India, the UK, and US law firms

Larry Ribstein —  27 September 2011

The Law Blog reports that India is considering letting in U.K. law firms after long barring all foreign law firms from having offices in India.

The LB notes that the UK would have to reciprocate by allowing Indian firms and that “[i]t’s unclear whether U.S. firms would be invited to the party.”

Well, I imagine that if the U.S. wants to join the “party” it would have to allow in Indian firms.  Which could open U.S. lawyers to all kinds of pernicious global competition. We wouldn’t want that, would we?  Even if it means that our counterparts in the U.K. will have access to a huge market denied to U.S. lawyers.  Because that would mean that the U.S. would have to allow, say, U.K. firms, and maybe all the new ownership structures permitted under the UK’s new Legal Services Act.

The question is how long will U.S. lawyers be able to hide from the rest of the world behind their regulatory wall.

Larry Ribstein

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Professor of Law, University of Illinois College of Law

8 responses to India, the UK, and US law firms

  1. 

    As Jeff Carr the voluble distinguished general counsel at FMC Technologies has long noted, legal services can be into four buckets: counseling, advocacy, process and content. See, for example, http://kowalskiandassociatesblog.com/2011/09/14/the-clock-is-ticking-in-five-years-traditional-law-firms-may-be-extinct-what-are-you-doing-to-avoid-being-an-artifact/ .

    Of these four buckets, only a portion of two of them require formal bar admission. In particular, court appearances and trial work (in the advocacy bucket) and formal opinion letters (in the content bucket) require admission to the court in which a case is pending or in a state under whose laws an opinion is rendered.

    But in the ligation (advocacy) arena, a very small percentage of the services rendered require the individual provider of legal services to be licensed. The majority of the work performed in the litigation process, consisting of legal and factual research, drafting of pleadings and motions does not require that individual providers of legal services be duly licensed. Licenses are only required of those making court appearances, inclusive of taking or defending depositions. Thus, as we all know, if we were to measure a full “litigation bucket,” it is likely that perhaps 10% of the contributors to that bucket require bar admission.

    With regard to content, the bulk of the work consists of due diligence, document review and legal research. The providers of those services need not be licensed. The only component requiring a license is the rendering of a formal opinion. Again, only an immaterial number of the contributors to that bucket require licensure,

    Yes, of course, LPO’s are open and notoriously practicing law without adequate bar admissions, licensing and are largely owned by non-lawyers. In that same vein, Internet providers of legal services are similarly openly and notoriously practicing law without being properly licensed and are also similarly owned by non-lawyers. (http://kowalskiandassociatesblog.com/2011/08/11/are-law-firms-going-to-be-replaced-by-internet-based-providers-of-legal-services/ ) Both operate in a completely unregulated environment, and no regulator or other authority has undertaken to challenge these activities.

    Paul Lippe estimates that within five years, these alternate providers of legal services will own 10% of the gross legal spend, or approximately $5,000,000,000, with traditional law firms losing $1.50 to $2.00 for every dollar earned by these alternate providers of legal services. http://www.abajournal.com/legalrebels/article/the_rise_of_the_non-firm_firms . These alternate providers may already be “too big to fail” and will be increasingly so as their market share grows.

    More significantly, the beneficiaries of this market disaggregation, namely consumers of legal services, will not abide any belated attempts to enforce bar admission or law firm ownership rules. The cow has already left the barn.

  2. 

    Larry;

    I am sorry if you felt that my comment was “uncivilized”. It was vigorous but not intended to be more than that. And I think one can expect and is entitled to at least some level of precision — more than say what one gets on a regular blog — in a blog that seems to be by law professors where the primary readership are lawyers, law professors, economics professors, economists etc. (I am assuming the last part of course — you doubtless have more detailed information regarding your readership.)

    As to Mr. Kowalski, I believe his post is evidently self-contradictory. He claims both that (1) these LPOs “deliver precisely the same types of legal services as traditional law firms” and also that (2) the LPOs are “actively practising law in the United States, unfettered by any rule that requires that they be admitted to any United States court.” (I assume by “United States court” he is not limiting himself to federal courts but that this takes in all courts, state or federal, in the United States.)

    The problem here is twofold: first, if the partners/employees of these LPOs are not admitted to practice in any court in the United States, then they cannot lawfully file pleadings, take or defend depositions, bring motions in court, represent parties at trial in a court, or even negotiate contracts on behalf of others if the contract involves some degree of legal complexity. However, doing those things are “precisely the same types of services as traditional law firms” perform.

    Second, Mr. Kowalski’s admission that the LPOs are practising law without a license to do so is an admission that the LPOs are breaking the law against unauthorized practice of law (UPL), much as Mr. Ribstein may not like that law. The fact that the LPOs are allegedly not subject to any regulatory scrutiny is not, as Mr, Kowalki alleges, because of how they describe their business, but because state governments have limited resources to enforce UPL statutes. Priority is placed of course on violent crimes and crimes resulting in financial loss. The LPOs’ may well find themselves subject to regulatory scrutiny or criminal prosecution if someone claims that (1) he or she thought they were lawyers, and (2) he or she lost a lot of money as a result of their deficient services.

    Of course, it is unclear whether the LPOs are in fact breaking the law, rather than merely exagerrating what they in fact do. If they are in fact merely performing what in the United States are described as “paralegal services”, then (a) they are not breaking the law, and (b) they are competing with a small part of the services provided by “traditional law firms.” But then the LPOs are not really that interesting and do not provide a basis for Mr. Ribstein’s assault on the regulation of the practice of law.

    • 

      Chris: “uncivilized” lets your comment off the hook too easily. Contrary to your last comment, of course it was “intended” to be more than just vigorous. It was intended to be insulting by its own terms. You made quite clear that it is intended to an insult to Professor Ribstein, and just to clear up any possible confusion, you distinguish that insult from potentially “undeserved” insults that might be directed toward “law professors other than” Professor Ribstein.

      Larry has already responded to the comment and so I will not delete it. Your comments are otherwise perfectly welcome and you seem to be quite capable of contributing meaningfully to the discussion without insulting others.

      But for future reference, I moderate blog comments, and you (and other commenters) should be aware that I will continue to delete all those that directly insult blog authors. There are plenty of “regular” blogs out there for that purpose.

  3. 

    Indian law firms, as well as other law firms from a host of other jurisdictions, are in fact actively practicing law in the United States in great abundance, unfettered by any rule that requires that they be admitted to any United States court. These firms deliver precisely the same types of legal services as traditional law firms and escape any regulatory scrutiny by simply dubbing themselves as “legal process outsourcing” companies. These LPO’s are engaged by corporate general counsel and as “subcontractors” (we would otherwise identify them as co-counsel). Nobody could possibly argue that in the real market, those entities are not in direct competition with traditional law firms for a part of the legal spend. See, for example, http://kowalskiandassociatesblog.com/2011/06/21/grabbing-slices-of-the-diminishing-legal-spend-pie-legal-project-outsourcing-downsourcing-and-insourcing/

    A rather blatant display of the head to head competition between traditional law firms and LPO’s will take place in Los Angeles on October at a conference entitled The Global LPO Conference in Los Angeles (http://globallpoconference.com/losangeles/ ), at which a variety of vendors of legal services, consisting of both traditional law firms as well as LPO’s will hawk their wares to traditional consumers of legal services. Each vendor will make its case as to why it can deliver legal services “better, quicker and cheaper.”

    The bloom is very far off the rose: The competition is fierce and direct. As in previous similar conferences, the niceties of bar admission will be largely completely glossed over.

    • 

      This is a more pertinent (and civilized) comment than the one by “Chris.” The LPOs, unlike the U.S. branches of non-U.S.-based firms, are not lawyer-owned, and therefore provide direct competition with the legally mandated U.S. business model.

  4. 

    As far as I know, nothing prevents offices of law firms based in India (or Russia or Turkey or …..) from opening in the United States, the only point being that lawyers practising in those offices must be admitted to practice in the states where those offices are located. The exact same rules apply to law firms based in other states, for example, law firms based in New York may open offices in California, as long as the lawyers practising law in those offices are admitted to practise law in California.

    To say that “that would mean that the U.S. would have to allow, say, U.K. firms” is really ridiculous and shows a deep ignorance of the actual practice of law in this country. I am tempted to say that that is typical of an academic or a law professor, but that would probably be an undeserved insult to law professors other than Mr. Ribstein. There are already numerous U.K. law firms with offices in the United States, and this has been the case for a number of years. Furthermore, it is not a matter of the “U.S.” allowing this or that: although Mr. Ribstein may not like it, the practice of law in this country is for the most part regulated by the states, not by the federal government. It’s one of those federalism things which he is all in favor of when it concerns Delaware corporate governance principles.

    • 

      The gist of my post, contained in the penultimate sentence, was that global competition may force U.S. regulators ultimately to permit firm structures (e.g., non-lawyer-owned) that are not currently permitted in the U.S. It’s a point I’ve often made before, and I’ll stick to it. Apparently the commenter did not notice that nuance.

      Yes, the post could be interpreted more broadly to say that no non-US firms have U.S branches organized pursuant to U.S. law, or to make the even more basic mistake that this law is federal rather than state. Anyone who has read my articles on lawyer license and ethical rules would know that I understand these things. Still, it’s always nice when commenters make these clarifications of blog posts whose phrasing sometimes doesn’t meet the standards of published articles.

      But was it really necessary to add the insults? This is yet another instance of the sort of uncivilized comments I seem to get mainly from lawyers, and mainly in response to posts that threaten their franchise. It makes me wonder about all those protestations that new forms of practice will erode “professionalism.”

  5. 

    What of the dozen or so Indian LPO firms that already have active offices in the US? Say what you will, but these LPO’s are competing directly with US law firms. See, for example, http://kowalskiandassociatesblog.com/2011/06/21/grabbing-slices-of-the-diminishing-legal-spend-pie-legal-project-outsourcing-downsourcing-and-insourcing/