Discuss about the Legal Outsourcing Study of British Comedian.
Legal outsourcing has become a growing trend in the legal profession. People outsource the legal services through the legal process outsourcing companies. This is the case study discussion regarding an irreverent British comedian, Sacha Baron Cohen, who is involved in defamation and dupery cases. The preparatory work was completed by a team of lawyers in Mysore, India despite of lawyers in Los Angeles. The case shows that Cohen wins the case by outsourcing the legal firms from India. This Indian Legal team helped him in winning the “Ali G” lawsuit. This report examines the importance and benefits of legal outsourcing. It also includes the risks associated with outsourcing the law firms. Furthermore, it includes various issues related to legal outsourcing and mentioned in the case study. It indicates the reasons why this case outsourced services from India as opposed to other company, like China.
Outsourcing and Legal Outsourcing
Outsourcing is the process, when any organization decides to use the resources outside the organization to handle and complete a task and service, which is previously managed in-house. Nowadays, it is very common in most of the industries, especially in the Information Technology. Most of the businesses use this new trend to decrease the costs or enhance the efficiency by shifting operations, business processes and tasks to the third party for a specific period of time (Dharamveer, 2015).
Legal outsourcing is a part of outsourcing services. Legal outsourcing is the business practice of a law firm or organization, which obtain the legal support services from an outside law corporation or any law service provider company. According to the case, the offshoring destinations for legal outsourcing are India and Philippines. The annual growth rate of this service is 20 to 30%. The corporate law departments and companies are exploring the legal outsourcing services due to escalation of costs (Oshri, Kotlarsky, & Willcocks, 2015). There are some major drivers of legal outsourcing services, which are given below;
- Advancement in the communication technology
- Increasing costs of legal services
- Growth of Internet services
- Development in the data security services
- Improvement in the Information Management Technology
There are so many firms, which are providing these outsourcing services. One of the major beneficial of legal outsourcing services is Pagea3, which was established by David Perla in the year 2004. It has headquarters in India and New York. It is providing services to various clients, which are international corporations and well-established law firms. This law firm helps other companies to improve efficiency and minimize the legal and business risks in this competitive environment (Itzkoff, 2009). Legal outsourcing can be explained as the example of globalization of production by having the benefits of lower costs in the production activities in other countries. Most of the countries outsource the legal services from Indian law firms, as they provide services favorable costs. According to recent survey, India has a large contribution in legal outsourcing and has the number of jobs in this field, which is increased to 79,000 by the year 2015 (Schwarz, 2014).
Benefits and associated risks
Outsourcing the legal services can be very beneficial for the law firms. There are various benefits to the law firm of legal outsourcing services to the foreign country. These advantages include use of external talent and skills, flexibility, cost reduction, reduction in the turnaround time. The countries, like; India and Philippines have the key benefits of legal outsourcing is the cost savings. Lawyers in the United States demand for $100 to $500 per hour for the work, whereas in India, the rate of legal services is very low, i.e. only $20 to $60 per hour. Furthermore, the firms can increase their efficiency. There is the time difference between India and United States; because of this the lawyers in the countries can basically work for 24 hours in a day (Cotts & Kufchock, 2007). For example, Pangea3 is outsourcing the legal services from other firms in Mumbai. This is providing services to more than 12 fortune 500 companies. Lawyers in United States cam emphasize on their specific tasks. The clients are more satisfied by having the legal services from foreign country. The firms with all the sizes have the benefits from the legal outsourcing. Small sized firms can take on the services on the cases, which are very large for them to handle. Large and mid-sized law organizations can make the rates of billing more competitive by getting authorized legal services at declined rate (Owen, 2008). The firms which are using legal outsourcing services from the foreign country find that it offers the advantages of having law associates, who perform the research, but at a part of cost and without appointing full time associates. The firms can have the specialized team on resolving the time consuming cases. Other benefits are like; it enhances the labor diversity in the firm. India has a different culture in comparison to United States. It will improve the cultural diversity and communication among people. The last benefit is that the Indian lawyers do not work under the American law environment directly, so they can work in more relaxed and free environment (Worstall, 2016).
Despite of these benefits, there are some costs and risks of this outsourcing. These costs are hidden since at the time, when the contract is signed with international firm. It may be possible that the law firm (vendor) could deliver the lower quality of work if it does not mention in the contract about the quality measurement standards. It can be risk for the law firm in the case of law quality, because the responsibility of the legal services comes from the law corporates instead of the organizations which they hired for outsourcing. There will be the risk to the confidential data and information, which is being exposed and there may be lack of focus from customers (Hanson, 2009). Moreover, there may be some problems related to language and cultural differences between the countries and Indian lawyers may not be aware about the legal system of United States. As discussed in the benefits, the employees are not directly supervised by the American Law firm, so the services will not be assured. If there will be any error in the case solution, then it will affect the reputation and image of firm. There may be occurrence of exploitation of the Indian workers as their bargaining power is low. In this case, the lawyers will be less dedicated to work and have less feeling of belonging to the law firm.
Amenable legal services
The legal services, which are amenable for legal outsourcing, are all the services, which do not come under the discretion of an advocate. This includes the all the tasks, like review of the documents, contacting the clients, preparing the schedule, drafting, contract among other services and other similar tasks (Vagadia, 2007). Hiring a legal assistant is also permissible, who can handle the tasks like; handling the wills, partnerships and advance orders.
Winners and Losers
In the process of legal outsourcing, there are different groups, which may gain from outsourcing of legal services. The legal departments and legal firms gain from legal outsourcing services since the services, which are carried out are very cheap (Steiger, 2009). These different groups may gain and lose from this type of outsourcing. It takes benefits to the lawyers and law firms in India. It increases in the Foreign Direct Investment in India. Use of outsourcing service is not good for the lawyers in the United States, as their work is taken over by the lawyers in India. So, they lose, if the country uses legal outsourcing. Moreover, law firms and their clients get the brilliant lawyers at affordable prices, who can work on their cases. It improves their effectiveness and efficiency. But there is a group of clients of legal firms in the United States, who have to pay high legal costs to their domestic firms for outsourcing services.
Legal Outsourcing is good or bad?
Legal outsourcing is a good thing because legal firms are able to appoint highly skilled lawyers to discuss their cases at affordable costs. Although it is very expensive to the country, which is outsourcing as the people have to pay a huge amount for the legal services. It is good to outsource preparatory work (Desai, 2009). Through this process, legal firms have duty to assist the clients to win the cases. It is beneficial for the lawyers in United States that they can finish their other important works. Outsourcing the legal services can enhance the reputation and image of law firms by higher level of efficiency. It can reduce the costs of labor and increase the labor diversity. It also lowers the money, which is required in the recruitment process due to large number of candidates in India. It also assists in increasing the disposable income of the citizens of both the countries.
However, there are some risks associated with this, like; it increases the chances of unemployment as they get the employees or lawyers from other countries. The economy of country also suffers from the process of outsourcing. It can harm the security of the information of any law firm. The major concern in legal outsourcing is the possibility of breach of confidentiality. This issue is considered as most important issue in legal process outsourcing. There is doctrine of law, i.e. “attorney-client privilege”, which states that anything, which is conveyed between a lawyer and his /her client, will be dealt with ultimate confidentiality and it is exempted from exposure in the court of law (Lacity, Burgess & Willoocks, 2014). Though, when any party discloses this private information to any other party, then the privilege is considered to be ignored. This was the reason that many legal firms hesitated to outsource the services during the early period. Another risk is that the people doing legal processes may not be complied with required ethical standards. The legal outsourcing has come in the discussion with the code of conduct, which was issued by American Bar Association. It has potential harm for the workers, as they face the strong competition since there are many options of workers due to outsourcing (D'angelo, 2007). Thus, the Indian employees feel more depressed. There will be need of more monitoring work for providing high quality work in order to avoid the errors. Over all, with the balanced organizing skills, legal outsourcing will be good to grant the advantages to both the countries, which are involved, i.e. India and United States, as mentioned in the case.
Why India, not China
As the case study shows that the company outsourced legal services from India, the reason behind this that the advocates in India charge only $20 to $60, which offers cost saving as opposed to the American lawyers, who charge between $100 to $500. The services are outsourced from India, not from other countries like; China, because Indian legal system is largely based on English common law, which also align with the American legal system by the same way (Kenny & Gordan, 2012). There are various provisions and acts, which are introduced by British and American government, are still valid in India. The law universities in India produce the lawyers, who are trained in the common law. These lawyers are well-prepared in the English in comparison to China. While the legal system in China is based on the civil law and this focuses on the leadership of communist party. It is very different from other countries and United States.
Source: IMF, Balance of Payments Statistics Yearbook, 2003
The firms do not outsource the legal services from China, because the lawyers in this country are not well-trained as Indian lawyers to handle the cases and works from United States. The laws and regulations of China government are very strict in comparison to India and there is lack of protection and security to the American legal firms. U.S. and India share very similar culture, China is very much different from these countries, so it is very difficult to make contracts with Chinese law firms. Similar culture will make the emerging lawyers easy to communicate with their seniors and co-workers (Alamgir, 2009). The Indian lawyers are trained in the common law in their universities and they can speak good English and have better English skills than people in China. So, it is easy for them to surf the documents and make the contracts for law firms in United States. The major concern is the time difference, which makes it possible for Indians to work overnight. If China will be chosen, then the process will be very difficult to manage. Another reason is that India beats China having comparatively a large number of law students. More appropriate students can be selected in India more than China. The people from China have lower education levels and they are good to do factory work (Lakshmi & Rama, 2008).
Except saving the costs, there are many other factors, which need to be considered when one wants to outsource the legal services. These factors include technical experts, who manage the improvement of work on regular basis. Another reason is quality management in the organization. The firms have to provide high quality work to the legal clients. Next factor is the knowledge of the vendor in the business environment. The ability and costs of labor should be considered. These costs include the cost of transportation and communication cost between subcontractors and law firm (Schniederjans, Schniederjans & Schniederjans, 2015). If the costs will be saved in a large amount, then outsourcing will be considered. With this, laws and regulations of different countries are also important factors to consider. The process of outsourcing requires focusing on different rules for avoiding faults and excessive violations.
The financial status of a firm is also an important consideration, because with more financial power, a law firm can possess more flexible management skills and then it can determine that whether legal outsourcing can assist itself or not. For the selection of locating the outsourcing services, developing countries will be the best place because they charge low cost for labor that makes it easier to outsource. Next is the expertise of the vendor in the space of law firm. For example, India and China will be the most appropriate choice for outsourcing services, due to their low standard of living and a number of suitable candidates.
Outsourcing is getting popularity day by day with the law firms and professionals understanding the benefits offered by the process of legal outsourcing. It benefits the legal clients and firms in different ways. Now, law firms, lawyers, courts and attorneys prefer to outsource their processes. The demand for these services is increasing continuously. Many service providers are offering quality and secure services to the lawyers. To have better services, ensure that the legal outsourcing is done with a brilliant and experienced service provider, who can provide high quality solutions at affordable rates. Thus, the above discussion demonstrates that legal outsourcing has both the sides, i.e. good and bad. It has advantages and disadvantages to both the firm and its clients. It indicates that India is the best suitable country for outsourcing the legal services in comparison to China. There are some factors, which need to be considered to determine whether the firm should outsource or not. Each firm should consider these factors to take assistance for resolving the time consuming cases or works.
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