Outsource — or Not?

Outsourcing jobs typically pay better than temp work — and certainly better than no work at all. This is the message of a recent article. The legal profession is developing its own caste system. We all understand some of the differences, or castes:

  • Big Law vs. Small Law
  • Sole practitioner vs. Large firm lawyer
  • Specialist vs. Generalist
  • Boutique vs. Full product line
  • Domestic vs. Outsource (overseas as in India and Philippines)

And I’m sure there are other distinctions that I’ve overlooked. But, now there is another phenomenon appearing. ….

Outsourced work began slowly. First, it appeared in the large firms where they sought to retain the business of Corporate America by controlling some of the costs. When it came to large document reviews, they could do the job better overseas with lower paid, but qualified lawyers. Then Corporate America began to go to the outsourced world directly, saving yet more money.

The phenomenon even translated to the small firm and sole practitioner. One of my clients, a sole personal injury practitioner in Texas found that he could expedite his needs because of the time differential. He could send his needs as he left work and find responses and completed drafts on his desk the following morning.

A major national firm separated all of its "backroom" functions such as accounting, HR, etc. and opened a central facility in West Virginia, thousands of miles from its headquarters; the firm then added lower paid lawyers to the mix. These lawyers received less compensation because their work was limited in scope to mundane, repetitive work such as document review and because of the lower cost of living in the area.

A new twist is with us, however. The very same "outsourced law firms" have grown so large that they are now opening offices in the U.S. and hiring lawyers in the U.S. The compensation of these lawyers is lower. But, as someone appropriately suggested, "If you are not getting the bills paid, you need to work even if the per hour rate is lower."

The nature of the outsourcing industry was already changing when ThomsonReuters acquired a 400 lawyer outsourcing firm in India. This company is now opening an office in Texas. So perhaps we’ve come full circle … and the compensation (at least on average) of lawyers is flattening, if not lowering.

This raises suddenly another issue for me. If the expense side of law is "flattening" because of globalization, how long will it take for the revenue side to change? For this to happen, rules of professional conduct will need to be, first, federalized and, second, globalized. In other words, we all must be playing on the same field for this to occur. Recently, I said this wouldn’t happen for many years … but perhaps it can happen in as few as 5 to 10 years. But, this is a discussion for another time. Stay tuned.

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