Outsourcing fever reaches legal departments
A new joint venture is betting that legal departments will look to India in search of cost
savings
Atlanta Business Chronicle
February 22, 2008
It's long been established that American companies have been going to India, hoping to
cash in on the savings afforded many firms by the outsourcing trend. Now, their lawyers
are heading to the subcontinent, too.
Indeed, a study by Forrester Research projected that between 2003 and 2015, 79,000
legal jobs would be outsourced overseas.
In the belief that a sizable legal outsourcing market exists in Georgia as well, Atlantabased BG Search Associates has entered into a joint venture with New York-based legal
recruiting company Strategic Legal Solutions Inc. to offer outsourcing services to inhouse law departments. The idea behind BG/Strategic Solutions LLC is to offer
document review and discovery and research services at a fraction of the cost, something
that seems to be quite prevalent in other parts of the country but only recently was
introduced in Atlanta. The work would be performed in India by local attorneys there
with American Bar Association attorneys overseeing it.
Barbara Goldman, founder of BG Search Associates, says e-mail review of legal
documents is a $2 billion-a-year industry nationally.
"The cost of litigation is going through the roof," says Goldman, who adds that she's
confident in-house corporate departments will be eager to take advantage of the 15
percent to 20 percent in cost savings afforded by her new venture.
Goldman believes there is "no limit" to the potential growth of this niche market.
Strategic Legal Solutions, a $60 million national firm specializing in temporary
placement of attorneys and paralegals, believes it has a formula that works.
The company already has offices in the legal markets of New Jersey, Chicago, Los
Angeles and San Francisco.
Strategic Legal Solutions CEO Jay Horowitz believes the joint venture with BG Search
Associates is ideal, given that this market is ready for the same kind of discounting as the
country's other top markets.
"When we evaluate another market, we look at where we think the client demand is and
we also look at the quality and quantity to fill demand and people we have there,"
Horowitz says. "We have the opportunity to join up with people who have respect and
credibility."
Skepticism
To be sure, there is widespread skepticism among some that legal work can as easily be
exported as technical support or other customer service duties.
Steve Kaplan, an in-house counsel at CompuCredit Corp., an Atlanta-based provider of
credit and related financial services and products, says he thinks that until a "lot of the big
players execute" on a company that outsources legal work, "a lot of folks won't go in that
direction."
Nonetheless, he certainly understands the appeal of such services.
"I think what you'll see is people sending off work that is high volume, low impact.
...With contracts, sorting documents -- things of that nature.
"The thing is, it's expensive and time-consuming. ... Most attorneys are hesitant, as
individuals, to be the first one to try out something or on the fringe."
Steven Cooper, an attorney with Stites & Harbison PLLC's Atlanta office who was the
general counsel at Electrolux Corp. for 25 years, says he would be leery of outsourcing
work overseas.
"I'd be very, very careful about understanding what it is that you're asking the people to
do, not just what it costs," he says.
Nonetheless, Goldman and Horowitz are convinced a growing market exists in Atlanta
and the Southeast. As budgets tighten and work increases on corporate legal departments,
general counsels will balk at outsourcing the work to a first-year associate at a local law
firm at a rate of perhaps $275 per hour.
CompuCredit's Kaplan agrees, saying he thinks that general counsel might eventually be
forced to employ the services of such international outsourcing firms.
"From the cost perspective, it makes sense," he says. "You just have to be judicious. It's
certainly not a panacea for all cost-cutting endeavors. It's a tool that an attorney with
good support behind them and people willing to take chances, something they can use to
their benefit."
He's also cautious of the potential for errors, saying that in addition to financial liability,
there is the potential damage that would be "reputational -- personal and for the
company."
But Cooper, of Stites & Harbison, is more circumspect, having already outsourced some
work -- to Kentucky.
Outsourcing has saved the firm's clients money by setting up the Kentucky location and
training lawyers there to do massive document review. He says that while understanding
the cost pressures that general counsels face, he would be concerned about whether the
people doing the work -- if it was being outsourced to India -- were licensed to practice in
Georgia.
"One of my concerns is that there is a fine line between practicing law as an attorney and
not practicing law," he says. "If you have a matter pending in Georgia, there would be a
serious question in my mind. Obviously they're not members of the Georgia bar. Who is
supervising? Is someone from Georgia? Probably not."
'Permanent professionals'
Horowitz, who practiced law for nine years at a New York firm before deciding to open
his own company, believes the quality of the work will not suffer. In addition to Strategic
Legal Solutions, Horowitz is CEO of SQ Global Solutions, which specializes in
outsourcing. SQ Global Solutions has 175 "permanent professionals," as Horowitz calls
them, based in India.
Horowitz points out that India has become a prime location for outsourcing in many
industries -- especially in the customer service arena -- and the area of legal services is no
different.
To start with, the country has a stable democracy and economy, making it worthy of
investment. Second, from the legal perspective, it is culturally compatible.
For many Indians, English is their first language and it also is the language of instruction
in schools. And like the U.S., India is a former British colony and as a result both
countries share the underpinnings of English common law.
Thus, for Horowitz, the decision to invest in India outweighed whatever possible risks
might exist.
"The first thing to remember is the type of work that they do over there for us -- they're
doing junior-level work," Horowitz says. "They also do research ... you can do research
like anyone here."
Additionally, he adds, some of SQ Global Solutions' employees have Master of Laws
(LL.M) certification in the U.S. or Great Britain. (An LL.M is an internationally
recognized postgraduate law degree, usually obtained by completing a one-year full-time
program.)
Horowitz lavishes praise on the work ethic of the Indian professionals, saying that they
are willing to work until 2 or 3 a.m. without complaint, and that after a probationary
period those workers have had a turnover rate of only 3 to 4 percent.
Still, Cooper remains a skeptic.
Using temporary attorneys "doesn't form that nexus [with the client]," he says. "There is
no loyalty. You don't have the same relationship ... That's what I see in some temporary
legal situations. But a lot of people are making good revenues on them. If it's done right
on a limited basis, it will work."