Yesterday’s Law Blog notes a Fronterion report that legal outsourcers are facing more competition from “insourcers” setting up centers inside the U.S. The reasons include rising wages in India and falling wages in the U.S. and the U.K. so
The glut of new law school graduates in 2012 will likely put offshore legal services outfits at a further disadvantage, the report found. “Most legal professionals, all things being equal, prefer to keep legal work domestically,” it said. In response, some offshore vendors are opening up in places such as Chicago and Washington D.C., said Fronterion managing Principal Michael Bell.
So wages of law workers in the U.S. are getting in line with their counterparts in India. Not good news for U.S. law grads.
The story concludes with an interesting observation:
“Law firms say, we can hire these contract attorneys in the U.S. for really nothing,” Bell said. “One issue that law firms have is that they can’t mark up the services of an LPO… but if it’s a center based internally and it’s law firm staff, they can charge whatever they want to.”
In other words, amid intensifying global competition, Big Law thinks it’s found another way to make money. I wouldn’t bet on this lasting very long — certainly not longer than in-house counsel see it happening and realize they can do better by eliminating the middleman.
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My father, z”l, and my grandfather, z”l, were lawyers. Back in WWII, my father, who had started college in 1938, joined ROTC after Pearl Harbor, and was called up to active duty in 1943, after his second year of law school. The Army, in its inscrutable way, sent the young artillery lieutenant to India, where he battled paperwork in Calcutta.
One day, the commander said, hey, law school boy, here is a bunch of forms that need to be filed at the courthouse, take them, go there and do it. My father had a jeep driven by a local employee take him to the courthouse. He performed his assignment and left the courthouse.
Upon returning to the jeep, the lieutenant, who had observed a row of Hindus, clothed in dhotis, squatting in the dust in front of the courthouse, asked the driver who those men were and what were they doing there.
The driver replied: “Sir, they are lawyers, give them a rupee, and they will plead your case”.
Quite frankly, it’s the LPO’s themselves, not content with the limited roles they have heretofore played in the legal space, who have been aggressively moving up the food chain and competing on a broad scale basis with mainstream law firms in providing a full array of legal services that had previously been the sole province of those mainstream law firms. Guild rules and bar admission requirements have largely fallen by the wayside. See, http://kowalskiandassociatesblog.com/2011/10/12/lpo%e2%80%99s-have-become-legal-project-outplacement-firms-they-are-outplacing-legal-work-from-traditional-law-firms/