I agree with Laurel Oates’ earlier post that outsourcing legal work is here to stay.  Despite the belief by some that the financial downturn may have lessened the growth of LPOs, quite the opposite seems to be the case.  For example, the largest sourcing firm in India, Pangea3, had one Mumbai office with about 100 attorneys when Laurel, Mimi Samuel, and I visited there in January 2007.  Pangea3 now has three Mumbai offices and 240 attorneys.

I also agree that cost is a big reason why US and UK law firms and corporations are outsourcing legal work.  When we interviewed the principals of Lexadigm, an outsourcing firm outside of Delhi, we asked them about their rates.  They said that when they started in 2004 they were charging about $40 an hour.  By 2007, they had raised their rates to $60-$100 an hour, depending on the complexity of the work and the turnaround time. But of course even those higher rates are a bargain when compared to what US domestic attorneys charge.

And some US attorneys are saying that they feel ethically obligated to do what is in the best interest of their clients, including saving them money by outsourcing some of their legal work.   Time magazine quotes Mark Alexander, a Dallas attorney who makes exactly that point.  Alexander said that he would not consider charging a client his $395 rate, or even a junior associate $225 rate, when he can outsource the work to Atlas Legal Research in Irving, Texas, which outsources the work to lawyers in India who do the work for $60 an hour.

But I also want to pick up on Laurel’s final question about what outsourcing might mean for our students, alums, and the practice of law.  Our students will have to compete for work and jobs in this changing market.  They cannot assume that when they graduate they will be able to make a six-figure income doing basic legal work for several years as they work their way up to partner.  They will have to adjust their expectations, and they will have to figure out how to justify the salaries they hope to receive.

As legal educators, we have an obligation not only to inform them about the effect LPOs will have on their careers but also to prepare them for this dramatic shift in the practice of law.  We have to get ahead of the curve on the whole issue of outsourcing and think through how to make it a win-win situation for all involved, including clients and lawyers here and in countries doing outsourcing work.  This will require some creative, fearless thinking and problem-solving.

Initially, for example, one might start by saying “OK, what legal work can’t be outsourced?  Let’s figure out what that is and give our students job security by teaching them to do that.”  Or we could modify the question slightly, adopt a “best practices” approach and ask “What legal work can best be outsourced, and what legal work can best be done by someone local?”  Or maybe the real question we need to ask is “How can we best prepare our students to practice law globally, including how to use outsourcing effectively?”