Columbia to Calcutta

The use of offshore legal process outsourcing companies by law firms and their corporate clients might be the cost-cutting move of the future.
However, some attorneys from the Carolinas are wondering if the price will be a loss of dignity for the profession.
“We have to ask, ‘What are we going to be?'” said Aaron R. Harmon, a 2007 University of North Carolina School of Law graduate who wrote an article about LPO ethics in the spring 2008 University of Florida Journal of Technology Law & Policy.
“Are we going to become just another business? If that’s the case, it would seem clear that LPO would be the logical direction to move in,” Harmon said.
“But if we are a noble profession, then the commoditization of our services — turning them into products — is something we need to seriously consider from an ethical standpoint.”
In April, North Carolina became the second state in the country to issue a formal ethics opinion about going offshore for legal services.
In South Carolina, an opinion from the State Bar or some other form of action could be on the horizon.
Jill Rothstein, risk management director for the South Carolina Bar, said the professional responsibility committee had the issue on the agenda for its July 25 meeting.
Neither Rothstein nor committee chair, Calhoun “Reb” Thomas III, would say what action — if any — the body might take.
Charleston lawyer Patrick Corrigan III said he would like to see the state address the issue.
“This is something that, if our Supreme Court isn’t already monitoring it, further direction from the court would be helpful,” he said.
Boom Times
The offshore LPO industry has flourished in recent years, particularly in India, a former British colony where lawyers and paralegals are fluent in English and trained in the common law. The country’s law schools produce an estimated 80,000 graduates per year.
Corporations and law firms are finding that Indian attorneys can do much of the work that junior associates in the United States can do, and at a fraction of the cost: $15 to $25 per hour for an attorney, for instance, instead of the U.S. hourly rate of $150 to $275.
Some projections about the LPO industry’s growth in India have been exuberant. A ValueNotes report predicted the country’s LPO jobs would rise from 1,800 in 2005 to 24,000 by 2010 and that revenue would soar from $61 million to $605 million.
Others are more reserved. Evaluserve projected growth from 1,300 LPO jobs in 2005 to 5,200 by 2010, with revenue climbing from $56 million to around $300 million.
A look at the number of Fortune 500 companies that have flocked to India shows where the legal profession is heading, said Russell Smith, the president and chairman of SDD Global Solutions. The LPO, based in Mysore, India, is the only one of its kind that is managed by a U.S. law firm, New York-based SmithDehn.
After outsourcing various business services to India for years — from call centers to collections — companies such as General Electric, Microsoft, Cisco and DuPont are starting to send their legal work there as well, according to a ValueNotes report.
Some corporations have set up their own LPO centers, while others have contracted with independent companies such as Pangea3, the country’s largest LPO, or LawScribe, whose staff has doubled to 140 attorneys and paralegals within the last 12 months, according to Mark Ross, LawScribe’s business development director.
It’s only a matter of time before law firms set up shop as well, following the type of model that SmithDehn has established with SDD Global, said Smith, who lives in Asheville, N.C., when he isn’t overseeing operations in India.
“Everybody in the Fortune 500 is here,” Smith said, “and the law world is next.”
Ethical Implications
Whether the growing offshore LPO industry will exceed ethical boundaries is an issue that state regulatory agencies are starting to address.
The North Carolina State Bar’s ethics committee received an inquiry about the use of LPOs in December 2007 from O. Max Gardner, a bankruptcy attorney based in Shelby, N.C.
After much debate, the committee issued a formal ethics opinion in April, 2007 FEO 12, which was modeled on a 2006 New York City Bar Association opinion, the first in the country to address the use of offshore LPOs.
The Florida Bar was the only state agency to issue a prior opinion on the subject.
Like the New York City opinion, North Carolina’s 2007 FEO 12 analogized the use of foreign assistants to the use of domestic non-lawyer assistants. The ethical considerations were the same, regardless of an assistant’s location, the opinion said.
As long as a lawyer properly selected and supervised the assistant, took “reasonable care” to preserve client confidences, avoided conflicts of interest, prevented the unauthorized practice of law and disclosed the outsourcing to clients and obtained informed consent, the use of a foreign assistant was fine.
H. Clifton Hester, an Elizabethtown, N.C., attorney, voted against adoption of the opinion. He said the type of supervision discussed in the opinion was not the same as the “direct supervision” that had been approved in the past for lawyers working with domestic non-lawyer assistants.
“The practice of law is a process, not a product,” Hester said. “If the lawyer is just getting a product, buying it from someone else, reading over it and stamping his stamp of approval on it, then we’ve lost all of the supervision that went into the product.”
Gardner said he had the same concern.
“If you look at what supervision historically meant, it meant mentoring. If you had a paralegal in your office, for instance, you would lead the paralegal through it step by step,” Gardner said.
“I don’t see any possible way you could supervise [an LPO] unless you got into a ‘Star Trek’ type of thing. You know: Beam me up, Scotty. Beam me over to Mumbai and let me check things out, then beam me back here.”
Nathan Crystal, who will teach contracts and professional responsibility at the Charleston School of Law in the coming academic year, said the issue of supervision boils down to context.
Since there is a duty on South Carolina lawyers to exercise “reasonable” supervision, then what is reasonable will depend on the circumstances, Crystal said.
“If you are outsourcing work around the world to lawyers who are admitted under their legal system but may not be familiar with the ethical obligations of American lawyers, the duty of supervision is going to require you to do more than if you were simply dealing with an American lawyer,” he said.
Otherwise, Crystal said there is minimal difference between using a document-review or legal-research service that is based in Indiana or one based in India.
“Even though it seems more dramatic, and it seems that when you’re sending something halfway around the world that you’ll somehow lose touch with it and the ability to supervise will become attenuated,” said Crystal, a former chair of the South Carolina Bar’s ethics advisory committee.
“But in this day and time, when so much practice is done electronically, I’m not sure that’s the case.”
Smith said SDD Global shows that it is possible to adequately supervise the work of foreign assistants. Ten U.S.-licensed attorneys from his company’s parent law firm, SmithDehn, supervise the work of a staff of 25 lawyers and paralegals in India.
“The basic point is that no work ever gets filed in a court or delivered to a client without a U.S.-licensed attorney being all over it,” he said.
What’s lying beneath the surface may very well be a fear that LPOs will eventually take away American legal jobs — a fear that’s unfounded, Smith said.
“This is a godsend for lawyers in the United States. It’s allowing a firm that wants to get ahead of the pack to get more business from its clients and offer something that makes it more attractive,” he said. “Legal work is created that otherwise would not exist.”
Crystal said it would be a “dramatic mistake” to view the use of offshore LPOs as “per se improper.”
“This is just another example in which changes in technology and economics can affect the legal profession, and the legal profession should be responsive to those changes in a way that’s consistent with traditional ethical values,” he said.

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