24 Nov 2008, Manoj Mitta, TNN
While BPO companies are feeling the heat of the global meltdown and resorting to layoffs and other cost cutting measures, their LPO
(legal process outsourcing) counterparts are thriving like never before because of the legal activity that has been generated by the sub-prime crisis in US. What is more, the LPO segment reflects the prevailing boom in the legal services industry in India. Law firms dealing with foreign companies operating in India have also seen an increase in their turnover, even if their work is now more about post-meltdown issues like restructuring, downsizing, layoffs, closure of branches, winding up of subsidiaries and termination notices to collaborators and franchisees. Take the example of Delhi-based Titus & Co, whose clientele consists almost entirely of foreign companies and governments. Its managing partner Diljeet Titus said, "We have had at least a 50% rise in the volume of transactional work ever since Lehman Brothers imploded two months ago." Since these transactions are mostly related to cost-cutting measures, Titus did his bit for his clients by offering a 20% discount in his fee. "The reduction in our fee is made up for by the increase in the quantum of work as well as the dollar rate," he added. Fox Mandal Little, the largest law firm in the country, displays more signs of it being business-as-usual. In the last two months, it has recruited 27 more lawyers at various levels, opened its 13th office (which is in Kochi) and forged ahead with negotiations to acquire another law firm. It is poised to recruit more lawyers for its recently launched LPO subsidiary, Legal Circle. The firm's managing partner Som Mandal said, "We are most bullish about our LPO because of the sheer deluge of enquiries we have received from US to do litigation support from India." The timing of the meltdown could not have been better for LPO companies as the e-discovery law, governing the storage and management of electronic data that might be relevant to litigation, came into effect in US only two years ago. The meltdown has forced more American companies to turn to LPO set-ups in India for help because of the enormous cost differential. For performing document review, a key aspect of the e-discovery process, a senior associate in US is paid $200-300 per hour while an LPO based in India charges barely $25-30 per hour for the same work, according to Mandal's estimate. Not surprisingly, Pangea3, one of India's largest LPO companies, claims to have registered 100% increase in volumes in the last six months. "We are witnessing an extraordinary influx of work directly or indirectly related to the sub-prime crisis," said CEO Sanjay Kamlani. The surge in Pangea3's e-discovery work involves court disputes among investors, lenders, borrowers, homeowners and banks. Post-meltdown, it is also cashing in on the demand for greater scrutiny of financial transactions and corporate governance. As Pangea3 CEO Sanjay Kamlani put it, "cost cutting measures have spared budgets only for non-discretionary items like legal services related to litigations and regulatory compliance. While BPOs must deal with delayed decision making, uncertainty and wait for new government policies in US, LPOs grow business almost as a function of the slowdown." For all the surge in business for LPOs and law firms, there is one part of the legal services industry that seems to have remained relatively unaffected: the vast majority of individual lawyers involved in litigation within the country. P H Parekh, president of Supreme Court bar association, dismissed the suggestion that senior advocates like him were under pressure to accept a fee cut in view of the economic slump. "The demand for top lawyers is so high and the supply of them so little, the worst that may happen is that the number of briefs we return for want of time may come down," Parekh said.
“ The above article has been reprinted from ://timesofindia.indiatimes.com/Business/Legal_eagles_soar_as_markets_crash/articleshow/3748948.cms and LegalEase Solutions LLC does not hold any rights to the same”.
Monday, December 22, 2008
In downturn, litigation bonanza for Indian legal outsourcers
Posted: Wed, Nov 26 2008.
In downturn, litigation bonanza for Indian legal outsourcers
Aruna Viswanatha
New Delhi: Amid talk of job cuts and lower-than-expected results, legal offshorers based in India say they are bucking the trend.
If the first wave of work for legal process outsourcing companies earlier this year stemmed from the rise in US lawsuits related to the subprime mortgage meltdown, the latest wave builds on that, but is also tied even more directly to the crisis; Indian legal outsourcers are now processing American foreclosures, and valuing the toxic assets at the heart of the trouble.
New opportunities: Bangalore-based Clutch Group. Legal offshorers are now getting work valuing toxic assets and processing home foreclosures. Hemant Mishra / MintThe US treasury department’s $700 billion (Rs35 trillion now) plan to purchase troubled assets from the ailing financial institutions and directly take stakes in the banks is, as expected, a boon for attorneys. What wasn’t expected is just how much of it might move offshore.
“In the short to medium term, there is rising litigation, the valuation of assets in the bailout package, bankruptcy, and it’s coming from all sides,” says Anand Sharma, chief financial officer at the legal services provider, Computer Patent Annuities Ltd (CPA). “Forget about cost arbitrage, I don’t think the US is capable of handling this entire work.”
Indian firms are grabbing pieces of it.
One newer player in the industry, UnitedLex Corp., says it has grown by 400% this year in staffing, from 98 people at the end of last year to some 520 now, with plans to expand to 1,000 by March. Another firm, Pangea3 Llc., says its revenues doubled in size in the first quarter, and doubled again since then. CPA, too, says it grew revenues by 30% this quarter from the corresponding period last year, while Mumbai-based Mindcrest Inc. says it grew 45-50% since April. Revenues for the Bangalore-based Clutch Group Llc., the company says, have doubled this year.
The entire industry reported revenues of $225 million (or Rs902 crore then) in 2007, and is expected to generate revenues of around $640 million by end-2010, according to the research firm ValueNotes Database Pvt. Ltd.
Much of the work specifically tied to the bailout package is yet to come, and will likely start in early 2009. But firms have already started handling related reviews of bank assets. UnitedLex, for example, has seen this area of its business grow by 50% since late March, according to Ajay Agrawal, founder and chief solutions officer. “There are millions of assets shuffling hands, and a lot of work,” says Agrawal, who specialized in asset-backed securities as a lawyer in the US.
It’s not just the highly technical work of reviewing complex derivatives that offshorers are gunning for. Home foreclosures and individual bankruptcies have generally been processed by local lawyers. Bits of the work, on loans held by banks with captive centres in India, have previously moved offshore. But now, with almost 280,000 foreclosures in October alone according to RealtyTrac Inc., up 25% from the same month last year, and up 5% from the month before, even after several states mandated delays on foreclosures, the momentum for offshoring has clearly been building up.
“Volume is a huge driver over the past 18 months, and it still has not plateaued,” says Agrawal, who claims that the foreclosure and bankruptcy processing business at UnitedLex took off at the beginning of the year, and has doubled every quarter since.
Bangalore-based Clutch Group is aggressively pitching itself for a newer piece of this market on foreclosures, one that requires court intervention and typically hasn’t come offshore yet. Lenders spend around $1,000 on this type of foreclosure in the US, and the firm estimates that around 60% of the work done before the lawyers file the case is now segregated and can be brought to India.
The firm is in trial runs with a few clients, according to Clutch Group CEO Abhi Shah. “In the next three-six months, it will be substantial,” he says. “Based on the volume of foreclosures for the past five years, it’s a 45-degree arrow going to the right.”
Foreclosure processing aside, much of the anticipated legal business falls under the larger umbrella of “risk assessment”. Pangea3’s co-chief executive Sanjay Kamlani describes one long-standing technology client who tapped the firm to review all of its customer agreements to assess the likelihood of termination, and what might occur in a change of control. The firm did the same on 25,000 open contracts for another telecom client, he says.
And just over the horizon, once US President-elect Barack Obama takes office in late January, observers expect new regulations overhauling accounting and disclosure requirements for public companies; another legal bonanza that offshore providers are gearing up for.
But the bulk of legal outsourcing revenue is still from the labour-intensive document review projects that any large litigation requires, and interest in outsourcing that work is following a well-trodden route.
Shah describes one large law firm client that signed on with Clutch Group for an 80-attorney document review on a case related to the financial crisis, but kept it on shore. Three months into the project, as cost shot up, the firm tested Indian waters and moved five attorneys offshore. Three weeks later, the number doubled to 10, and two months later, it tripled to 30.
“Before, clients had the luxury of saying, ‘This is interesting, let’s think about it,’” says Shah. “But then they spent $500 million (on a legal budget), they can’t do that any more, and the stakes are higher.”
“ The above article has been reprinted from http://www.livemint.com/2008/11/26010816/In-downturn-litigation-bonanz.html and LegalEase Solutions LLC does not hold any rights to the same”.
In downturn, litigation bonanza for Indian legal outsourcers
Aruna Viswanatha
New Delhi: Amid talk of job cuts and lower-than-expected results, legal offshorers based in India say they are bucking the trend.
If the first wave of work for legal process outsourcing companies earlier this year stemmed from the rise in US lawsuits related to the subprime mortgage meltdown, the latest wave builds on that, but is also tied even more directly to the crisis; Indian legal outsourcers are now processing American foreclosures, and valuing the toxic assets at the heart of the trouble.
New opportunities: Bangalore-based Clutch Group. Legal offshorers are now getting work valuing toxic assets and processing home foreclosures. Hemant Mishra / MintThe US treasury department’s $700 billion (Rs35 trillion now) plan to purchase troubled assets from the ailing financial institutions and directly take stakes in the banks is, as expected, a boon for attorneys. What wasn’t expected is just how much of it might move offshore.
“In the short to medium term, there is rising litigation, the valuation of assets in the bailout package, bankruptcy, and it’s coming from all sides,” says Anand Sharma, chief financial officer at the legal services provider, Computer Patent Annuities Ltd (CPA). “Forget about cost arbitrage, I don’t think the US is capable of handling this entire work.”
Indian firms are grabbing pieces of it.
One newer player in the industry, UnitedLex Corp., says it has grown by 400% this year in staffing, from 98 people at the end of last year to some 520 now, with plans to expand to 1,000 by March. Another firm, Pangea3 Llc., says its revenues doubled in size in the first quarter, and doubled again since then. CPA, too, says it grew revenues by 30% this quarter from the corresponding period last year, while Mumbai-based Mindcrest Inc. says it grew 45-50% since April. Revenues for the Bangalore-based Clutch Group Llc., the company says, have doubled this year.
The entire industry reported revenues of $225 million (or Rs902 crore then) in 2007, and is expected to generate revenues of around $640 million by end-2010, according to the research firm ValueNotes Database Pvt. Ltd.
Much of the work specifically tied to the bailout package is yet to come, and will likely start in early 2009. But firms have already started handling related reviews of bank assets. UnitedLex, for example, has seen this area of its business grow by 50% since late March, according to Ajay Agrawal, founder and chief solutions officer. “There are millions of assets shuffling hands, and a lot of work,” says Agrawal, who specialized in asset-backed securities as a lawyer in the US.
It’s not just the highly technical work of reviewing complex derivatives that offshorers are gunning for. Home foreclosures and individual bankruptcies have generally been processed by local lawyers. Bits of the work, on loans held by banks with captive centres in India, have previously moved offshore. But now, with almost 280,000 foreclosures in October alone according to RealtyTrac Inc., up 25% from the same month last year, and up 5% from the month before, even after several states mandated delays on foreclosures, the momentum for offshoring has clearly been building up.
“Volume is a huge driver over the past 18 months, and it still has not plateaued,” says Agrawal, who claims that the foreclosure and bankruptcy processing business at UnitedLex took off at the beginning of the year, and has doubled every quarter since.
Bangalore-based Clutch Group is aggressively pitching itself for a newer piece of this market on foreclosures, one that requires court intervention and typically hasn’t come offshore yet. Lenders spend around $1,000 on this type of foreclosure in the US, and the firm estimates that around 60% of the work done before the lawyers file the case is now segregated and can be brought to India.
The firm is in trial runs with a few clients, according to Clutch Group CEO Abhi Shah. “In the next three-six months, it will be substantial,” he says. “Based on the volume of foreclosures for the past five years, it’s a 45-degree arrow going to the right.”
Foreclosure processing aside, much of the anticipated legal business falls under the larger umbrella of “risk assessment”. Pangea3’s co-chief executive Sanjay Kamlani describes one long-standing technology client who tapped the firm to review all of its customer agreements to assess the likelihood of termination, and what might occur in a change of control. The firm did the same on 25,000 open contracts for another telecom client, he says.
And just over the horizon, once US President-elect Barack Obama takes office in late January, observers expect new regulations overhauling accounting and disclosure requirements for public companies; another legal bonanza that offshore providers are gearing up for.
But the bulk of legal outsourcing revenue is still from the labour-intensive document review projects that any large litigation requires, and interest in outsourcing that work is following a well-trodden route.
Shah describes one large law firm client that signed on with Clutch Group for an 80-attorney document review on a case related to the financial crisis, but kept it on shore. Three months into the project, as cost shot up, the firm tested Indian waters and moved five attorneys offshore. Three weeks later, the number doubled to 10, and two months later, it tripled to 30.
“Before, clients had the luxury of saying, ‘This is interesting, let’s think about it,’” says Shah. “But then they spent $500 million (on a legal budget), they can’t do that any more, and the stakes are higher.”
“ The above article has been reprinted from http://www.livemint.com/2008/11/26010816/In-downturn-litigation-bonanz.html and LegalEase Solutions LLC does not hold any rights to the same”.
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