Now in Legal Rebels:
Posted Aug 21, 2007 03:31 pm CDT
Once upon a time, U.S.-based corporations routinely hired American law firms to do virtually all of their legal work. But today, using cheap foreign lawyers—or even American lawyers in lower-paid parts of the country—to do routine tasks such as document review and conducting due diligence on merger partners is becoming a standard practice. This approach is aided, of course, by the ease of transmitting documents via the Internet.
Not every law firm will discuss the subject. But those that do often readily admit that putting lower-paid lawyers from other geographic locations on the on the legal team is commonplace. One reason why is that corporate clients push for it, so law firms have little choice but to agree, according to Bloomberg.
“The objective is to have only the most valuable people in London or New York, and the others in India, China or Columbus, Ohio,” says New York attorney Robert Profusek. He co-chairs the mergers and acquisitions practice at Jones Day, which sends low-end work to the cheapest locations and plans to open a document center in India.
India is a popular choice for such outsourcing, because attorneys there are trained in English-language courses that use a common-law model, like England and the U.S. Also, a legal pay scale that provides for huge savings to American companies, compared to the cost of hiring U.S. lawyers, is viewed as generous there, Bloomberg reports. A junior Indian lawyer might earn as much as $8,160 a year, while top first-year associates at major U.S. law firms are paid starting salaries of $160,000 or even more.
However, outsourcing can create concerns about whether attorneys on the other side of the world are being adequately training and supervised.
“India has very talented lawyers,” says Janine Dascenzo, managing counsel for legal operations at General Electric Co. The Fairfield, Conn.-based company sends about $3 million in routine legal work annually to an affiliate in that country. “But it’s a misconception that you can just send work there and it gets done,” she adds. “You need proper supervision and security.”