Outsourcing or Not Outsourcing: That is the Question

For a week or so now, ever since I came across the following piece on Law.com, I’ve been mulling over whether or not I should blog about it, but I just couldn’t hold back any longer: http://www.law.com/jsp/article.jsp?id=1202732098332

I’ve talked and written previously on how I believe firmly that 2008 will be the “tipping point” year where we witness the public embracing by the legal profession of offshore legal outsourcing as a viable strategic alternative to offer to clients. Here’s what I, and other more accomplished LPO soothsayers didn’t predict. Perhaps the first step on the path towards public acknowledgement is where law firms embark on what is to all intents and purposes offshore legal outsourcing, but where they put a different hat on it and label it a non-outsourcing initiative.

This is what has happened with the opening up of Howrey’s new office in Pune, India. Howrey’s managing partner Robert Ruyak has stated that, “It’s not outsourcing,” and that clients apparently, “don’t want to use outsourcing.” Now if it walks like a duck and quacks like a duck…. Well, you can see where I’m going. Now many of us lawyers if we apply our analytical legal brains to the matter may conclude that Mr Ruyak is entirely correct and that the Howrey initiative doesn’t fit the standard definition of outsourcing, the act of obtaining/purchasing services from a third party. There doesn’t appear to be any third party involved, so there’s no outsourcing going on. Case closed then, I suppose. Well perhaps not. Are we really splitting hairs here and getting just a little too preoccupied in the minutiae of the definition as opposed to the reality of the act? If we are then let’s apply the same standards to the definition of offshoring, the practice of moving business processes or services to another country, especially overseas, to reduce costs. No mention of any third party here so this would apply perfectly to the Howrey situation.

My point here is not to criticize in any way shape or form, and I genuinely applaud the firm for having both the foresight and initiative to undertake the substantial time and effort in establishing a delivery center in India, but let’s call it what it is.

I have no doubt that the firm will not be engaged in the practice of Indian law, still governed by the Advocates Act of 1961 and a forbidden fruit for any foreign law firm. It also appears that the majority of the employees in Howrey’s Pune office will not be U.S. admitted attorneys, but Indian attorneys or other individuals considered here in the States as “non-lawyers.” If both of these assumptions are correct then the considerations highlighted in the four Bar Association opinions dealing with legal process outsourcing to date are also applicable in this scenario. Only through the appropriate level of supervision can it be guaranteed that the Indian attorneys are not engaged in the unauthorized practice of law. In order to discharge the overall duty of competence the supervising U.S. attorneys must be sufficiently qualified and expert in the relevant areas to be able properly to evaluate the work product coming from the firm’s Indian attorneys. If Howrey’s clients would in the ordinary course of events expect the work for which they have retained the firm to be carried out by U.S. qualified attorneys then the firm will have to obtain their clients’ prior consent before putting their Indian attorneys to work on the matter. Finally the firm will still of course have to bill their clients appropriately for the outsourced work.

Now I completely concur that elements of the supervision process, the conflict checking, etc, can be more straightforward in the Howrey model than, say, in a third party arrangement, but of course not every law firm has the resources, initiative, time or the inclination to set up their own facility offshore. I sincerely hope that more firms follow in Howrey’s footsteps as this only helps push us towards the day where utilization of the global pool of available legal talent becomes the norm rather than the exception.