In the latter days of the Bush Administration and the earliest days for President Obama, federal officials were fixated on correcting the economic downturn. We heard a lot about financial regulatory reform -- new agencies, new responsibilities for existing agencies, changes in how companies should address risk and so on.
Lately health care reform has been in the news more prominently than financial regulatory reform, but that doesn't mean it has disappeared from the agenda. And George Hefferan, the sales VP and general counsel at Mindcrest, poses a good question at law.com: Will the increased compliance burden resulting from financial regulatory reform create a bigger market for legal process outsourcing?
Frankly, when I first heard about it, the concept of legal process outsourcing scared me a little, as a potential consumer of legal services, and as someone with a U.S. legal education. Why would I want my legal work to be done by someone in a different country? Yes, they are undoubtedly educated, but the laws here are certainly not the same as the laws there. Right?
Well, of course, my initial reaction was naive. First, the work would be labor intensive, and not necessarily require extensive expertise in a specific area of the law. The examples Hefferan offers are document review and basic research. (I would emphasize the "basic" there.) And as he points out, the work that is outsourced would still be supervised by the company's outside or in-house counsel. These are things I would have realized had I stopped to think before simply reacting.
What I did not know is that the American Bar Association has approved the practice. Hefferan says:
In sanctioning the use of LPO companies, the ABA recognized how smaller firms can use offshoring to more effectively represent clients -- a justification even more important for small or medium-sized corporations, which face a disproportionately heavier compliance burden than larger entities.
Those that choose to leverage LPO, however, must vet providers as thoroughly as they would any other outsourcing company, if not moreso. The savings realized are "meaningless," Hefferan says, "if the quality of the work does not meet or exceed American legal standards."