Offshore Legal Outsourcing – Panacea or Pandora’s Box?

In this, the first of hopefully many columns, I wanted to take a few moments to introduce myself. My name is Gavin Birer and I am the founder and president of the first Canadian offshore legal outsourcing company. I am called to the Bar in Ontario and admitted as an attorney in the Supreme Court of South Africa. My legal experience is as a corporate commercial lawyer, practicing in Bay Street law firms and in-house as a General Counsel.

This month’s column is going introduce you to the offshore legal outsourcing industry (also commonly known as “legal process outsourcing” or “LPO”). Subsequent columns will provide a more in depth look at the LPO industry, India as an offshore destination, information security, the advantages and disadvantages of LPO, and of course, I will provide you with different views and news on LPO, both in Canada and abroad.

Paradigm shift

As you well know, law firms and in-house legal departments face a plethora of challenges. A growing demand for legal services; greater volume of work; higher expectations; quicker turnaround times; higher lawyer salaries; higher operating costs; reduced budgets and lawyer attrition are some of the challenges that lawyers face today. Whether you like it or not, these challenges constantly change the status quo. Have you heard the phrase “something has got to give”?

Legal services have traditionally been provided exclusively by “locally qualified” lawyers, paralegals and law clerks. The conventional approach to providing legal services has historically been that all legal services would command a premium price, because the expertise required to provide the services could not easily be duplicated. The legal landscape is changing rapidly due to technology, globalization, and commoditization; and it is due to these changes that the prospect of offshore legal outsourcing is now viable.

For those who are unfamiliar with the concept, the phrases “offshore legal outsourcing” or “LPO” simply refer to the contracting out of legal work that was previously done by lawyers (paralegals or law clerks) within a law firm or legal department, to an external third party in a different country. India has undeniably become the primary destination for LPO services. In a world that is “flat” (many of you have likely read Thomas L. Friedman’s famous book “The World is Flat”), sending certain types of legal work to India is becoming an attractive proposition for law firms and legal departments.

In my view, these changes are nothing short of a paradigm shift in the legal services industry.

What legal services can be outsourced?
Lawyers generally serve as legal advisers to their clients; and perform qualitative, skill-intensive legal tasks (or at least that’s the goal). By contrast, offshore legal outsourcing vendors typically perform quantitative, “lower-skilled” legal tasks, and serve as a support to their law firm and legal department clients. This support is crucial where a law firm or legal department is under-resourced – particularly where the law firm or legal department needs to gear up periodically during busy periods.

The nature of work that can be outsourced is varied and includes document review, document drafting, legal research, due diligence, and much more. The main category of work that is increasingly being outsourced offshore with a high degree of success is document review. Document review work could include a review of documents for litigation purposes (e.g. discovery) or corporate commercial purposes (e.g. due diligence or creating and maintaining contract databases). LPO vendors typically work closely with their law firm and legal department clients to identify the ideal work that can be outsourced.

For these reasons (in case you are wondering), offshore legal outsourcing vendors will not, in my view, replace local lawyers any time soon. And besides, offshore legal outsourcing providers typically only provide services directly for local lawyers.
So is offshore legal outsourcing a Panacea or Pandora’s box? As a lawyer, the answer to that question should clearly be “it depends”. It depends on the specific facts and circumstances. It’s my hope and goal that this column will strip away some of the hype and the hysteria surrounding this burgeoning industry – an industry which has arguably brought about one of the most fundamental changes in the practice of law today. Ultimately, I think that LPO will become a ubiquitous service, providing benefits to the legal industry as a whole and to the clients that they serve. Stay tuned.

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Comments

  1. Learning more about outsourcing is a good idea, but this also comes across as advertising for this person’s business.

  2. Thanks for your comment Sue. The focus of the column is not on Legalwise. My aim is to educate lawyers on this growing business and industry. The focus will be on the industry itself, the advantages, the disadvantages, the Canadian market for these services, what’s going on internationally, etc. Since many lawyers either don’t know about this industry (or if they do, they don’t know much about it), I believe that there will be a great deal of benefit to the Canadian legal community by educating them on the LPO industry. I hope that you will benefit from my future columns and comment on them. I would also welcome any suggestions you may have on how to present this topic impartially.

  3. Gavin, I had raised this issue with Rob Hyndman before, but why isn’t this the unauthorized practice of law?

    Rob had forwarded a very old LSUC exemption, which in the current context made no sense.

  4. That is an excellent question. This topic was previously the subject of much debate in the US and other jurisdictions where LPO (legal process outsourcing) has become more mainstream. More recently, the topic has been put to rest, most notably in the US, where there have been numerous State Bar Association opinions stating that (subject to certain conditions) LPO is not the unauthorized practice of law. Simply put, LPO vendors assist local lawyers and law firms with their practice of law. Local lawyers and law firms should supervise their non-lawyer “assistants” – whether they be legal assistants, law clerks or LPO vendors. Finally, LPO vendors do not (or should not) provide services to consumers. Canadian law societies have not (yet) provided an opinion on this topic but I would be very surprised if the approach in Canada is different to other jurisdictions such as the US.

  5. Sounds like that would be a great topic for a future column. Thank you for explaining it so clearly, Gavin.

  6. Interesting, I was just reading an article on this from earlier this year.

    See:

    Law firms do the math; ; Your Lawyer’s Office–thousands Of Miles Away
    Jim Middlemiss. National Post. Apr 26, 2008. pg. FP.1

  7. The article you refer to is an interesting and informative piece on LPO. Coincidentally, I accompanied Jim Middlemiss on that trip to India.

  8. I am a U.S. licensed attorney who works for a company that does quite a bit of outsourcing – primarily in the areas of objective and subjective coding. While I can’t speak of Canadian law, in the U.S., the American Bar Association has recently released an opinion that supports outsourcing efforts when supervised by a U.S. licensed attorney and the ABA Model Rules on Professional Responsibility are followed. I think it has become apparent that we live in a global society and in order to keep litigation costs from further escalating, we have to explore new ideas such as outsourcing, culling, and concept search technologies. As an attorney who has practiced for quite some time I struggled with these concepts initially. The U.S. legal system is slow to change. Over time, I have come to the conclusion that in order to remain competitive and survive – in an era of of law firm mergers and corporate dissolutions and takeovers – law firms and corporations are going to have to explore new options for E-Discovery. U.S. Courts and the ABA seem to agree that the type of work that is being outsourced – document review, due diligence, word processing and legal research does not constitute the practice of law. In light of this, with client consent and active client engagement in the process,I believe better quality can be obtained at a lower cost to the client.

  9. Amy. Your comments are insightful, informed and in my view, right on the money. This is an exciting time to practise law. Thanks for your contribution.

  10. Great point to Managers who thinks outsourcing is the solution for cost cut down. Many companies realized the issues and loss with outsourcing by now
    legal outsourcing