Friday, December 18, 2009

Legal Process Outsourcing: 2010 the challenges ahead

With the Countdown for 2010 already ticking, it becomes both necessary and desirable to glance at the major events of the year passing by and to assess our preparedness for the year coming. This year 2009 is testimonial to a phenomenal growth in the offshore outsourcing of legal processes wherein majority of deals were with Indian vendors. Freshfields Bruckhaus Deringer, Linklaters, Slaughter and May, Osborne Clarke, Simmons and Simmons, Rio Tinto, Eversheds, Pinsent Masons are a few of the names in news for outsourcing their legal processes to offshore destinations in this year 2009. Infact as soon as they realized that offshore outsourcing is now the next level of globalization and the company's earlier who faced the question of whether or not to outsource were left with the only option to decide now when to outsource, the situation moved from a may-be to a must-be. The offshore outsourcing today is neither a desire nor an option rather it is the support system of all globalizing companies, of all who wish to grow in this ever integrating competitive world. As I often tell my friends in the industry, "One can't do today's job with yesterday's methods and be in business tomorrow".

Since the legal department of most corporations is not a revenue generating department, it is always under constant pressure to cut upon costs and expenses. After big corporations and large-size law firms, the time is now right for the Solo practitioners, small-size law firms (less than 10 attorneys) and mid-size law firms (less than 50 attorneys) to begin with outsourcing their legal processes to offshore locations like India. Amidst their desire to cut upon the back-office costs, they will face low cost deliverable challenges from their competitors and pressure from their clients to provide similar services for lower charges. There is no alternative but to offshore.

Although Contract services, E-discovery and Paralegal support would dominate the legal outsourcing paradigm, but a new market for Litigation Support is predicted to emerge and flourish in the upcoming year. Interestingly, solo practitioners, small-size and mid-size law firms together as a group constitute 90% of US and UK legal market and is also the group hardly outsourcing to offshore destinations. Year 2010 would observe a new market wherein we would see US debt collection attorneys outsourcing preparation of Consumer Complaints, Briefs, and Motions for FDCPA, FCRA, FCBA and TILA violations, social security attorneys outsourcing preparation of FIT, research on GRIDS, De novo appeal before ALJ, bankruptcy attorneys outsourcing intake form fill up and entering of litigation information in Bankruptcy software's, foreclosure attorneys outsourcing preparation of complaints, motion and briefs to offshore destinations like India.

Legal practice predominantly involves large amount of variety documents to be handled. The tedious and time consuming process of gathering the requisite information, completing the proper forms and preparing the necessary documentation, is something a practicing attorney can gladly outsource. For instance, an average US Bankruptcy attorney with more than 5 years of experience has filled hundreds of annoying yet essential forms and templates. No attorney can honestly claim that he doesn't have a basic form or template to work on. By outsourcing the filling of these templates, attorneys get more time to concentrate on increasing client base. Outsourcing to India gives a time-zone benefit where a 5:00pm (EST) outsourced work gets converted into deliverables and is on your desk by 9:00am (EST) the next morning for review. Starting salaries for untrained American lawyers, who may be straight out of law schools, have climbed up to $160,000 per year. Owing to all these and many more fundamental benefits, the Offshore outsourcing of these legal and paralegal services is going to escalate. It would not be wrong in saying that this growth rate is hedged by the very strong fundamentals of this industry and so the chances of fading the pace of the legal services being off-shored and outsourced to India are minuscule. Through continuous training Indian attorneys are more polished and abreast than ever before to cater to most of the legal needs. Additionally, service solutions are accomplished with savings in salaries and Infrastructure (ranging from 1/10th to 1/50th) as compared with US/UK location.

There cannot be denial of the fact that the Indian LPO industry which was worth $61 m in December 2005, is expected to grow by almost 10 folds, nearly to $610 m by 2010. I expect a loud, clear and strong indication for the end of recession to come by 2nd quarter of 2010. 2010 is set to evidence boom in offshore outsourcing of legal processes, however, the test of time will protect only those LPO's who have a strong team protecting the iron cage of quality and confidentiality. Infact in a blog post way back in August I discussed some of these concerns and predictions, which are at this instant a reality.


Monday, December 7, 2009

Free webinar on “Legal Research Outsourcing: Our means and your ends.”

I take immense pleasure in inviting you to the webinar on “Legal Research Outsourcing: Our means and your ends.”

Legal research is an important discipline in its own right because of its immense importance in the area of law. Law is ever-changing either through a new legislation or a new judgment and therefore, it is important to understand the law at a particular point in time and offer accurate opinion. The ability to cite relevant cases is critical to successful litigation.

The purpose of this webinar is to question the paradigm shift in the needs, means and results of Legal Research in wake of integrating world. After holistically looking at the intricacies of the service, the webinar shall proceed to understand and analyse the regulatory and ethical aspects of the same.

Topics Covered in the web cast are:

* Legal Research outsourcing Needs

* Multi jurisdiction research

* Legal Research tools & deliverables

* Memo Writing

* Ethical and Regulatory aspects of Legal Research outsourcing.

* Issues of Confidentiality and Quality

* Process Flow

* Pricing the Legal Research

Title: "Legal Research Outsourcing: Our means and your ends."
Date:
Thursday, December 17, 2009
Time:
11:00 AM - 12:00 PM GMT

Register now by clicking the link below:
https://www1.gotomeeting.com/register/570138216

After registering you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows(R) 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh(R)-based attendees
Required: Mac OS(R) X 10.4 (Tiger(R)) or newer

I look forward to interact with you at this webinar.

Sunday, November 29, 2009

Webinar on "Contract Outsourcing needs - The Indian Edge"

As a part of the legal fraternity, you are invited to this related event about issues and concerns regarding Outsourcing of Contract services to India. The aim of this free webinar is to evaluate the different benefits and challenges in offshore outsourcing of Contract Drafting, Review and Management needs. This webinar, "Contract Outsourcing needs - The Indian Edge", is a must attend for Attorneys, Law-firms, Counsels of Corporate legal department, LPO professionals and law students.

Holistically the webinar shall look into the history of the Contracts with an aim to segregate different types of contracts being outsourced, and the Indian advantage in effectively catering to the contract needs of foreign Law firms and Corporations.

Learn what it takes to close a profitable and useful global deal in the arena of Contract Review, Management, Compliance and Drafting.

You know there is a confirmed benefit in outsourcing Contract services. You also know that you save more by outsourcing to offshore destinations than to your own country. But you still do not want to take the plunge. The grounds are untested and you do not want to be a net looser instead of a gainer by outsourcing offshore. You know there is a clear benefit from the labor arbitrage but you are positive that given the uncertainties and risk involved, the benefit just may translate to real-time losses.

If that is what exactly your thoughts are, please join us in critically examining the concepts and facts of the India advantage in catering the Contract outsourcing needs.

Topics Covered in the web cast are:

  • History of Contracts and its development in the Common Law system.
  • Analysis of the ethical and regulatory aspects of Contract outsourcing.
  • Issues of Confidentiality and Quality
  • Drivers & Risks of Offshore outsourcing, particularly to India.
  • Evaluating the importance of Contract Excellence.
  • Process flow.
  • Our free trial offer


Title: "Contract Outsourcing needs - The Indian Edge"
Date: Thursday, December 10, 2009
Time: 11:00 AM - 11:55 AM GMT

Register now by clicking the link below:
https://www1.gotomeeting.com/register/778437640

After registering you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows(R) 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh(R)-based attendees
Required: Mac OS(R) X 10.4 (Tiger(R)) or newer

I look forward to interacting with you at this webinar.


Thursday, November 12, 2009

Impact of the new health care legislation on the outsourcing industry

President Barack Obama had a hard won victory on Saturday night (the 7-8th day of November 2009) when the landmark health care reform legislation (HR 3962) was passed with 220-215 votes. Now if everything goes the Obama way, then by the end of the year '09 "Affordable Health Care for America Act" would apply as a law impacting almost fifty million US lives. But what does this Act actually imply? How does it stand to impact an average US life? How does the Act affect the outsourcing industry at large? Through my article below I endeavor to answer these and many more questions.

Ab-initio we will refresh the fundamentals of federalism, stating the Roles, Duties, Nature, Scope and Restrictions on the government in a written federal constitution. Next we proceed to see whether the above attempt by the federal government to accede healthcare legislation is ultra-vires the powers granted by the US Constitution.

What is Federalism?

According to the traditional classification followed by the political scientists, constitutions are either unitary or federal. In a unitary constitution, the powers of the government are centralized in one government viz., the Central Government. In the federal constitution, on the contrary, there is a division of power between the federal and the state governments in a way that they are both inter-dependent and independent at the same time.

As we all know that Constitutions are organic documents which operate as fundamental law. The governments and their organs owe their origin to the constitution, derive their authority from the constitution and discharge their responsibilities within the framework of the constitution. The judiciary has the power to declare a law unconstitutional if the law is found to have contravened any provision of the constitution. The American Constitution is the oldest and a well praised example of federalism.

What are the powers granted by the US Constitution to the State Government?

Powers reserved for State Governments are:

  • Establishing local governments
  • Issuing licenses (driver, hunting, marriage, etc.)
  • Regulating intrastate commerce
  • Conducting elections
  • Ratifying amendments to the U.S. Constitution
  • Providing for public health and safety
  • Exercising powers which are neither delegated to the Federal Government nor were prohibited from the States by the Federal Constitution (residuary powers)
  • Framing other domestic law (for example, setting legal drinking and smoking ages etc.)


What are the powers granted by the US Constitution to the Federal Government?

Under the Constitution, powers reserved for the Federal Government are:

  • Printing of money
  • Declaration of war
  • Establishing the armed forces
  • Entering into treaties with foreign governments
  • Regulating commerce domestically and internationally
  • Establishing post offices and issuing postage
  • Making laws necessary to enforce the Constitution


What are the powers shared by Federal and State Government?

Under the Constitution, the shared, or "concurrent" powers are:

  • Setting up courts
  • Creating and collecting taxes
  • Building highways
  • Borrowing money
  • Making and enforcing laws
  • Chartering banks and corporations
  • Spending money for the betterment of the general welfare
  • Acquiring private property with appropriate compensation


What is the HR 3962 Act ?

The HR 3962 Act conceptualizes a new, voluntary, public, long-term care insurance program to help purchase services and support for people who have functional limitations. The Act endeavors to form a new national program to provide affordable coverage for those who can't get health insurance today because of pre-existing conditions. Under this, the insurance companies must spend 85 cents out of every premium dollar on medical services, thereby fostering the expansion of Medicaid and improving the Medicare. Under this, the young adults, till the age 26, are covered within their parents' policies.


The Obama administration intends to attain this by creating mandates. As a self-sustaining public insurance option (that is financed not by tax dollars but by insurance premiums), this provides an alternative to and competes with private health insurance companies, on a level playing field. Additionally, the Act intends to eliminate the antitrust exemption for health insurers and medical malpractice insurers thereby fostering competition thus targeting the existing monopolies in the health insurance market. It aims to establish a new mandatory essential benefits package that shall become the minimum quality standard for employer plans, with the passage of time. The package places a cap for annual out-of-pocket spending, at a maximum of $5,000 per individual and $10,000 per family to prevent bankruptcies from medical expenses.


This Act requires the employers to either provide insurance to their employees or contribute to the cost of their coverage through the public plan/exchange, though the small businesses are exempted from this requirement.


Arguments regarding Constitutionality of HR 3962

The legal fraternity is divided between two schools of thought about the constitutionality of the Act. First school believes that the Act is unconstitutional and places reliance on Articles I §8 and V of the US constitution and on Tenth Amendment. They claim that their argument is supported by the celebrated case of MARBURY v. MADISON, 5 U.S. 137 (1803) and some federalist opinions. The second school of thought places reliance on Article I §8 and the celebrated case of McCulloh v. Maryland, 4 Wheaton 316 (1819); Steward Machine Co. v. Davis, 301 U.S. 548 (1937); United States v. Butler, 297 U.S. 1 (1936) and some federalist opinions. An in-toto analysis of these school of thoughts would conclude that the true interpretation of the word 'general welfare' in Article I §8 of the U.S. Constitution can only determine the constitutionality of an Act like HR 3962. Till date the court opinions have been more inclined towards Hamilton (Federalist 33, 83 etc.) and Story rather than Madison (Federalist 41, 45 etc.).

Simply put, when the government mandates welfare as a quid-pro-quo for premiums collected, such welfare translates to nothing but a tax liability for the country men. Such an attempt by the government to regulate insurance sector by masquerading as an industry player is inspired from socialism. I personally feel that socialism is a Marxian concept and may not go well in an economy with capitalist foundations. The good thing is that people all over the world should buy insurance; this however turns bad when the government forces people to do so.

What are the implications of HR 3962 on the Outsourcing industry?

The object clause to the Act states that it is meant to provide affordable, quality health care for all Americans and reduce the growth in health care spending.

In reality, the act is a victim of haste. Ideally if the intention of the Obama administration and the object clause of the Act were actually in-sync then the administration should have awaited a confirmed indication of the end-of-recession. The administration should have first looked at strengthening the fundamentals of the economy, by:

  • better regulating the existing insurance sector,
  • improving the US agrarian culture and making the country self sufficient regards its food requirements,
  • checking the cost-of-living index and
  • creating more jobs in the private sector.

But if the intention is to make more and more Americans dependant on Federal Government for basic requirements, then the attempt is bang on.

Impact on the outsourcing industry:

Prima-facie it may seem complex but there are clear indications for the outsourcing industry to benefit once the HR 3962 is implemented. The benefit roots from the fact that the employees will become expensive for the employers post this Act's applicability. Now given the very competitive market scenarios, thin profit margin and the inability of the employer to transfer this increased cost to the end consumer, the employer is forced to search for the less costly alternatives. It is needless to say here that the Act magnifies the already existing labor arbitrage opportunities internationally. To appreciate the existing labor arbitrage opportunities you can refer to my older blog post in my blog on Legal Process Outsourcing.

Saturday, November 7, 2009

Malpractice insurance and Legal Process Outsourcing

[Please remember that only the insurance policy can give actual terms, coverage amounts, conditions & exclusions. This article neither renders legal opinion nor recommends the pros and cons of malpractice insurance. The article is a simple compilation of the requirement of malpractice insurance for Legal Outsourcing vendors. The article is not a substitute of recipients' obligation to ensure compliance.]

This issue was discussed with brevity in the last article posted. The previous article collectively dealt with seven myths in the Legal Outsourcing Industry. However a need was felt to exhaustively deal with this issue of malpractice insurance, hence this article.

What is Insurance?

Insurance is an agreement (generally in standard form) between the policy holder and the insurer, where the insurer agrees to indemnify the policy holder upon the occurrence of a contingent event. In the absence or lapse of insurance, the wrongdoer is personally liable to compensate the alleged victim.

What is Malpractice Insurance and what does it cover?

Malpractice Insurance is one category of insurance, specifically meant for professional practitioners like physicians, lawyers, accountants etc., which provides coverage to these policyholders against potential negligence claim made by their clients/patients. The malpractice insurance taken by attorneys is popularly known as legal malpractice insurance. Legal malpractice is defined as the failure of an attorney to deliver competent services to his client. If the latter is harmed by the failure of the attorney, then he can pursue a claim for legal malpractice. This insurance generally covers defense costs, deposition representation, defendant expenses, license protection, and any liability occurrences. Some also offer the coverage of assaults, personal liability, personal injury, first aid expenses, medical payments, and damage to the property of others depending upon the scope of agreement. Malpractice Insurance is a general liability insurance.


Who are covered under a Legal Malpractice Insurance?

By the doctrine of respondent superior and vicarious liability, the employer is responsible for the torts of their employees or agents when the wrongdoing occurs within the scope of employment. Under the same principle, in case if a paralegal or junior associate commits a tort within the scope of employment, the client can sue the paralegal, the associate, the attorney or all. This is a reason why most of the legal malpractice insurance covers each and all of them.


Is it mandatory for the US Attorneys' to have legal malpractice insurance?

Oregon is currently the only state to have a mandatory program requiring all private practice attorneys to carry malpractice insurance. Four states - Alaska, Ohio, South Dakota and Virginia - have varying requirements for disclosure of professional liability coverage. The Supreme Court of California adopted new Rule of Professional Conduct 3-410 on August 26, 2009, effective from January 1, 2010. This Rule 3-410 requires lawyers without professional liability insurance to provide written disclosure of their lack of coverage to all, i.e. to both the new clients as well as the clients which return to the attorney with new assignments. The mandatory disclosure is to be made at the onset of any client's engagement, beginning January1, 2010. It is imperative to note here that although having such an insurance cover just may be desirable, but is not a mandate to follow even after Rule 3-410 is effective. But this rule is widely opposed by the legal fraternity at large. It is believed that once the Rule is made effective, it shall bring to foyer larger difficulties for uninsured attorney's to generate business. At this time, I would like to quote a study by Louisiana State Bar, Oral Report to the House of Delegates, January 19, 2002 that "…. only half of American attorneys carried insurance protection (at that time)…..".


How painful is it for a client to sue an attorney for a malpractice?

Areas of law practice where lawyers get most frequently sued are Personal Injury, Domestic Relations, General Corporate and Real estate. The most common errors due to which lawyers get sued are: failure to timely file or respond, improper advice, unethical conduct, failure to advise, misrepresentation, inadequate investigation or preparation, failure to follow instructions etc. In case of any malpractice on account of the attorney, the client has two options: either to approach the state bar with a written complaint or to file a malpractice case.

In case of the former, if the ABA data has to be believed, only 0.27% attorneys were formally charged for disciplinary action in 2004 [American Bar Association, Center for Professional Responsibility, Survey on Lawyer Discipline Systems2004, available at www.abanet.org.] .

Unfortunately, it is also hard to win a malpractice case. Malpractice means that the lawyer failed to deploy the ordinary skill and care that would have been deployed by other lawyers in handling a similar problem or case under similar circumstances. To win a malpractice case against an attorney, the alleged victim needs to prove four basic things:

  • Duty -- that the attorney owed a duty to act properly,
  • Breach -- that the attorney breached that duty,
  • Causation -- that this conduct caused actual damages, and
  • Damages -- that financial loss resulted due to this above conduct.

The biggest hurdles amongst the 4 above are: Causation and Damages. To win a malpractice case, the alleged victim must first (I) show that he would have won the case that the lawyer mishandled. And second(II), he is required to prove that the victim would have been able to collect compensation from the defendant (unless he is in the state of Ohio, where the second part is not required).

For example, let us say the victim who was hit by a vehicle, hired an attorney who failed to file the claim-suit within limitation. To win the malpractice case against his attorney, this victim, inter alia, has to show that the vehicle driver has sufficient funds or insurance. Now if the victim cannot prove that the driver has assets which can be used to pay the judgment, then the victim will not win this malpractice case despite the fact that both the lawyer and the driver were at fault. Additionally, expert evidence may also be sought to facilitate the case proceeding. Malpractice cases often fail because mere bad outcomes or ill-advised strategic choices by an attorney are not considered deviations from the standard of care, though in more complicated cases this can be a very gray area. Limitation, case within a case, standard of care and attorney judgment rule are some strong defenses available with attorneys in cases of legal malpractice. To sum up, without an expert attorney on the claimant's side, the chances of winning a legal malpractice case are bleak.

In an effort to reimburse defrauded clients who cannot get reimbursement from the attorney who caused the loss or from insurance, some states have Client Protection Fund. The fund is financed through annual registration fees and administered by the state courts. But unfortunately a client's ability to recover under the Client Protection Fund is usually severely limited.

Now let us look at how the legal malpractice insurance and the Legal Process Outsourcing industry norms are intertwined.


Understanding the models of Legal Process Outsourcing:

Traditionally there are two popular modules in which legal processes are outsourced, Third Party Service Providers/vendors (TPSP's) and owned captive unit. A TPSP vendor (commonly referred to as LPO vendors) assists foreign law firms and in-house legal departments to achieve cost effective legal support. TPSP's are not law firms and do not practices law in any domestic or foreign location. They are engaged by foreign attorneys and work on set guidelines to assist them. They have internal Quality checks to ensure consistent quality work product (deliverables). This work product (deliverables) is also supervised by licensed US attorney. Captive unit in the simplest way is an extension of your office.


Do LPOs need malpractice insurance?

The answer as obvious is NO. Since an LPO is not engaged in practice of law, it does not require insurance cover for malpractice. The law firm outsourcing work should ensure from their insurance agent, for the coverage of TPSP's attorney. LPOs do not take malpractice insurance. With malpractice insurance, the argument is that a TPSP or its employee does not work in direct contact with clients and therefore would not be sued for malpractice. In fact for the reasons mentioned above in the article, the probability for TPSP's being sued as defendant, co-defendant or even a third-party defendant in a malpractice suit is limited. To the extent they can be, TPSP's are covered by the malpractice insurance of the outsourcer. Associates of counsels, paralegals and virtual lawyers are generally covered in malpractice insurance policy depending on how broad the coverage is. Please contact the insurance broker or agent for more detail.


Which Insurance cover is then required by TPSP?

It is necessary and desirable that TPSPs have an E & O (Errors and Omissions) insurance coverage. Though it is interchangeably used, there is a difference between malpractice and E & O insurance cover. Malpractice insurance covers defense costs, deposition representation, defendant expenses, license protection, and any liability occurrences. Some insurer also covers assaults, personal liability, personal injury, first aid expenses, medical payments, and damages to the property of others. E & O insurance protects TPSP and its employees in the event a client alleges to have suffered a financial loss as a result of an error and/or omission committed by TPSP in the delivery of legal outsourced services. It is unlikely that any foreign attorney who understands the nature and scope of malpractice insurance and the scope and obligations of outsourcing would ask a TPSP to have malpractice insurance.

E & O insurance coverage is flexible and can be taken exclusively for each assignment to better cover a specific situation. In majority of cases the SLA signed between the outsourcer and TPSP, provides for some form or the other of indemnity. This indemnity risk can be better covered by entering a clause in the SLA to an effect that TPSP obtains E & O insurance cover for risk mitigation.

It is not just a fundamental but also a technical analysis of the scenarios in the outsourcing industry today that inspires someone to outsource work to TPSP. Weigh the dependability and reliability of the organizations to which you want to outsource. A thorough due diligence should be made about TPSP. Free trials are occasionally offered, which helps the outsourcer to understand the nature, scope and standard of work-product (deliverables), before outsourcing.

Wednesday, October 28, 2009

Bursting the 7 (Seven) Myths behind Legal Process Outsourcing

Myth 1> LPO stands for PLPO (Para-Legal Process Outsourcing) and/or there is a compromise in quality.

The legal process outsourcing industry is at nascent stage, but at the same time is growing both monetarily and intellectually. Although it is true that High cost, more routine, lower risk legal works are easy to outsource, it in no way circumscribe the potentials of legal process outsourcing. The PLPO perception is a backlog, as the Legal outsourcing industry begun with routine work. Suffice it is to mention that various important players like (SDD and Lexadigm) have prepared Briefs and Motions to be filed in US courts. Our attorneys are trained for Multi jurisdictional research and assist:-

  • US debt collection attorneys prepare Consumer Complaints, Briefs, and Motions for FDCPA, FCRA, FCBA and TILA violations.
  • Social security attorneys in filing FIT, research on GRIDS, De novo appeal before ALJ.
  • Bankruptcy attorney in intake form fill up and entering the information on Bankruptcy software.
  • Foreclosure attorney in preparing complaints, motion and briefs to help the homeless.
  • Contract review and management attorneys in contract Review including red lining and blue lining.
  • Merger and Acquisition attorney for due diligence.
  • For E-discovery solutions with cost advantage.

Quality is a term that changes face with new situations. Clear guidelines, good teamwork and 100% quality check are the factors that coordinate in determining standard. It requires involvement from both the ends, keep a track of milestones and guidelines and the Outsourced service provider will ensure quality. We however, from our end add extra input to provide best quality deliverables. Had all vendors failed in providing quality this industry would have collapsed by now, the continuous growth reflects value.


Myth 2 > Legal Outsourcing compromises confidentiality.

Assuming that U.S. and U.K. are the countries outsourcing majority of legal processes, ABA Model Rule 1.6 and UK Data Protection Act 1998 are relevant for our purposes. An epitome is that there has to be a mechanism for "adequate protection of data". Many LPO's including ours, appreciate security concerns and have rigorous IT and client data confidentiality standards. We for instance ensure employee frisk, I.D card entry, finger print attendance system and strict restriction on using mobile phones and data storage devices. Our other security measures includes restricted entry, 24*7 CCTV surveillance, round the clock security guard, visitor log, access control to work station, software and hardware security, Limited internet access, data locking in server, data encryption, client password facility for milestones access.


Myth 3> It is unethical to outsource.

Till date the following Bar Opinions have dealt with outsourcing:

  • ABA Ethics Opinion 08-451, Lawyer's Obligations When Outsourcing Legal and Nonlegal Support Services (2008).
  • Florida State Bar Association Opinion 07-2 (2008).
  • North Carolina State Bar 2007 Formal Ethics Opinion 12 (2008).
  • Association of the Bar of the City of New York Committee on Professional and Judicial Ethics Formal Opinion 2006-3 (2006).
  • Los Angeles County Bar Association Professional Responsibility and Ethics Committee Opinion 518 (2006).
  • San Diego County Bar Association Ethics Opinion 2007-1. (2007)


Although all of them favors Outsourcing, the San Diego opinion is the most elaborate document stating in its relevant part that work done by Indian attorneys' under supervision of US attorney is not "unauthorized practice of law".


The précis of all the opinions is that a lawyer may outsource legal or non-legal support services provided the lawyer supervises and remains ultimately responsible for rendering competent legal services to the client {Model Rule 1.1, 1.5, 1.6, 5.1, 5.3 and 5.5.1 ABA}. Hence it is not unethical to outsource.


Myth 4> Outsourcing results in a loss of jobs in the outsourcer's country.

Job creation is a mysterious, little understood and complex economic process (to detail which is beyond the scope of this article). What may seem as a loss of job initially may create 3 times more jobs than anticipation. Let us understand it with the simplest possible example:-


Say an US company outsources Rammon's job to Ram in India. Rammon's company's savings are addition to the GNP for US, which gets utilized creating more jobs, probably one for Rammon. Our Ram with more money in hand starts behaving American and consuming American foods, goods and other luxurious lifestyles. Due to increase in income there is demand in raw materials for House and cars, these comes from US. There is rise in demand for luxurious goods, goods meant for rich, US is a large exporter of that. Indian companies willing to attract customers like Ram, needs to produce goods and services of American standards. This requires borrowing or Outsourcing American technology, expertise and R & D. With monies in hand Ram is also willing to complete his online MBA from a reputed American University. In the long run all these are factors generating jobs.


There was equal resistance for globalization in many countries. The governments chose to engage Machine diggers in place of workmen with spades. Despite specific jobs being lost in the short run, the total number of jobs has increased since globalization. At the time, there were people who objected. But on that basis, no economy replaced each man with a spade with 50 men using teaspoons. On the same vein outsourcing jobs to other countries frees up labor that can then be more industriously employed. According to the McKinsey Global Institute, for every $1 outsourced, the economic gain to the United States as a whole is $1.12 to $1.14; whereas the country to which a job is outsourced gains just 33 cents.


Myth 5> My Indian LPO vendor will compete with me.

All the LPOs work in a module where they are assisting US law firms and in-house legal departments to achieve cost effective legal support. Indian LPOs are not law firms and do not practices law in any domestic or foreign location. They are engaged by foreign attorneys and work on set guidelines to assist them. Selecting a foreign vendor for your outsourcing needs leverages more time for you to concentrate on other core competencies, increase client base and face challenges. The LPO vendor is a partner in your growth and not competitor.


Myth 6>
LPO vendors need Malpractice Insurance.

Since an LPO is not engaged in practice of law, it does not require insurance cover for malpractice. The law firm outsourcing work should ensure from their insurance agent, for the coverage of vendors' attorneys. LPOs do not take Malpractice Insurance (at least my LPO does not have one).


Myth 7> Legal outsourcing creates instant savings and carries no obligations.

Everything cannot be outsourced though outsourcing is everywhere. Outsourcing is delegation; you outsource your graphic design work and marketing your products and services. Legal Outsourcing is more like hiring a new associate; you assign him routine work till he is adapted to handle critical situations for you. Remember, we begun our legal practice this way but with the passage of time we gained more confidence, exposure, knowledge and acumen.
After gaining speed outsourced associate extends your capabilities. As law firm attorneys or in-house counsel in the West close their offices, their assigned work is attended to and completed in India due to the time zone advantage. To wit, there is a gestation period of about 1 month in legal outsourcing but the long-term benefits are unlimited.

Friday, October 16, 2009

A comparison of 4 most popular LPO locations.


 

In this article we will try to make a comparison between India, China, Israel and Philippines for the best LPO locations. The Databox below would help in our assessment.

 

India

China

Israel

Philippines


 

Total Population (as on Oct. 2009)


 

1,170,940,000


 

1,333,420,000


 

7,448,200


 

92,227,100

Median age (half the population is above and half below)

25.3

34.1

29.1

22.5

English speaking people

90,000,000

10,000,000

100,000

48,800,000

Law Graduates

1,180,000

162,146

40,469

45,000

Legal System

(common law or others)

English Common Law

Civil law system

Common law influenced by German Civil law

Spanish Law influenced by US common law

No. of law colleges

> 128

25

10

8

Internet users (in millions)

68

169

2

4.9

Govt. economic policy (1-5);

1-best, 5-worst

2

3

2

2

Time difference with US (EST)

9.5 hrs.


 


 

[Local time in Delhi,
10:33 AM on Saturday, Oct. 15, 2009.

Local time in New York, 1:03 AM on Saturday, Oct. 15, 2009]

12 hrs.


 


 

[Local time in Beijing, 1:03 PM on Saturday, Oct. 15, 2009.

Local time in New York, 1:03 AM on Saturday, Oct. 15, 2009]

6 hrs.

[Local time in Israel, 7:03 AM on Saturday, Oct. 15, 2009. Local time in New York,
1:03 AM on Saturday, Oct. 15, 2009
]

12 hrs.

[Local time in Philippines,
1:03 PM on Saturday, Oct. 15, 2009. Local time in New York, 1:03 AM on Saturday, Oct. 15, 2009
]

Time difference with UK

4.5 hrs.

[Local time in Delhi,
10:50 AM on Saturday, Oct. 15, 2009. Local time in London,
6:20 AM on Saturday, Oct. 15, 2009
]

7 hrs.

[Local time in Beijing, 1:20 PM on Saturday, Oct. 15, 2009. Local time in London, 6:20 AM on Saturday, Oct. 15, 2009]

1 hr

[Local time in Israel,
7:20 AM on Saturday, Oct. 15, 2009. Local time in London, 6:20 AM on Saturday, Oct. 15, 2009
]

7 hrs.

[Local time in Philippines, 1:20 PM on Saturday, Oct. 15, 2009. Local time in London, 6:20 AM on Saturday, Oct. 15, 2009 ]

     

Source: Wikipedia and official govt. websites.


 

China and the Legal Process Outsourcing Industry: - From electronics, manufacturing, PCB, Operating Systems, 3-G to Hardware Chinese goods are everywhere in market. From Olympics in 2008, 60th birth anniversary in 2009 to the upcoming Worlds' fair (Shanghai) in 2010, china had always and will always surprise the word with clear competency indications. The Chinese influence is set to grow in the years to come. Opportunities of outsourcing to China are enormous keeping in mind the fast economic growth. The Dragon has also diluted its rudimentary communist policies and is helping the Pvt. sector to grow. Since 2005, several IT and ITES services are duty free in China. China based TCL, the largest TV manufacturer backed by the Govt. has shown aggressive acquisition steps. Since 2000, against the populist advocacy, China has taken some strong steps to introduce English as a language. The Chinese leadership now realizes that English has a vital role to play in nations' modernization and development.

    Let it be as it may, imparting English education is one thing and piercing the civil law mentality and instilling Common law jurisprudence is pole apart. China has a long way to go before it becomes an actual threat to other strategic Legal Process Outsourcing Countries.

Israel and the Legal Process Outsourcing Industry: - Israel started to appear on the IT outsourcing map in 2005, when a survey included it in the list of top-20 location for outsourcing. Israel has a unique culture that is influenced by its inhabitants most of whom are Expats or have American parents. Slowly and gradually Israel is picking up as a LPO location. However at present it doesnot gives a tough competition because of the following factors- Instability, influence of German Civil law system and high manpower and other costs. It is neither a location nor cost rival for places like India and Philippines.

Philippines and the Legal Outsourcing Industry: - Philippines is ranked as Asia's second biggest outsourcing destination after India. Advantages like cheaper labor, lower cost of living, and large English speaking educated communities, are the exclusive advantages in Legal Outsourcing to the Philippines. However, to the contrary, Philippines had been slow to attract awareness about itself as an accepted destination for offshore as well as Legal Process Outsourcing. The country though had the same opportunity India had in the last decade but sat around the sidelines and watched India acquiring hundreds of outsourcing opportunities. During the same period Philippines could not materialize much into its kitty. Even today, the penetration of the outsourcing sector in Philippines is said to be 2 to 3 years behind India. Lack of Marketing, Bad security perception, Tight labor market, poor telecommunication infrastructure and dramatic rise in office rental and labor cost are obstacles, Philippines needs to overcome if it desires to overtake India as the Outsourcing superpower.

India and the Legal Outsourcing Industry:- No prizes for guessing, India is the most popular Outsourcing location. Even the Legal Process outsourcing Industry is not an exception. More than 200 LPO's exults India's enormous potential to cater the offshore legal requirements. No other country is even a good competitor to India in the Legal Process Outsourcing Paradigm. But the challenges are stern. India to maintain its status needs to update its Infrastructure, update vocational education, control the real estate prices and control the rise in salary structure of outsourcing professionals. In a previous post some concerns was also raised about practices adopted by new LPO vendors and a need for their introspection.

Tuesday, October 6, 2009

OBAMA TAX REBATE POLICY PROVED TO BE A HISTORICAL FAILURE


Globalization is a reality. And this makes most leaders today realize that populist illusions can't be sustained before they collapse into stagnation and leave their political supporters deeply disillusioned. You can't inflate away your troubles or allow mountains of debt to build up if, as a country, you have to make your living in a globally competitive environment... Building prosperity requires caution and patience. It requires time. Populism is a short cut that doesn't work.


Ever since Obama announced his anti-outsourcing tax rebate policy, contrary to his expectations the volume of outsourced work has increased. The policy was announced to prevent a quo warranto and generate popularity from 100 days of visionless usurping on the most paramount post. The corollary and conclusion is that Obamaenia is fading and monies not materializing. The author believes that the Obama authority has learnt lesson and will show reluctance before making another popularizm stunt.


What went unexpected with the tax policy?


US law states that "any income that is earned outside the US is not taxed until such time it is brought back into the US." By his latest tax policy Obama aimed at an antithesis. He aspired to raise the kitty by another $210 billion in additional tax collections over the next decade for profit earned outside the US by companies having base at US.


Vis-à-vis restrictions were also imposed on H1B1 visa requirements to stop people from developing countries like China and India entering into US. So what was it that the Obama administration tried to promote and what to restraint? Why did not the policy respond positively?


The Obama policy lacked foundation. World trade does not function in isolation; the world is flat, short and too much inter-related. The economies may have different trajectory but are influenced by each others. After Globalization a company searches the world, not just to sell or to source, but to find intellectual capital and Market - the world's best talents and greatest ideas irrespective of nationality. IBM, Microsoft, and Oracle become big corps just because of low cost and strong intelligent and hard working work force in India. The factors that catalyzed this were two forth 1> savings in cost, and 2> US do not have trained human resources to do a certain category of specialized services.


We need to get matured enough to the cost savings economy and start talk sense. Indian call center agent is engaged for 12-15K per month that to 9.6 hours a day. 15 K is about 300 $ in US. Obama administration thought that companies like Citibank will run their call center in US and pay 4000 $ to US call center agent, just for the sake of retaining US jobs. An Indian IT guy can be hired for 20 to 40K rupees which is less than one thousand Dollars per month (40K Rupees is around US $800). How much your computer wizz requires you know Mr. Obama about $100000.00 per year or about $8500/00 per month which is more than 400000 (4 L) Rupees in Indian money per month. How much the companies make due their pay roll in India - believe me it is a mountain of monies and new ideas getting them all for pits just about one eight of the local US Pay for such jobs.


Other area where Obama administration lacked foundation was that the services are getting commoditized day by day. Faster, better and cheaper is the key to success in the market. The Obama administration cannot bind, the new generation (which is an improved bunch and can differentiate quality) to buy GM Chrysler or Fords' lousy cars with lousy engines and sub standard transmissions, just for the sake of retaining US jobs. On the other hand these car companies are earning revenues in developing economies like India. Mac burger, Coke, Pepsi, Dell, HP, IBM hardware, Microsoft, oracle, Google software and Boeing cannot be stopped from doing business in India just for the sake of promoting Indian Companies. Nor can the Indian govt. prevent them from earning revenues, because they offer quality goods at comparative price. US had lost 2, 73,000 jobs in September 2009, so were an equal number of extra workers engaged by outsourcers of the developing countries. NO, Indian outsourcing industry is also affected and is praying for quick recovery of US economy. There may be increase in outsourcing in some sector in the short run but the long-term health of vendor is in the prosperity of customer. When the companies of developed nations will close, from where the developing ones will get outsourced stuffs.


So instead of being analytical to a developing nation's prosperity and announcing boomeranging anti-outsourcing policies the Obama administration could have done better things. Concentrating more on market fundamentals would had helped framing practical policies. Administration could have added more (than $210 billion dollar) by investigating the reasons and locations of revenues pillaged from poor workers in capitalist economy. Mr. Bush donated $750.00 Billion Dollars to his friends before leaving the Presidential Palace to his retreat. It is sensible for President Obama to create a committee and investigate and roll back those taxpayer's funds to the exchequer. Even a billion in investigations ordered on the 100th day celebration should have recovered $210 Billion at least by now. Investigations should have been made to capture the bosses of those big bankrupt organizations who filed for bailout, but paid million dollars as CEO's salary. Control the bank bosses who are nothing but nerds and want to make in hundreds of thousands from the Bank's coffers thus driving foolishly the service charges into billions in the process that exhausted the wealth of the nation and its people. Revamp the Banking industry in USA. The stimulus, without getting credit market work again, without cleaning bad debt is mismanagement. Plan a way out to have better administrative control in capitalist market and stop 1 trillion dollar bailout package next year.


KPO / LPO vendors need to fasten their seatbelts now.


The effect of recession and survival strategy was discussed by the author in a previous post in August and is not repeated for the sake of brevity. The LPO (Legal process Outsourcing) industry claims rejoice of surviving the great depression. The responsibilities ahead are more challenging and the preparedness is outdated. Suffice it is to mention, that this most infant industry was not much hit by recession, there was some stagnancies and decrease in growth rate. But now for the reasons mentioned in the article published in this blog in August, the industry player needs to be prepared to taste the unprecedented boom.

Wednesday, August 19, 2009

CONTRACT MANAGEMENT AND DOCUMENT REVIEW ARE CRYING OUT FOR PROCESS IMPROVEMENT, AUTOMATION AND UPDATE.


This article is an attempt to explore the potential of technological utility in transforming analytical data into work product. However we would be circumscribing ourselves to two most important legal processes being outsourced. This article will attempt to overview the existing platforms for document review and contract management and will envisage towards developing the ideal module with edge cutting capabilities.

INTRODUCTION: - Document review (a/k/a doc review) as popularly understood is an assignment undertaken by an attorney in anticipation of legal proceeding or during the discovery phase of litigation. Primarily Document Review rivet huge amount of data into useful work product. Document review postulates attorney to review the relevance and/or responsiveness of documents, by employing the facts of the case and the ratio. Later stages of document review (also known as privilege review or second level review) further analyzes privileged (on the basis of attorney-client communication and/or work product) and may be either withheld from production or redacted for content. The actual review of the documents is performed electronically (e-mails, files, scanned copies of documents). With proliferation in electronically stored data, an e-discovery first level document review estimates 75% of the average litigation cost. Data explosion, technological evolution, and the sudden increase in electronic stored information has catalyzed technical role, as the total quantity of documents has multiplied several times over the years. Besides in litigation, document review is also performed in matters of regulatory compliance, merger and acquisition and corporate due diligence.

PLATFORM:- whether through FTP, remote desktop or other networking concept as soon as the ESI (Electronic stored information) is received for review, an idle platform should give best technology integration to accomplish purposes.

Document review platforms have, for some time now, offered the possibility of order, control and cost-avoidance. These tools promise easy organization of large document collections, ready access for reviewing attorneys, status reports and programmatic production of relevant materials. Unfortunately, all too often, their promises fall flat. Available tools are limited by shortcomings in the areas of security, flexibility and scalability – issues which severely limit an organization's ability to use them successfully. Most often they behave like idiots to your command and at times completely collapse with 1. Reading different file formats, 2. Cluster operations, 3. Segregating duplicates or near duplicates, 4. Setting of milestones and 5. Quality concerns.

One by one illustration of these issues is necessary to clarify behavioral expectations and perfect technological integration desire. File formats. Recognizing the entire different files format (including but not limited to gif, excel, movie player, ppt and zip) and the platform's ability to present it within desired layout in an understandable form is a challenge many platform fail to meet. Many platforms are outdated and do not recognize WIN 2007 files. The platform must be intelligible enough to extract zip files. Cluster and duplicates though used interchangeably is remarkably different concept. The best platform must offer the choice of flexibility in determining the percentage of similar contents to mark duplicates. Duplicates must be clustered well and a flexible but intelligible approach is desired to give similar treatment to all duplicate and cluster, which most platforms miss out. Milestone. Should not only be limited to distances covered in the DR assignment but must give a graphical depiction of work done and the ability to compare with personal and other records. My dream platform would also track the number of clicks and ticks and would tell me the exact idle amount of time wasted by each reviewer. Quality. Provision of a milestone in quality is also desired from the platforms. A true high-end user friendly platform should have the ability of generating quality reports vis-à-vis milestones. This feature lacks in most platforms.

So am I claiming the world? No, many of these problems have been consistently faced because of no improvement in the reviewer interface with the platform. My dream platform would have short keys for marking of documents, and the marked docs would be saved automatically and the new doc pop-ups in the interface. This would limit and answer half the concerns and would increase the efficiency.

CONTRACT MANAGEMENT: - Contract Management is often confused with document management and repository. Though both of them are related to Contract Management the scope is much broader. Contract Management or contract administration is the management of contracts made with customers, vendors, partners, or employees. It is a methodical management of contract from inception to conclusion. Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing any changes that may arise during its implementation or execution. Only if parties are aware of the deliverables in agreements can they take pre-emptive and anticipatory action on critical contract milestones and triggers.

Organizations are typically good at certifying payments to suppliers, but not good at ensuring compliance of contract obligations. Conversely, Suppliers do not always maximize the potential of each customer relationship. Lost revenues and over-expenditure occur when parties lack good systems in place. Since Contract Management is the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk. CM Software has the responsibility of managing the contract life-cycle, from identification of a need, through negotiation, agreement, monitoring, and close-out. Many software developers concentrate too much on terms like signing date, effective date, termination date, expiry, automatic renewal (ever greening) and signatory to compromise with other vital terms like indemnity, warranty, inspection, liability, payment and penalties. Change is also desired in the interface, perfect Contract Management software should pop-up like a calendar showing all milestone and decisive actions to be taken for each and every day on the entire contract repository in the database.

To wit, the consequences of reliance on substandard Contract Management software can cost dearly and choosing good software with multifaceted feature can save beyond imagination. Not that we have an option, except to wait for some charismatic software's to come. Suffice it is to say at the conclusion that there is only one difference between LPO of Contract Management and software companies handling Contract Management stuff, that is indigenous technology that the later possesses. An attempt is being made by Contract Management software companies to outsource repository and other core competencies to India (Pontus to begin with and many to follow), which will broaden their horizon and limit costs.

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