The median annual salary of a lawyer in the United States is around $95,000. The median annual salary of a lawyer in India is around $20,000 per year.
This significant salary differential is prompting a growing number of U.S. employers to export legal work to low-wage, developing countries overseas. The transfer of legal services to overseas markets, called Legal Process Offshoring (LPO), is a growing trend in the legal industry. U.S. firms and corporations are embracing LPO as an effective and efficient way to reduce legal costs.
The Growth of Legal Process Offshoring
The advent of the Internet, increased automation of legal processes, developments in data security, new technology tools, economic changes and the availability of well-educated low-cost foreign labor have combined to instigate and energize the LPO phenomenon.
Legal Processing Offshoring is occurring in nearly all sectors of the legal services industry. The work of lawyers, paralegals, legal secretaries and litigation support personnel is increasingly being performed by legal service providers on the other side of the globe.
Legal secretarial tasks and repetitive legal administrative functions, termed “back office operations,” were one of the first functions exported to low-wage markets. As data processing, customer service and call centers sprung up across foreign landscapes, legal secretarial tasks soon joined the ranks of exported commodities.
The range of secretarial and administrative services provided by offshore back office operations is growing by an estimated 20% annually as developed countries seek to lower costs by outsourcing routine office functions. Legal secretarial tasks outsourced overseas include data entry, proofreading, legal transcription, simple filings, cite-checking and remote secretarial services.
The advent of e-discovery and changes in the Federal Rules of Civil Procedure have encouraged the offshoring of high-volume, labor-intensive litigation support functions . In fact, litigation support functions are the bread and butter of many foreign legal service vendors.
In lieu of paying armies of high-priced U.S. attorneys and paralegals to code and review millions of discovery documents, highly trained workforces overseas perform the work at a fraction of the cost. Typical litigation support tasks performed by overseas legal service providers include imaging, scanning, coding, abstracting, indexing, data entry and document review.
The work of lawyers is not immune to the offshoring phenomenon. Overseas legal service vendors are performing sophisticated legal tasks formerly reserved for high-priced U.S. attorneys. Technological tools such as the internet, electronic legal research, e-mail, text messaging and remote document retrieval make it easy for lawyers to communicate across the globe. Complex legal research, due diligence, contract management and negotiation, appellate briefs and research, and intellectual property services are among the legal tasks being exported to low-wage markets, where attorney rates are as little as 1/30th the cost of U.S. lawyers.
Legal processing outsourcing is also making an impact on the paralegal industry. In India and other low-cost markets, paralegals earn between $6 and $8 an hour, compared with the $20+ an hour earned by their U.S. counterparts. A study at the University of California at Berkeley cites the paralegal field as one of the top occupations most at risk of being outsourced abroad.
In the beginning, the types of paralegal tasks outsourced were primarily low-end, high-volume work including deposition summaries; document review; electronic discovery; document organization, summarizing, indexing, categorizing and abstracting; document imaging, scanning and coding; and routine research such as multi-jurisdictional surveys.
As offshoring gains momentum, more sophisticated and complex paralegal tasks are being sent overseas such as complex legal research; contract drafting, monitoring and review; business research services such as reviews of SEC filings and corporate financial research; and drafting of legal documents such as legal memorandums, pleadings, briefs, discovery requests and jury instructions.
In India and other developing countries, the title of “paralegal” does not exist. Employees performing paralegal tasks are trained law school graduates who deliver a high-end work product at a fraction of the cost of U.S.-based paralegals.
India is currently the leading destination for offshoring legal services. With tens of thousands of students graduating from India’s law schools each year, India boasts an enormous labor pool of highly trained, English-speaking lawyers. Like the U.S., India’s legal system is based on British common law, reducing the learning curve for Indian legal employees who work for U.S. clients. Moreover, the ten-hour time difference between India and the United States permits overnight and 24/7 operations. A U.S. attorney can assign a project at the end of his workday to an Indian employee and find the completed project on his desk the following morning.
Although most offshored work is exported to India, other countries are competing for a share of the LPO market, including China, South Korea, Australia, New Zealand, Sri Lanka, Israel, and the Phillipines.