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.