Outsourcing: A New Front is Opened

For many, India is synonymous with outsourcing. A country with a population of over 1 billion and a large, well-educated workforce with good English language skills is well-placed to serve the needs of multinational companies wanting to save money. The newest arrivals in the sector are legal process outsourcing (LPO) companies, which began by servicing in-house legal departments. ‘Companies are not so willing to pay fees for work that need not be done by qualified lawyers in the first place,’ says Ganesh Natarajan, chief executive and co-founder of Mindcrest, a Chicago-headquartered legal services company with operations in several Indian cities. ‘They have outsourced significant pieces of other functions, so now it’s the turn of the legal departments.’

Law firms’ historic antipathy toward outsourcing began to change in late 2008 when the sudden economic downturn caused clients to increase their demands for lower legal costs. LPO companies can certainly provide them a useful service as they are particularly experienced in carrying out volume work. Mindcrest, for example, is often called on to review loan documentation for legal completeness, look through contracts as part of a due diligence exercise, or carry out document reviews in the litigation context.

There is no shortage of staff for LPO companies (see the statistics in the main article), which leaves them with a luxury of numbers; Natarajan says he need only shortlist between 10 and 15 per cent of all applicants in order to find sufficiently talented individuals. He sees the LPO industry as providing a new career option to those graduates who are unable to break into the tight circles of traditional Indian firms. ‘With us, they have a career in the legal business, but not as a lawyer,’ he says.

The expansion of the LPO market serving Western firms is also leading to an increased demand for Western legal education. Nicole Shroff, admissions counsellor at St Francis School of Law (an online law school which allows overseas students to earn a JD and sit for the California Bar), says the college has seen ‘a huge uptick’ in the number of Indian applicants it receives. ‘As the LPO market has increased, the need to educate LPO attorneys has also increased because the clients of LPO firms want attorneys who are subject to the ethical standards concomitant with being admitted to a US Bar,’ she says.

Even outsourcing companies have not found themselves immune from the ire of opponents of liberalisation. Integreon, which has operations in Mumbai and New Delhi, was also named in A K Balaji’s 2010 writ, which states:

‘[S]ome of the international law firms has their office in India and practices Indian law by calling themselves as LPO. They are running a law firm in India without obtaining any prior permission from Indian government and the concern authorities … This is complete violation of our country’s… laws… rules & regulations… This kind of activities of foreign law firms have to be found and blacklisted.’ [sic]

This vehement, if rather inaccurate, attack should perhaps not unduly worry outsourcing providers. Sources with knowledge of the lawsuit say that Balaji was motivated by a desire to keep the legal liberalisation issue bogged down in the courts. After the Bombay High Court ruling in Lawyers Collective v Reserve Bank of India and Others, some opponents of liberalisation sensed that the discussion could quickly become a political one that could be settled during the courts of international trade negotiations. Reasoning that nothing could be done if the matter was before the courts (India takes sub judice very seriously), the 2010 writ was filed to move the debate back out of the political arena.

It would seem politically unwise for the government to pursue an industry that is creating a significant number of jobs in India, and analysts think it is very unlikely that the LPO industry will be forced to shut down as a result of the present lawsuit. The government will also be considering the effect that the ongoing debate is having on India’s reputation; but whether it will be strong enough ever to push through the necessary legislative changes in the face of such vehement opposition remains to be seen.