Legal departments increasingly are outsourcing work to India and other low-cost markets, primarily for document review and other routine tasks that free up U.S.-based attorneys for higher value work.
The legal process outsourcing market, valued at $8 billion in 2020, is projected to grow at a compound annual rate of 22% from now until 2027, when it is expected to have swelled to $30 billion, according to a Global Market Insights study.
“The high cost of legal services in Europe, the U.S., and the U.K. will boost the LPO market demand,” according to the report. “High demand for precise legal assistance at affordable costs is likely to drive the industry growth.”
.Another study by Technavio said new offshore outsourcing destinations is helping drive the trend. While the Philippines, Malaysia and Vietnam are important outsourcing locales, India’s low labor costs and high availability of skilled lawyers proficient in English make it especially competitive.
“India is viewed as a place that has very high levels of education, so you’ve got very capable people at a much lower cost,” said Cynthia Dow, the Boston-based leader of management consulting firm Russell Reynolds Associates’ legal, regulatory and compliance officers practice.
Among the companies embracing India is the giant New York-based insurance brokerage Marsh McClennan, which told Law.com last year that it developed an “India-based center for global contract review to increase consistency/efficiency and lower costs, reducing spend by 80% and freeing up 8 FTE colleagues to focus on higher-value matters.”
Silicon Valley-based electronics manufacturer Flex already was manufacturing in India when it decided to capitalize on the country’s low-cost legal services, said Melissa Zujkowski, vice president of litigation and disputes for the company.
Flex has about 30,000 of its 200,000 employees in the country. The legal workers earn about $12,000 to $30,000 a year reviewing contracts, handling legal research, subpoena responses and document reviews and completing other tasks, Zujkowski said.
But tapping into low-cost legal markets isn’t without potential downsides. In addition to considering labor costs, legal departments must think about political and social risks, the Technavio report notes.
Jason Winmill, managing partner of the legal consulting firm Argopoint, said the move to outsource legal work to India is motivated by the relentless ongoing pressure to reduce in-house legal spending.
He said that, while there’s been lots of talk about outsourcing to India for decades, “when you actually look under the hood and see what’s being done,” it’s moving in a much more targeted and limited fashion and “is by no means widespread.”
“It’s a marathon, not a revolution,” he said.
He said there actually might be a pause in the momentum because of the ongoing reassessment of globalization. Pandemic-fueled supply chain woes, the war in Ukraine and other challenges have caused some businesses to rethink their global approach to business.
Most of the work companies move to India involves record-keeping, compliance and document review—mainly nondisclosure and confidentiality agreements, low-level purchasing contracts and routine aspects of Intellectual property.
“They do a lot of the basic work, instead of having a higher-cost resource do it,” said Flex’s Zujkowski. “And they know the company. They know our business. They know some of the issues that tend to come up repeatedly. So they’re able to do it seamlessly.”
Legal experts say the India-based lawyers do not have to be certified in U.S. jurisdictions because of the nature of the work they are doing. Additionally, they are working under the direction of lawyers that are admitted in U.S. jurisdictions.
Corporate governance expert Charles Elson, an attorney who recently retired as a University of Delaware professor, said the workers normally aren’t doing true legal work. Instead, they are churning out basic legal research and funneling it to a U.S. attorney.
“I don’t want to say they’re paralegals. They’re certainly elevated above that. But it’s, frankly, just that the company finds it less expensive to have someone other than a U.S. attorney do it.”
Zujkowski said some of the workers in India performing tasks for Flex’s legal department are attorneys, and some aren’t.
“I don’t mean this in any way to discredit them, but the law licensing process there is not really as rigorous as it is here,” Zujkowski told Law.com last year.
“But they do certifications to get more familiar with U.S. laws, and we train them and have our law firms work with training them.”