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.

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