Offshore Legal Work: The Next Phase of Outsourcing?

The front page of today’s New York Times business section has an article on the offshore outsourcing of legal work, such as basic due diligence and document review.  The focus, as one might imagine, is on India.

Offshore outsourcing is of a piece with onshore “contract” lawyers, who are for-hire temporary lawyers often delivered through companies such as Axiom.  Both are part of efforts of legal service buyers to decrease costs for basic legal work, either directly or through law firms that such buyers hire.

Along with the cost savings come inefficiencies in coordinating legal work into a coherent whole (which can seriously reduce or even eliminate the anticipated cost savings) and a loss of accountability.  It’s harder to hold the main legal provider responsible for errors or oversights if that provider depends on another business, whether onshore or offshore.  Consequently, outsourcing is less used, and has grown less quickly as a legal service model, than one might have expected.

Legal services are different than, say, PC technical support, so the reliance of those businesses on outsourcing is, and probably will continue to be, considerably different.  Still, outsourcing—whether onshore or offshore—is a market factor worth keeping a close eye on, especially if the business model becomes more innovative than it is.  It has the potential to exert some downward pressure on legal wages.  More important, it threatens to permanently disable lawyers who begin their careers as contract lawyers, in effect stopping their careers at the level of document review or other lower-level legal work.

~ by Kyle Pasewark at Advise-in Solutions on August 5, 2010.

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