Taking Issue

Misleading. At best.

Law.com reported today on Kroll Inc.'s annual survey on corporate fraud. And for some reason law.com used the following headline:

"Legal Pitfalls of Outsourcing May Outweigh Benefits, Says New Survey"

Except, that's not at all what Kroll's report says.

The first sentence of law.com's post reads:

Companies that choose to outsource work to save money may be buying themselves more legal trouble than it's worth. That's one conclusion from Kroll Inc.'s annual global corporate fraud survey released Monday.

Except, um, that's not even close to any conclusion reached by the survey.

Based on that headline (at a legal-based web site) and that opening sentence, you might think the survey discussed Legal Outsourcing. It doesn't.

Based on the headline and that opening sentence, you might think the survey discussed the legal ramifications of other types of outsourcing. It doesn't.

The second paragraph of law.com's post opens with:

Asking if outsourcing is really worth the risk, the survey says companies often make the decision "without a thorough assessment of the risks involved in determining what is to be outsourced, and to whom."

The quote from the Kroll's report is pulled from a section solely dedicated to the discussion of IT Outsourcing. The title of that section is IT Outsourcing: Is it Worth the Risk?

But not even in this section are legal ramifications discussed. The intent of this section of the report -- in the report's own words -- is to present "a strong reminder that technology companies, including IT outsourcing ones, are vulnerable to the same common frauds - such as internal financial fraud, vendor or procurement fraud, and the theft of physical assets - that can occur in any other business."

The survey never intimates that the risks outweigh rewards. The survey simply says do your due diligence. Just like you would do in any other business capacity.

What does the report actually have to say?

It says that the financial services industry has been hit the hardest by fraud.

It also says that the professional services sector (which includes legal services and legal outsourcing) reported the lowest level exposure to fraud.

So, at the end of the day, the report says that while the internet has expanded business services, it has also created additional sources of potential fraud. Nothing earth shattering there. The report says to make sure that any vendor or business partner has proper data security safeguards in place.

Again, business as usual.

But nowhere in the survey does it conclude that legal pitfalls may outweigh the benefits of outsourcing.

Unbound

Unbound: How Entrepreneurship is Dramatically Transforming Legal Services Today is a timely and relevant new book for anyone tracking emerging trends in the legal profession.

Wasting no time, the opening paragraph dives right in with observations we've been discussing for the better part of this year:

"The financial and economic crisis of 2008 delivered the final blow to any skeptics still resisting change in the legal industry. The legal industry is now rushing toward dramatic transformation. Change is long overdue... Over the next three to five years, the legal landscape will be dramatically reshaped. Law will continue on its global march. Even small firms are outsourcing legal support work overseas."

Author David Galbenski founded Lumen Legal, a legal staffing and consulting company, in 1993. His fifteen years as a legal consultant has informed his identification of a number of major trends that he believes will affect the legal industry in the coming few years. Some of those trends are:

• New ways to buy legal services. Consumer demands will force the legal industry to behave less like a profession and more like a business.

• New ways to provide legal services. Globalization is a force that will expand the ways in which legal services are provided to the end consumer.

• New ways to organize legal services. Tasks will become unbundled, as a result of both business pressures and globalization.

• New categories and types of people will be called upon to perform legal services.

Unbound underscores many of the opinions in Richard Susskind's The End of Lawyers? Rethinking the Nature of Legal Services.

Additional quotes from the Financial Times' review of Unbound:

"The highlight of the book is a series of interviews with leading general counsel, who explain the changing global landscape their companies operate in and the pressures in-house lawyers face to rein in costs since the economic collapse. Their observations are stark and should raise the hairs on the arm of every managing partner, group practice leader and legal marketing expert in the business."

"The legal industry is facing unprecedented change, and law firms that don't modify the way they run their businesses face extinction."

"Law firms may be coping with a downturn in business by trimming their costs, but the recession is moving the entire industry toward a range of new, entrepreneurial models that will eventually put the legal industry more in line with other types of businesses."

Real Overhaul in Associate Hiring?

Two weeks ago we discussed how some major firms were rethinking their summer apprenticeship programs.

But last Friday's article in the Boston Business Journal indicates a far more systematic revisiting of the entire recruitment model, and at an even faster pace than previously noted.

The BBJ's title says a lot: Traditional Associate System Collapsing Under Economic Pressure.

According to the article: "Many law firm leaders now are taking the time to rethink the recruitment process soup-to-nuts, from pondering the wisdom of summer programs to slashing first-year salaries."

You know it's significant when the article is peppered with quotes like:

“It is antiquated. It just does not make economic sense. It does not make good business sense,” said John V. Snellings, hiring partner at Nixon Peabody LLP

“The age-old system hit a brick wall with the sharp downturn,” said Brian Bickerton, partner at legal staffing firm Major, Lindsey & Africa. “Never before has there been any kind of real consideration by firms to change the ways they recruit and hire."

“My guts says that there are bigger changes coming,” said Randi Friedman, assistant dean at Northeastern University School of Law. “It’s going to be the beginning of a new era."

“I spend a lot of time out in the world talking to clients. One thing I hear over and over again is that they are not willing to pay the kinds of hourly rates for young associates that they used to,” said Walter G.D. Reed, managing partner of Edwards Angell Palmer & Dodge. “Either we’re going to have to come up with a new way of pricing our services or we’re going to have to figure out a different way of bringing young lawyers along.”

It's a refrain that's becoming more and more familiar. 1) The historic summer associate/hiring pattern is based on little other than tradition at this point. 2) Clients are less and less willing to pay large hourly fees for associate-level work.

Now, for the first time, large firms seem to be legitimately open to evaluating new approaches to associate-level work.

More Movement Away From Hourly Billing

LegalWeek.com reported last week that both Mayer Brown and Reed Smith are evaluating new cost structures that will bring fixed or capped fees for transactional work.

"Mayer Brown's senior management is in the process of reviewing how the firm bills clients and is considering proposals to overhaul fee structures for core transactional practices including corporate, banking and real estate.

The proposed changes, which the firm said have been accelerated as a result of client demand for greater certainty during the downturn, would see Mayer Brown offering fixed fees for all transactional work, as well as more regularly using abort agreements and success fees.

Separately, Reed Smith has also been looking at changing fee structures within its transactional practices. The firm has a committee made up of partners from across the firm reviewing proposals and is looking at an increasing use of fixed or capped fees for clients within its financial industry group (FIG), corporate and real estate practices, for transactional work."

Sure, this is an important development simply because it signals the readiness of two of the larger global firms to reassess historically entrenched billing practices.

But, actually, the implications are even more profound. This development is more than a possible trend in cost structures and more than a comment on difficult economic times.

Fixed pricing for transactional work, by definition, encourages the unbundling of legal services. The act of articulating an a la cart menu of legal services is, in itself, a form of unbundling.

Transactional pricing isolates the tasks being performed and separates them from other services. And that is inherently different than the traditional business model of a firm offering a stew of services, all intertwined, and all covered by the umbrella of billable hours.

As we quoted Robert J. Ambrogi back in April:

"Legal services are evolving from a highly bespoke, highly customized product toward becoming a commodity. As part of this evolution, legal work will be unbundled into its constituent tasks and many of those tasks will be standardized and systematized."

Another brick in the wall.

Adjusting to Fewer Associate-Level Positions

As noted recently in the ABA Journal, many large firms are delaying hiring new associates, and some are putting their summer apprenticeship programs on hiatus altogether.

Obviously, though, a decreasing number of entry-level associate positions doesn't necessarily mean there is less associate-level work to be done.

That's why one of the major challenges facing firms today is reshaping business practices to accomplish associate-level work without charging clients senior-level rates.

One of the solutions many firms are turning to is the flexible use of off-site associates for legal research.

An example of this trend is LegalEase's own Research Pathfinder, a program that offers thoroughly researched breakdowns of all relevant case law, statutes and any other opinion, law review, and any secondary research related to a specific legal issue.

All within 24 hours and all for a $250 flat fee.

LegalEase's Research Pathfinder applies two levels of quality checks by U.S. attorneys to our network of global attorneys to provide the 24-hour turnaround.

You can view additional information on LegalEase's Research Pathfinder here.

A Change in Seasonal Hiring

As we discussed back in February, the seasonal hiring pattern at large law firms is a tradition that becomes ripe for reconsideration during tough economic times (and potentially altogether as the professional landscape evolves).

The practice of offering employment to a predetermined, fixed number of newly minted law school grads at the end of each summer is based on the expectation of a corresponding level of attrition from more senior attorneys.

Many of us, though, anticipated that the current sea of churning economic uncertainty would result in far fewer senior staffers choosing to jump ship. Fewer empty deck chairs would mean fewer new hires, especially with many firms working to trim overall headcount.

Well, those predictions are now actuality.

The ABA Journal reported this last week that many large firms are delaying job offers to summer associates.

This comes as especially unwelcome news to current second year law students after last week's reports that many large firms a scaling way back (or even eliminating) their 2010 summer apprenticeship programs and recruiting.

Again, according to the ABA Journal:

• "Skadden, Arps, Slate, Meagher & Flom has cut the size of its 2010 summer program by more than half.

• Morgan, Lewis & Bockius has canceled its summer program and all on-campus recruiting.

• DLA Piper and Orrick, Herrington & Sutcliffe have postponed recruiting.

• Law firms opting against interviews at Yale include Baker & McKenzie; Milbank, Tweed, Hadley, & McCloy; and White & Case.

• Law firm interviews are down by a third or a half at New York University, Georgetown, Northwestern and other top law schools. It’s even worse at lower-ranked schools."

The wrinkle here is that this will leave organizations top heavy with more senior attorneys, causing dispraportionate billing fees for associate level work, potentially creating further demand for "virtual associates" available through LPOs.

Here Come The Numbers

As fiscal years start coming to a close, official revenue figures are starting to confirm everyone's expectations.

As reported at Am Law Daily (and discussed at Above The Law), Baker McKenzie's fiscal year ended on June 30th, and last year's 2nd highest revenue generating firm reported a 3% drop in global revenue and a 17% drop in profits per partner due to the recession.

"The financial crisis progressed into an economic recession that has been very challenging for our clients, for all law firms and for us,” says John Conroy, chairman of the firm’s executive committee.

To put Baker McKenzie's numbers in perspective, this is a firm whose fiscal year 2007 "reported profits per partner of $1.06 million, breaking the $1 million mark for the first time in the firm’s history. The firm reached another milestone in fiscal year 2008 when total revenues came in at $2.2 billion, surpassing the $2 billion barrier for the first time."

However, Baker McKenzie has also been a leader in terms of outsourcing legal work, and past year's numbers have been anchored by a global approach that encompasses more than 3,900 lawyers at 67 offices in 39 countries.

Given the squeeze in profit per partner this year, it won't be surprising to see an even greater emphasis on pushing work to more efficient cost centers.

And, while we can only speculate on how much worse Baker McKenzie's numbers would have been without their aggressive outsourcing stance, it will be interesting to see how comparable firms' numbers stack up as the year progresses.

Shameless Self-Promotion

LegalEase is pleased to introduce our Legal Process Outsourcing Handbook, free for viewing and/or downloading here.

As increasing numbers of both in-house and firm-based counsel adopt new strategies to respond to the evolving legal marketplace, The LPO Handbook provides a one-stop resource to help you evaluate whether strategic use of LPO is an efficient addition to your business initiatives.

Connecting Dots

As anyone who's worked on a large project knows, you can start to view the world through the prism of that project. New data gets filtered through the context of that project; patterns emerge.

Which is probably why some recent essays and analysis of fields unrelated to the legal profession are resonating with similarities.

Take, for instance, a very informative and insightful recent post from Barrett Garese, founder and CEO of Spytap Industries, a company specializing in online content and social media strategies.

You can read it in full here, but the upshot is this:

The entertainment industry is at a crossroads because the internet has essentially acted as a disruptive technology, in that it is providing alternative access to content and/or services that were previously the sole domain of thoroughly entrenched, system-wide gatekeepers.

Read that paragraph again, and we could be talking about the legal profession.

Garese notes that "the argument is often made that the internet is putting thousands of people out of work and killing off professional content."

This same argument is heard in legal office hallways, as well, as the internet has modified access to legal content (i.e., online legal forms sites and legal information sites), the cost of legal work (LPO, virtual attorneys, and virtual associates), and the physical proximity of legal service providers (i.e., skype, VOIP, social networking, and every other online tool that allows people thousands of miles apart to share a virtual office).

But Garese dismisses that argument, saying "This may or may not be true, however it’s irrelevant for the following reason: disruptive technologies always put people out of work…temporarily."

Temporarily. Because new models emerge. That is fact. Not a question of 'if', but 'what' and 'when'. Just like a forest fire is nature's way of clearing out the dead mass so that new growth can emerge.

While Garese's summation is aimed at the entertainment industry, it is also so directly appicable to the legal profession that it's worth quoting in full.

Big changes to established industries are both painful to the aforementioned established companies, and an opportunity to the more nimble. Business models will change drastically over the next few years to compensate and remain relevant, but when everyone is comfortable there’s no room or interest in changes.

Right now, entertainment is in a low-to-mid-level state of chaos. There’s little confidence in the status-quo, and unlike past decades no one seems to know what the future will bring. This means that those who are willing to experiment will have first opportunity to rewrite the rules. Those who are content to live with the status quo will be replaced. This is equally true across the entire scale of entertainment, from large to small. We’re well placed in a disrupted field, and that presents unprecedented opportunities.

So what is the future of entertainment? It’s up to us to decide. All of us. Because we now have a seat at the table. Fortune (in all forms) favors the bold.

So grab a seat and speak up.

Legal Rebels

The ABA Journal has started a new feature they're calling Legal Rebels. Their intent is to shine a light on the current transformation taking place in the business of the legal profession.

Obviously, they're preaching to the choir, as far as we're concerned.

The opening paragraphs from their new website frame it nicely:

In these times of great economic chaos lies great opportunity.

The legal profession is not just struggling through a recession, but also undergoing a structural break with the past. There is a growing consensus that the profession that emerges from the recession will be different in fundamental ways from the one that entered it.

Dozens of lawyers nationwide aren't waiting for change. Day by day, they're remaking their corners of the profession. These mavericks are finding new ways to practice law, represent their clients, adjudicate cases and train the next generation of lawyers. Most are leveraging the power of the Internet to help them work better, faster and different.

The Legal Rebels project will profile these innovators and describe the changes they are making. It will tell their stories in the ABA Journal, on this website and through a variety of social media channels using text, pictures, audio and video. The first of these profiles will appear here on August 25. Several will be added weekly through the end of November.

We're looking forward to keeping an eye on the Legal Rebels project.

Large Firms Resisting Change?

As readers of this blog know, much of our focus is on emerging trends in the legal profession. And, at this juncture in time, most observers agree that the profession is in the midst of some profound changes in the business of law.

A flattening, global market; legal process outsourcing; captive offshore legal departments, virtual attorneys and virtual associates; web based legal products; evolving business and billing models; and the U.K.'s Legal Services Act 2007 are just a handful of emerging trends adding new colors to the legal canvass.

However, a recent study indicates that for all the talk and analysis, there may be significantly less change or innovation taking place in large firms. At least significantly less than GC's would like.

As reported this month at law.com, a survey released a few weeks ago by Altman Weil had this to say about General Counsels' opinions regarding the large firms with whom they work:

"75 percent of the responding chief legal officers rated their law firms between zero to four on a 10-point scale, indicating their opinion that firms had little or no interest in change. Only 5 percent of the respondents ranked their outside law firms between eight to 10, with 20 percent falling somewhere in the middle.

"This is a dramatic vote of no confidence from chief legal officers," Altman Weil Principal Daniel J. DiLucchio Jr. said in a statement. "Either many law firms just don't understand that clients today expect greater value and predictability in staffing and pricing legal work, or firms are failing to adequately communicate their understanding and willingness to make real change. In either case, it's a big problem."

This perception on behalf of GC's comes after more than 60% of respondents reported putting legitimate, non-negligible pressure on their law firms to change their value proposition.

So, given what appears to be some dissatisfaction in the degree of change being offered by large firms, it can't be encouraging for these firms to know that the survey also reported that 40% of GC respondents expect to give less work to outside firms this year.

To put that number in perspective, from 2000 through 2007, that expectation never surpassed 20%. Now, in a matter of two years, the expectation to give less work to outside firms has doubled.

While this may simply be a temporary blip fueled by the sour economy, history tells us that this window of time may well see some alternative models take hold that will provide GC's with the evolution they are seeking.

Law Firm Apprenticeship Programs

Law.com recently profiled the growing implementation of apprenticeship programs for first-year attorneys.

Notable firms across the country embracing the apprenticeship model include Howrey; Philadelphia's Drinker Biddle & Reath; labor firm Ford & Harrison; Ohio/Kentucky firm Frost Brown Todd; and Dallas' Strasburger & Price.

"Firms are putting new recruits through additional apprenticeship programs that they say will better train their attorneys for life at a law firm and for handling clients. Think of it as the equivalent of a medical residency, only with suits instead of scrubs."

"The latest -- and so far largest -- firm to move to an apprenticeship model, 659-lawyer Howrey, announced its program last week. Starting next year, first-years at the firm will get a pay cut -- from $160,000 to $100,000 in base pay plus a $25,000 bonus to pay down law school loans -- and they'll spend a good portion of their time attending classes with partners and shadowing them on client matters. The apprenticeship period will last two years.

"Robert Ruyak, Howrey's managing partner, said associates will be doing far less client work, and when they do work on client matters it won't necessarily be billed to clients. "We really want them to focus on learning the skill they need to be first-rate litigators," Ruyak said."

"The old model is broken," Ruyak said. "You're bringing on these extremely bright individuals and letting them waste their careers buried in documents where they aren't really learning the practical skills it takes to be a lawyer."

Ah, yes. Here we see -- yet again -- another real-world distinction between the two separate job functions that have been each historically covered by the umbrella term attorney. On the one hand, there is the redundant, commoditizable, associate level work, and on the other hand we have the role of adviser, counselor, manager, and/or litigator.

As we discussed previously, while the future of the legal profession is changing, the need for the experience, insight, and perspective of a seasoned attorney will always be in demand.

These apprenticeship programs seem to acknowledge that, and then take it a step further by explicitly separating the training of litigators/advisers/counselors from the redundant, high volume work that can be executed at a more cost-efficient level, either by in-house staff attorneys or -- with even more cost-efficiency -- by highly trained attorneys at an LPO.

A Lesson from the Engineers

Marketplace, a radio program run on many NPR stations, recently discussed how the sour economy was eliminating engineering jobs at a faster rate than many other professionals, with high profile companies looking to offshore their engineers.

Obviously, this sounds very familiar to legal professionals.

Interestingly, the American Society of Civil Engineers read the writing on the wall long enough ago to start revising their Body of Knowledge, which was created in a 1998 policy statement to define prerequisites for licensure and practice.

Last year the ASCE published Civil Engineering Body of Knowledge for the 21st Century, Preparing The Civil Engineer for the Future, Second Edition.

The purpose of the book is to acknowledge new professional challenges and identify improvements to the education and licensure process. The book states:

"The manner in which civil engineering is practiced must change. That change is necessitated by such forces as globalization, sustainability requirements, emerging technology, and increased complexity with the corresponding need to identify, define, and solve problems at the boundaries of traditional disciplines."

Again, to those following the legal profession, there is a familiar echo: Globalization. Emerging technology. Problem solving at the boundaries of traditional disciplines.

Of equal importance, the ASCE also includes a telling word choice in one of their stated goals for the book.

" [to] focus on outcomes to the proposed changes in the way civil engineering is taught and learned, including the knowledge, skills and attitudes necessary for entry into professional practice."

Pretty striking. The American Society of Civil Engineers -- not a group historically known as wild-eyed, knee-jerk, doom sayers -- is 1) stating that the manner in which they practice their profession must change and, 2) suggesting that a change in attitude is a key component to succeeding in the 21st.

As attorneys peer into the coming years, it might not be a bad idea to steal a page from the ASCE's Body of Knowledge for the 21st Century and acknowledge that a change in attitude may be a successful strategy to address the challenges of globalization, emerging technology, and problem solving at the boundaries of traditional disciplines.

The Business of Law vs. The Service of Legal Counseling

The New York Times ran an article last week on how the most venerable law firms -- we're talking multinational, centuries old, most upper of the upper crust firms -- continue to purge their ranks in unprecedented fashion.

As anyone who is paying attention knows, the landscape of how legal work is organized and delivered is shifting beneath us as we speak. What no one knows exactly is how it's all going to shake out.

But there were a few more interesting signposts offered in the Times article that may at least help shape the way we perceive and articulate it.

Here is what the New York Times had to say (and I'm reordering some of their paragraphs):

"The gentleman’s profession of the law is becoming a vestige of the past, removed enough from reality to be remembered, like phone booths or fedoras."

"... the natural order of this world has been set on end by the economic crisis and the possible disappearance of fixtures like the pyramid system (under which associates are thrown en masse at certain cases, fattening the fees), and the billable hour itself (increasingly replaced by flat rates or retainers in a client’s market). The tectonic plates have begun to shift in a nauseating manner, bringing fear, ambiguity and psychological scars."

Philip K. Howard, a senior partner at Covington & Burling, another multinational firm, laments
that as the bottom line increases in importance, the traditional role of the lawyer as a trusted counselor slips away.

In another passage, Mr. Howard underscores his observation, saying that he's not really "interested in the business of law".

In other words, Mr. Howard is equating the current emphasis on the bottom line with the "business of law", and distinguishing that from the role of lawyer as counselor.

And this is consistent with our conversation regarding the distinction between legal information and legal advise.

The unbundling of legal services that we've been watching unfold in front of us can be framed in this way: the business of legal work is being separated from the service of legal counseling.

If this way of looking at it is accurate, and if this divide -- between the business of legal work and the service of legal counsel -- continues to solidify, that would seem to argue for the continued growth of LPO as attractively priced virtual associates and virtual attorneys to contribute to the business of legal work.

Legal Information vs. Legal Advice

The unbundling of traditional legal offerings -- which is an emerging trend central to Richard Susskind's recent book The End of Lawyers -- has been a hot topic in these parts lately.

The idea of different legal services becoming available in new venues and formats is one that we're seeing manifest itself in a number of ways from web-based companies offering legal forms, legal facts, entreprenuerial start-up guidance, copyright filing, and more.

And it's happening in both the U.S. and the U.K.

In fact, the U.K.'s Legal Services Act 2007 is a national initiative providing a legislative framework to actually reform the way legal services in England and Wales are regulated and delivered.

The Act specifically allows legal services "to be provided under new business structures" with a stated goal of promoting "competition and innovation".

The BBC recently reported on this, highlighting that "future providers, including large retail brands, could seek a license to offer legal services."

The article includes opposing views, including an attorney who says the move "demonstrates utter contempt for the consumer of legal services. The solicitor profession faces being all but wiped out by a government seemingly intent on robbing the public of access to good quality, local legal advice."

Ah, but here is something to keep in mind: As we talk about the fragmenting of legal offerings, it's important to be consistent in distinguishing between legal information and legal advice.

In fact, it could be argued that the BBC's reporting fails to do this. Or, at the least, it allows for the interchanging of the terms.

The American Bar Association distinguishes between legal information and legal advice. Legal information is general, non case specific, and can be provided by anyone. Legal advice, on the other hand, is "provided by a trained lawyer who uses his or her knowledge of the law to tell you how the law applies to your specific circumstances."

When listening to all the voices on both sides of the conversation, it's important to keep the distinction in mind and remember that legal advice isn't going anywhere.

Legal experience, insight, and strategy aimed at an outcome will always be in demand. What is evolving, and will continue to evolve, is how the more rudimentary and "commoditizable" aspects of the law will be unbundled and delivered.

The Managing Onshore Attorney - Part II

Law.com's Legal Blog Watch summarizes a recent study of emerging trends for contract lawyers conducted by The Posse List. In regards to Legal Process Outsourcing, they write:

"Though firms are under pressure to cut costs, data security and quality of work are two key deterrents to sending projects to India. Still, Bufithis notes that "off-shoring is not going away." It's moving toward a blended approach, with a first pass at review in India followed by second review in the United States."

Here is another acknowledgment that the blended onshore/offshore model provides the benefit of a second layer of quality control and oversight from the onshore attorneys, and it dovetails nicely with the second part of our conversation with Managing Onshore Attorney, Chris Crawford.

Q: Generally, what is the breakdown in terms of the percentage of work executed by the offshore attorneys and the percentage executed by the onshore staff?

A: “It can really vary. Depending on the complexity of the work, it ranges from 10% onshore to 90% onshore. The benefit to the client is that the cost does not change whether the work is performed by a U.S. trained attorney or an India trained attorney.”

Q: What are the types of work that you have seen translate successfully to being outsourced?

A: "India is a common law country, and the attorneys there have all gone to law school. So they can be trained to do any legal work that a U.S. attorney can be trained to do. We have successfully assisted law firms and corporations in many areas of the law including research and writing, contract drafting and review, discovery and document review, drafting of motions, briefs, and pleadings, as well as all general paralegal services."

Q: What are the educational backgrounds of the offshore attorneys?

A: “All Indian attorneys have graduated from an accredited Indian law school, which requires either three or five years of schooling, depending on the law degree obtained. We only hire those that have graduated within the top 10% of their class.”

Q: How are the attorneys trained once they join LegalEase?

A: “LegalEase has its own six month training program, designed by a Harvard Law School graduate. All LegalEase attorneys must complete that training program before working on live projects. This program is designed to teach the attorneys the major distinctions between U.S. and Indian law, and to give the Indian attorneys an opportunity to further hone their writing skills.”

Q: How do you address ethical concerns, e.g. how do the off-shore attorneys ensure confidentiality and conflict checking?

A: “All attorneys working for LegalEase sign confidentiality agreements. In addition, most clients require that LegalEase employees sign confidentiality agreements before commencing work on a project. Regarding conflicts of interest, we have an internal conflict checking system to ensure that we do not undertake work that would present a potential conflict of interest with another client.”

Q: How do you guarantee client satisfaction?

A: “We have always provided our clients with a 100% satisfaction guarantee. If the client is for some reason dissatisfied, we only ask that they provide the reason for the dissatisfaction and give U.S. an opportunity to re-work the project until it is to their satisfaction.”

You can read the first part of our conversation here.

The World Gets Flatter -- Virtual Law Firms

Another dispatch from the front line of the rapidly shifting landscape of legal outsourcing and offshoring.

Virtual law firms are not a new or particularly cutting-edge idea. A wikipedia page on virtual law firms notes that they have been around since 2004. And, if you think about it, even having a wikipedia page probably precludes any sort of "underground" status.

The ABA's Law Practice Today generally characterizes virtual law firms as having the following traits:

1. A stable core group of attorneys
2. Established collaborative relationships with other specialized law firms that possess expertise that’s occasionally needed
3. Technologically linked infrastructure via appropriate computer and telecommunications systems
   
4. Ability to expand and reduce personnel as needed

In other words, we're talking about a team of attorneys -- saving on overhead by forgoing the traditional bricks and mortar office buildings -- networked together via the web.

Some virtual law firms employ attorneys scattered throughout the U.S.. Other virtual law firms, like Rimon Law Group (a firm with a very creative and intriguing billing model that factors client satisfaction), manages to reduce overhead even further by including attorneys who live in locations with lower costs of living -- areas in the United States as well as other countries.

And this makes perfect sense as a business model.

Because virtual law firms employing U.S. attorneys located outside the U.S. are leveraging the exact same dynamic as Legal Process Outsourcing: Work is completed by qualified colleagues who live in areas with lower costs of living, and those savings in overhead translate to lower costs to the client.

An interesting element at play here is the distinction in terminology.

Whereas a network of U.S. attorneys living in different countries is a "virtual law firm", a network combining U.S. attorneys with attorneys trained and accredited in other countries is thought of as "offshoring".

As the lines between old guard legal paradigms and new, global legal paradigms blur, it is likely that the terminology will, too. So, when an LPO engages offshore attorneys to perform some of the more redundant legal processes (litigation support, legal research/writing, contract/document review, etc.), couldn't we just call them "virtual associates"?

The Onshore Attorney's Role in the Review Process

When United States attorneys evaluate the efficiencies and savings of outsourcing certain legal tasks, they find themselves weighing the merits of two different LPO business models: The entirely offshore model versus the blended onshore/offshore model.

While an entirely offshore model connects the client directly with the offshore office, the blended onshore/offshore model inserts a layer of United States based attorneys to work with the client and shepherd each project.

This layer of onshore managing attorneys serves a number of crucial functions, including project management, quality control, and as a liaison directly from one U.S. attorney to another.

LegalEase's managing onshore attorney, Chris Crawford, recently explained the organizational structure and the managing attorneys role in the workflow and review process. Here's an excerpt from that article.

When a client approaches an LPO with a blended onshore/offshore model, how is the work organized and what is the workflow process?

“Initially, the client will contact the U.S. office about a project. A U.S. based attorney will then get the client specifications for the project, including all facts, documents and directions needed to complete the project. The U.S. based attorney then reviews the project, doing preliminary research and drafting as necessary. He/she then assigns components of the project to the offshore attorneys with specific instructions for the completion of the project.”

What is the review process?

“The U.S. and offshore team work together to complete the project, much the same way an associate and a partner would work to complete a project at a law firm. There is a constant, open line of communication between the two offices for feedback and to answer any questions that may arise. Once the project is complete, a U.S. attorney gives it final review and approval for delivery.”

Media Round Up

LegalEase Solutions and one of the company's founders, Tariq Hafeez, were profiled recently as a Michigan based business in the Ann Arbor Business Review. A few of the topics touched upon...

The ABA's approval of legal process outsourcing:

"He said the industry was boosted by an August 2008 ruling from the American Bar Association's ethics committee outlining lawyers' responsibilities in outsourcing, but deeming it morally acceptable.

The practice is allowable, the panel found, if the participating lawyers "adhere to ethics rules regarding competence, supervision, protection of confidential information, reasonable fees and not assisting unauthorized practice of law," according to an ABA statement."

Perceptive challenges still facing LPOs.

"Hafeez said confidentiality and quality are the two issues prospective clients hesitate most about. He said the company's internal processes of training the lawyers in India and doing all quality control in Ann Arbor should calm those fears."

Efficiencies and cost savings.

"Like most outsourcing, the business model is relatively simple - use offshore employees for repetitive and less complex tasks at lower costs. In LegalEase's case, Indian lawyers fluent in English and trained in American law can take care of legal research, drafts of pleadings and document review, among other services, at $60 per hour or less, Hafeez said. "

To read the complete profile, click here.

Also, this blog itself received a nice recognition from oDesk.com as one of the 100 Best Outsourcing and Offshoring Blogs and Resources.

More Commoditization -- Putting A Price On Experience

Still ruminating on our recent post regarding the commoditization of some legal services.

The commoditization is coming hand in hand with the unbundling of legal services. Some legal tasks, which historically have been conducted en masse in one office, are being fragmented and driven down the workflow pyramid to their most cost efficient layer -- even if that layer is in another zip code.

This natural process (aligning the work with the most cost-efficient execution of the work), which has always occurred within the confines of a single firm, is slowly taking place across the country and the planet. Essentially, the walls of the single firm are coming down. And, with the removal of some office walls, the consumer, end-user, and attorneys themselves have increased access to legal process efficiencies.

To put it another way, the unbundling of legal work is a natural byproduct of increased access.

As for the increased access, well, there's that darned internet again. Okay, it is both obvious and a monumental understatement to say that the internet has and is changing the landscape of many professions (ask any travel agent if his/her job evovled in the mid 1990's). But there is no denying that, in terms of evolution, we are knee deep in primordial soup watching a surge of business models bubble to the top, each with the goal of leveraging the end-user's increased access to legal efficiencies.

One of these new strands of business models that is especially noteworthy is unbundling and commoditizing not just legal tasks, but another entity entirely -- legal experience.

Tologix offers software to attorney's who conduct research in specialty areas of law. A firm's (or even a single attorney's) years of work can be collected, captured, and organized so that the aggregate can be searched and monetized on a subscription basis to end-users.

Websites like justanswer.com allow consumers to name their price and receive one-off legal information directly from a network of experienced attorneys online.

Both are prime examples of the wave of creative business models surging right now to leverage the unbundling of legal offerings resulting from increased accessibility via the internet.

Again, it's way too early to say which models will thrive and which will flame out in short order. But it sure is fascinating to watch.