The political incorrectness of outsourcing, a phenomenon that is growing as the US Presidential election nears, is also intimidating many law firms, who fear both a backlash from employees and possible litigation that would generate adverse publicity for these extremely shy and secretive firms. Growing concerns over security breaches by outsourcing firms are also worrying law firms in the US, where lawyers can be debarred for breaches of client confidentiality. All these are risks that most big law firms in the US feel are not yet offset by the gains they would stand in terms of cost savings and productivity.

William Tanenbaum, international chair of the technology, intellectual property and outsourcing group at Kaye Scholer LLP and a partner in the firm’s New York office,  says the mistake LPO proponents make is in assuming their industry’s trajectory will mirror that of the business process outsourcing (BPO) industry. “There’s never going to be an absolute, compelling case with legal outsourcing the way there is for outsourcing of call centres and work that are commoditised,” says Tanenbaum. “U.S. law firms are not offshoring any work because they are afraid of confidentiality issues, lack of control, besides they still have to figure out what they can send out that would be high volume enough to make it worth it.”

Tanenbaum, who advises several U.S. clients on legal offshoring issues, also says legal outsourcing will not take off in the way that information technology support and other services have because the former are highly subjective and judgement-oriented and less reducible to standard delivery models.  Further, he argues, “You really are tied to specific client information and don’t get the high-volume advantage that you do when you are doing commodity work. Others may disagree, but it is a major consideration.”

Others do disagree. Christopher Arena, a partner at Philadelphia-based intellectual property law firm Woodcock Washburn LLP, says legal outsourcing will increase with time. “Corporate budgets are not getting bigger; they are getting tighter,” says Arena. “It’s an issue that’s here to stay, the law firms and the corporations and the LPOs in India should figure out a way to do it effectively.” He adds that ultimately it boils down to providing value to clients.

That could, in fact, be the key to the problem. “Law firms have less of an incentive to offshore as such, because it is their clients who foot the bill anyway,” says Sonny Ajmani, principal consultant at Opera Solutions in New York, a global consulting firm that advises clients on outsourcing and offshoring. “Unless there is peer pressure, which will induce competition or pressure from the clients to reduce costs, I don’t see law firms going the offshoring way.”

Murky Future
All this has raised a debate about the future of LPOs and any talk on the issue invariably raises widely disparate views. A study conducted last October by Evalueserve, a Gurgaon-based knowledge process outsourcing and business research firm, says that Indian LPOs were employing only 1,750 professionals.  The study also took the pessimistic view that this number would grow only gradually, to 7,000 by 2010 and to 22,000 by 2015.