Canadian lawyers quietly begin to outsource work to India
Janice Tibbetts, CanWest News Service Published: Tuesday, July 04, 2006
OTTAWA - Canadian lawyers are quietly starting to outsource legal work to India, where they can pay substantially less per hour and enjoy a faster turnaround time than they would by paying junior lawyers in Canada.
Legal work, ranging from research for court cases to contract drafting and patent applications, is one of the newest services being sought offshore, following in the footsteps of such flourishing businesses as call centres, data processing and accounting.
India -- with almost one million English-speaking lawyers trained in common law, the same type of law that is practised in most of Canada -- has been referred to in international business publications as "global counsel" because of its mbuttive potential.
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"It's early days, but I would not think this is overblown rhetoric," said Simon Chester, a Toronto lawyer and legal trend watcher, noting that sending legal work to India is thriving in the U.S. "If this model proves attractive to American businesses, there's no reason it wouldn't be attractive to Canadians," he said.
The National, the in-house magazine of the Canadian Bar buttociation, recently published an article about the "commoditization" of legal services, and warned that Canadian lawyers may have no choice but to change their business practices to compete in a world where India is offering work at substantially reduced costs and clients can access do-it-yourself kits online to do such things as draft wills and, in the United States, obtain divorces.
Farming out legal work to the other side of the world, where companies say they provide hourly savings of up to 75 per cent, appears to be still in its infancy in Canada.
Two officials with companies in India said in interviews that they have about 10 clients between them and another outsourcing company reported it is talking to several interested Canadian companies. Clients are either law firms or the in-house legal departments of large companies, not individual Canadians.
"Canada is where the United States was about 18 months ago," said David Perla, one of two chief executive officers for the firm Pangea3, a Mumbai-based company that expects to employ 150-200 lawyers by the end of the year and 500 people by the 2010.
Pangea3, which provides savings of 30 to 75 per cent, depending on the service, has two Canadian clients and is talking with several interested companies, he said.
"Primarily smaller law firms are starting to embrace it, but we have had some inquiries from the Canadian legal departments of large multinationals. There is increasing interest."
The prospect of buying legal services abroad for far less money than at home is raising several questions, including whether savings will be pbutted on to clients, whether it threatens the legal tenet of confidentiality when sensitive documents are prepared on the other side of the world, and who is responsible if the delegated work goes wrong.
"There are always issues that crop up when something is new," said Mike McCabe, a U.S-based spokesman for the international outsourcing company Tata Consulting Services, who has recently added legal services to its expansive roster. "I think you could attribute it to growing pains."
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Dhiraj Aggarwal, whose India-based company Economical Services has been sending e-mails to Canadian firms seeking business, said that he is finding that privacy is a concern among his clients.
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"Not many clients feel comfortable sending confidential data to another continent," said Aggarwal, who estimated his outfit of 20 lawyers does work for "seven or eight" Canadian companies and firms and charges about $20 to $25 US per hour, with a turnaround time of about 72 hours.
Over the last few years, lawyers in India selling services offshore have focused mainly on the routine grunt work that is often done by junior lawyers, such as research, in which lawyers comb through legal documents searching for information to back up a case.
"The actual lawyering is done back in the home country," said Perla.
But the work being sent offshore "is quickly moving up the value chain," said Chester, who seriously considered outsourcing research to India last month, but in the end, his client no longer needed the service in question.
Law firms that outsource to India are not legally bound to reveal they are delegating work outside the country, but Chester stressed they have a moral obligation for lawyers "to make full disclosure."
Outsourcing companies say that legal firms and large companies, in sending their bread-and-butter work offshore, can focus on their specialities and spend more time on high-end work.
Ultimately, they say, the idea is to save money for clients who can currently pay hundreds of dollars per hour, putting legal costs out of reach of most people.
"There's definitely a cost saving, but companies are also turning to outsourcing so they can focus on whatever their core competency is," said McCabe.
The work being completed in India is becoming so sophisticated that a U.S. newspaper reported earlier this year that a legal brief for a tax case in the United States Supreme Court had been prepared offshore.
There are no national estimates on how many legal jobs in Canada will be outsourced to India.
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