Legal outsourcing makes its case

With KPO catching up the Legal profession has also got into the act. Legal Outsourcing is expected to be a US $163 billion pie and India is aptly positioned to take a sizeable share.

It didn't take much for University of Pennsylvania law school friends David Perla and Sanjay Kamlani to become entrepreneurs. After working as corporate counsels for years in the US, they wanted to make an impact on the legal market.

Last May, they set up legal services firm -- Pangea 3 -- with five US lawyers and two clients. Today, they have a dozen clients, and 15 professionals. And in the next three years, they hope to have about 200 lawyers and 100 clients.

Their clients -- US law firms and legal departments of corporates -- may be American and British, but they are serviced from Mumbai, thousands of miles away.

With offices in New York and India, the duo, both 35, are part of the fast growing legal process outsourcing (LPO) tableau which has hit India in the past one year.

So what's new? Not to be left behind, traditional business process outsourcing (BPO) units are frenetically hiring lawyers to take on this business. And practically every homegrown Indian law firm is building up its case.

Last year, Mumbai-based ALMT Legal, which has been providing LPO services since 2003, spun of this business. The LPO arm -- ALMT Synergies -- is now headed by Mathew Banks, who left behind a lucrative law practice back home in Britain.

“Our work encapsulates a whole range of tasks. It is like a low hanging fruit ready to be eaten,” says Banks.

So today, on offer is online research, reviewing and reporting documents, drafting, litigation support, corporate due diligence support, mortgage processing and intellectual property researching, drafting and applications of patents.

A far cry from the the traditional BPO activity of a voice-based, transaction-oriented model, law firm Nishith Desai & Associates set up its patents practice in 1999. Last year, Desai tied up with old friend, technocrat Sam Pitroda, and transferred his patents business to the newly set up IP-PRO.

Industry sources claim that more than a dozen dedicated patents lawyers are assigned to the business.

Then there is AZB & Partners, the erstwhile Zia Mody's Chambers. A flourishing corporate law firm, Mody claims she is seriously thinking about courting this business.

“It is an interesting proposition and can provide an alternate revenue stream for us,” she says.

Typically, those into it claims they are providing high-end legal work. But clients say that it is mostly back-end, low-profile, labour-intensive para-legal work which is being outsourced.

This is something that the law firms are not worried about. “The work may not be too high-end but we can make up with sheer volume,” adds Mody.

Almost all the big players from Office Tiger to Evalueserve to Integreon, which began as traditional BPOs, are focusing on LPO. And most of their business is coming from two constituencies -- law firms and corporate legal departments.

Says Jason Brennan, director of legal services at Office Tiger, “As the global marketplace becomes increasingly competitive, corporations are being forced to streamline operations and cut costs in order to maintain profitability. Law firms are subject to increasing pressure from their clients to reduce costs and maintain profits per partner. These factors have given them an incentive to look at alternative sourcing methods.”

Or take Evalueserve, the BPO which has hired three lawyers and plans to hire seven more immediately. “Fortunately, the area is still nascent,” says Alok Agarwal, chairman, Evalueserve.

In fact, American conglomerate General Electric was one of the first to set up its captive BPO Gecis in India, which included LPO. Other technology companies, too, farmed out work to their Indian captive units.

That's because like other BPO activities, Indian lawyers come cheap. An associate lawyer in the US comes with a $225 per hour tag in the first year.

By the eighth year, it goes up to $450 an hour. In India, the rates are barely 10 per cent to 15 per cent of that. It isn't cost alone. With the time lag between India and the US and the UK, the turnaround time is 24 hours.

And now, with Indian law firms, too, donning their robes, it is a different case altogether. As Mody says, “We can bring more credibility to the business.”