The New York Times Spotlights Legal Services Outsourcing

The New York Times ran an article this week on the continued growth in the legal services outsourcing sector.

Highlights from the piece include:

• "India’s legal outsourcing industry has grown in recent years... to a small but mainstream part of the global business of law. Cash-conscious Wall Street banks, mining giants, insurance firms and industrial conglomerates are hiring lawyers in India for document review, due diligence, contract management and more."

• “This is not a blip, this is a big historical movement,” said David B. Wilkins, director of Harvard Law School’s program on the legal profession. “There is an increasing pressure by clients to reduce costs and increase efficiency,” he added, and with companies already familiar with outsourcing tasks like information technology work to India, legal services is a natural next step."

• "Employees at legal outsourcing companies in India are not allowed by Indian law to give legal advice to clients in the West, no matter their qualifications. Instead, legal outsourcing companies perform a lot of the functions that a junior lawyer might do in a American law firm."

• According to Janine Dascenzo, associate general counsel at General Electric, while G.E. “will continue to go to big firms for lawyers who are experts in subject matter, world-class thought leaders and the best litigators," what G.E. does not need is the “army of associates around them. You don’t need a $500-an-hour associate to do things like document review and basic due diligence,” she said.

• "Thanks to India’s low wages and costs and a big pool of young, English-speaking lawyers, outsourcing firms charge from one-tenth to one-third what a Western law firm bills an hour."

• "The number of legal outsourcing companies has more than tripled in the last five years."

• "Revenue at India’s legal outsourcing firms is expected to grow to $440 million this year, up 38 percent from 2008, and should surpass $1 billion by 2014."

• “It really is the future of legal services,” says Leah Cooper, former managing lawyer for mining giant RioTinto and current director of legal outsourcing for CPA Global.

New Models for Legal Education

The recent trends in the legal world (e.g., an emphasis on project management, a bottle neck for new associates, growing demand for alternative pricing models) all involve not the practice of law, but the business of law.

Responding to those shifts, New York Law School and Harvard Law recently teamed to spearhead an initiative to reevaluate the way future lawyers are educated.

The American Lawyer reported that 75 law school deans, legal educators and lawyers gathered April 9th and 10th for a two-day conference called "Future Ed: New Business Models for U.S. and Global Legal Education".

In general, the two themes that emerged were 1) the need to augment existing curriculum and, 2) the possibilities of creating alternative curriculum.

In terms of augmenting existing curriculum, the consensus was a heightened emphasis on the practical skills clients require.

• Business Management Skills

• Financial Literacy

• Executive Communication

In a forceful concurrence with this idea, Chester Paul Beach, associate general counsel of United Technologies Corporation "hammered home the need for more real-world training. To cut down on legal costs, Beach said, his company absolutely will not pay for first- or second-year associates because "they're worthless." Lawyers need more "skill development" in school because, especially amid the current economic downturn, businesses are "not going to pay for people who can't add value."

The other theme to emerge was alternative education models, which might include:

• Accelerated Programs

• Experiential Learning

• Distance Learning

• Specialized Schools

The collective agreement here was that "there should be "multiple futures" to legal education. Every school can't be Harvard, and every school shouldn't follow the same system, said Joseph Altonji, from consulting firm Hildebrant Baker Robbins. Schools should specialize, he said, "because we need different kinds of practitioners."

"Altonji added that a model based purely on grades and LSATs for all graduating law students embarking into various careers "is just not working today."

Associate Hiring Part II

Following right on the heels of last week's post is a timely first-person account of a recent law school graduate who was not offered a position.

With the backlog of legal hiring, it's not a surprise that the ranks of the no-offers are swelling.

But when those left frustrated and unemployed are coming out of Harvard Law, it puts the difficult situation in a different, more desperate light.

The author offers advice to other Harvard Law no-offers, while confirming the underlying fundamentals that are squeezing all recent grads, summer associates, and laid-off associates:

"1. It’s not our fault. The economy changed unexpectedly, and things are tough all over.

2. In fact, as Harvard graduates, we have more opportunities. Most people encountering employment challenges in this economy are in worse positions than we are.

3. The loss of Biglaw opportunities means we may find something else from which we derive immense satisfaction, and which we may never have otherwise pursued.

4. People with offers but no start dates are in a poor position as well. Even those with deferrals of specified duration face the possibility of an unexpected deferral extension, or even an outright retraction of their offer. In fact, with things as bad as they are, there’s really no guarantee that even those who manage to start work won’t find themselves laid off somewhat soon. Biglaw right now simply doesn’t offer the degree of security it used to offer. Everybody is in the same boat."

It seems safe to assume that five years ago the author of this article would have been offered exactly the job he/she trained for and expected.

Instead, he/she is both a participant in -- and a victim of -- the log jam of future lawyers feeling the reverberations from the Fall of 2008.