Earlier this month, I was perturbed that Indian IT outsourcing firms didn't seem to understand why hospitals in the U.S. are hesitant to send electronic records system work overseas. They're health records. I have a hard enough time thinking about all the people in this country who see them for perfectly legitimate business reasons. That those same records could be "exposed" - for lack of a better term - outside the U.S. where the privacy laws aren't as strict makes me shudder.
Similarly, I've never quite understood why legal process outsourcing is such a big business. Mitratech marketing director Scott Giordano told me recently that some sources estimate it to be a $300 million business that will grow into a $3 billion business by 2015.
It's legal work. You have to have a specific education and maintain a license in order to do it. How does it make sense to send it overseas to those who, though they may have been educated in the law in their own countries, are not educated in U.S. law nor licensed to practice here? (Granted, there are U.S. educated and licensed attorneys working in other countries, but they're not often working in LPO firms.)
Giordano reminded me it wasn't until 2008 that the American Bar Association issued an ethics opinion in which it outlined attorneys' obligations when sending legal support services overseas. The headnote explains, in part:
[A] lawyer who engages lawyers or nonlawyers to provide outsourced legal or nonlegal services is required to comply with [ABA Model Rules of Professional Conduct] 5.1 and 5.3. She should make reasonable efforts to ensure that the conduct of the lawyers or nonlawyers to whom tasks are outsourced is compatible with her own professional obligations as a lawyer with "direct supervisory authority" over them.
Generally, Rules 5.1 and 5.3 say that lawyers who have supervisory authority over other lawyers or non-lawyers should make sure that those they are supervising "conform to the rules of professional conduct." The rules also indicate that supervisory attorneys are responsible for the misconduct of their supervisees if they order the conduct, if they are aware of the specific conduct and ratify it, or if they are aware of it early enough to avoid the consequences thereof and fail to take corrective action.
As a result, it seems that any attorney who is outsourcing work is actually creating more work for himself because he has to ensure that the work the outsourcer does is up to snuff and that controls are in place so that the representation of the client does not suffer. (Again, the supervisory attorney has the same responsibility with any U.S. attorneys she may supervise, but doing so may not require the same level of review, simply because they have been trained in U.S. law schools and licensed in this country.)
Giordano's concerns about the process are similar to mine. He calls the ABA approach contrived and says the idea of sending legal work overseas is "a little scary." What he has seen that does work well, however, is an approach taken by Cisco Systems. He explained:
[Some companies are] very, very good at this...[T]hey'll outsource things within the United States based on negotiated rates to boutique law firms. They have a model they use called core versus context.
For those companies, he said, the legal work that deals with the core of their business, they'll keep in house. A software company will keep the intellectual property work in house, for example Anything else, like real estate issues, they'll contract out to law firms in the U.S. at pre-negotiated rates.
The untold story is...you can "outsource" legal work to attorneys here in the U.S. with the help of technology, and get that expert advice without having to be concerned about LPO, per se, because you're sending it to licensed attorneys in their respective jurisdictions.
And that, he says, is the future of legal process outsourcing, if not the practice of law in general. Because the infamous "billable hour" doesn't work any more. Especially in this economy.