, law firms pay around 30 per hour, and bill clients about 300 an hour for that work.
If you don't believe it, just pull some settlement agreements off the internet and take a look.
I did a contract gig earlier in the year for a provider of online content markets to hedge funds and major ibanks. Prior to bringing me on, and a bunch of other ex-BIGLAW folks, they had outsourced the work to India.
The work was crap, the clients hated it, and they had to hire us to mop up their shit.
Offshoring legal services to India sounds great, but the work product shows and the clients eventually get that it is not really cost efficient, net net.
That, and Indians are some of the mor euntrustworthy people you will ever meet. What the ABA and state bars have to begin to do is crack down on the unauthorized pratice of law, be it in India or in domestic sweatshop doc review halls.
Anyone experience anything about the easy google profit kit? I discovered a lot of advertisements around it. I also found a site that is supposedly a review of the program, but the whole thing seems kind of sketchy to me. However, the cost is low so I’m going to go ahead and try it out, unless any of you have experience with this system first hand?
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