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Independent U.S. Contract Lawyer Takes On Foreign LPO: Round 2

Last fall, I wrote about the risks that lawyers take when they outsource work to foreign legal process outsourcing companies. The primary risk I focused on wasn’t the possibility that the foreign provider might violate confidentiality or conflict of interest rules: it was the risk that the LPO company would produce substandard work.

My last post on this subject was prompted, in part, by the abysmally poor grammar used in a particular LPO company’s marketing piece. As I explained in comments to that post, I think the quality of a company’s marketing materials is a good predictor of the quality of its work product. Last Friday, I came across The Legal Outsourcing Handbook from LegalEase Solutions. Ever curious, I downloaded the Handbook and started to read.

I was immediately struck by the “quality” of the writing. From the first paragraph (and, as I was to find out) to the last, the Handbook is rife with grammatical and usage errors; a few typos are thrown in for good measure. These errors alone would be sufficient to disqualify LegalEase from consideration by any sole practitioner or small firm looking to outsource: the last thing that a busy solo or small firm lawyer wants to deal with when outsourcing substantive legal work is having to practically rewrite a brief to get it signature-ready.* But more serious still are the Handbook’s substantive errors.

The Handbook describes ABA Formal Op. 08-451 (Lawyer’s Obligations When Outsourcing Legal and Nonlegal Support Services) as “the first opinion issued by the ABA regarding legal outsourcing.” However, while Op. 08-451 is the first ABA ethics opinion that discusses offshore legal outsourcing, it isn’t the ABA’s first opinion concerning outsourcing.

In fact, Op. 08-451 itself discusses the ABA’s two earlier opinions concerning outsourcing: Formal Op. 00-420 (Surcharge to Client for Use of a Contract Lawyer) and Formal Op. 88-356 (Temporary Lawyers [the ABA acknowledges in Op. 08-451 that engaging the services of a temporary lawyer is “a form of outsourcing”]). Although the ABA’s ethics opinions are not binding in any state, they are widely cited in relevant opinions issued by state ethics authorities and some influential local bar associations (such as the New York City Bar Association). One would expect an LPO company like LegalEase to have a better understanding of these opinions, upon which the very viability of its business model rests.

There’s more. As every 1L knows, if you’re going to cite a case or statute in a brief, it’s important to make sure that the case or statute is still good law. In its discussion of its conflict checking systems, LegalEase quotes N.Y. Code of Professional Responsibility DR 5-105(e) (actually, it mis-cites the section as “DR 5 – 105(E), New York Lawyers Code of Ethical Responsibility”). New York abandoned the Code in favor of a modified version of the Model Rules 13 months ago.

If you’re intent on squeezing every last penny of profit out of the outsourcing equation, you may be willing to spend the time to re-write poorly-written briefs, or to submit lightly-edited versions of those same briefs to the courts, in the hope that the judges before whom you practice aren’t sticklers for good writing. But are you willing to re-do the research, too, or run the risk that the brief you submit overlooks significant cases or statutes, or cites bad law? At what point does the extra work you have to do, or the extra risk you have to take, as a result of sending legal work offshore outweigh the benefit you obtain by maximizing the spread between what you pay to outsource the work and what you bill your client for that work?

There’s no question that you’ll most likely make less profit if you work with a freelance lawyer who lives, is admitted to practice in, and works in the United States than if you hire a foreign LPO company. But there’s more to outsourcing than dollars and cents: foreign LPOs may offer a better price, but onshore freelance lawyers offer solos and small firms better value.

*Update 7/2/16: It appears that LegalEase has revised the handbook, as the grammar, while not perfect, is much improved.

Comments (12)

  1. Reply Andrea Cannavina

    Great post Lisa! Keep up the heat on these guys – not sure if it’s venture capital or what keeping them going – but honestly, they’d do well to at least invest in US based proof readers for their marketing materials! Maybe they should hire you? 😉

  2. Reply Carolyn Elefant

    Lisa,

    First, thanks for warning everyone about this issue. But I wanted to add that a foreign LPO is not necessarily going to be less expensive for legal research and writing projects.

    About 7 years ago, when LPOs first came on the scene, I explored the possibility of using such a service for some “exploratory research” for a potential civil rights case. The rate quoted was around $75 an hour, which to be honest, was not all that cheap for the type of research (again, fairly low end “lay of the land” case summaries rather than brief writing or high end analysis). In fact, I was able to find a fairly new solo who was willing to handle the project on a contract basis for $65 an hour – which was a bump up from document review rates. Plus, I was able to help a new solo earn some revenue for his practice.
    In addition, the ABA and state ethics rules favor outsourcing to American firms when it comes to mark ups. As you have mentioned in several articles, almost all jurisdictions allow lawyers to mark up rates paid to contract lawyers without disclosing the mark up to clients. By contrast, when firms outsource overseas, they must disclose the mark up (I wrote about the topic here – http://legalblogwatch.typepad.com/legal_blog_watch/2007/08/do-us-ethics-ru.html ).
    But more importantly, with the questionable reliability of foreign LPOs, any short term savings simply give rise to longer term risk in the form of potential malpractice liability. In addition, if I have to scrutinize all of the memos that I receive from a foreign LPO, I’m spending more time on the matter, which adds to the cost.

  3. Reply Lisa Solomon

    Carolyn, your input as a solo who has hired contract attorneys is invaluable.

    However, I’m not sure that I agree with you that law firms are required to disclose the rates paid to contract lawyers when they outsource overseas. None of the ethics opinions about outsourcing that I’ve read (and I’ve read them all) explicitly require such disclosure. Moreover, while I agree with your analysis that, at some point, an excessive profit margin might be considered unreasonable for the services performed (especially if the services are sub-par), I don’t think that affirmative disclosure of the exact rate paid is required.

    On the other hand, the general disclosure requirements governing the use of contract lawyers favor domestic outsourcing. In Op. 08-451, the ABA analogized contract lawyers to law firm associates, explaining that

    “a law firm that engaged a contract lawyer could add a surcharge to the cost paid by the billing lawyer provided the total charge represented a reasonable fee for the services provided to the client. This is not substantively different from the manner in which a conventional firm bills for the services of its lawyers. The firm pays a lawyer a salary, provides him with employment benefits, incurs office space and other overhead costs to support him, and also earns a profit from his services; the client generally is not informed of the details of the financial relationship between the law firm and the lawyer. Likewise, the lawyer is not obligated to inform the client how much the firm is paying a contract lawyer; the restraint is the overarching requirement that the fee charged for the services not be unreasonable.”

    A firm that bills for an associate’s time identifies the associate by name on the bill. In my view, a firm that bills for a contract lawyer’s time should similarly identify the contract lawyer by name on the bill or, if not by the individual’s name, certainly by the company’s name.

    I know that, if I were a client, I would not pay an invoice for substantive legal work performed by unidentified personnel. In light of the acknowledged difference in general quality between onshore and offshore providers, as a lawyer, I would hate to be in the position of having my client find out, after a case is lost, that I hired an offshore company to perform substantive work on a case without first obtaining my client’s consent to the arrangement.

  4. Reply Russell Smith

    Hi Lisa, Andrea, and Carolyn! I guess Twitter is not the best forum for expressing ideas on complicated subjects. So I’m glad for a chance to clarify here. According to census data, about 80% of Indians do not speak English. Of the 20% who do, the vast majority know English only as a second or third language. So I guess I’m underwhelmed that Lisa was able to find a few examples (out of an LPO industry with hundreds of companies) of Indian lawyers who make grammatical and other mistakes when writing in English. I also don’t think there is anything controversial or wrong with saying that hiring an Indian company to draft a brief or a contract, if that company’s employees cannot write effective and correct English, is a mistake. This is no matter what the supposed “cost savings” are. But the same applies to hiring U.S. law firms or U.S. contract attorneys, many of whom are unable to deliver a high-quality written product. As for the Indians, most of the legal work going to India does not involve drafting at all, but when drafting is needed, Indian providers need to offer outstanding results at a lower cost. That’s a no-brainer. Conversely, if U.S. contract attorneys can provide top-tier quality at a lower cost than the qualified Indian companies, then they deserve to be hired!

  5. Reply Lisa Solomon

    Thanks for your comment, Russell.

    As I explained in the post, the poor writing in LegalEase’s outsourcing handbook is just the tip of the iceberg. The inaccurate description of ABA Formal Op. 08-451 as “the first opinion issued by the ABA regarding legal outsourcing” and the citation to ethics guidelines that haven’t been in effect for more than 13 months are much graver errors.

    Moreover, even focusing solely on the writing, LegalEase boasts of its four-step quality control process, with projects reviewed twice by American attorneys (see http://www.legaleasesolutions.com/quality.htm). I weep for the quality of American attorneys if the Handbook is representative of the work product we can expect of our colleagues.

    I acknowledged in the comments to my last post on this subject that you can find mediocre (or worse) providers in the U.S. as well as abroad, and that “you get what you pay for” applies regardless of state or national boundaries. Still, in their attempt to land legal research and writing work (which LegalEase and Draft N Craft [the subject of my last post on foreign outsourcing] are trying to do), the foreign LPO companies I have come across have exceeded their level of competence.

    As Carolyn pointed out in her comment, a truly qualified foreign LPO provider may not charge less than a similarly qualified American lawyer. For another spin on this issue, from the LPO provider’s point of view, see today’s post at Legal Pad, entitled “When Outsourcing Proves Too Expensive, Bring it on Home,” (http://tinyurl.com/2auwlgp).

    The bottom line for solos and small firms looking to outsource is that it’s more efficient to to seek a provider among the the growing pool of qualified freelance American lawyers than to search the foreign LPO haystack for the rare provider who may be qualified to provide legal research and writing services.

  6. Reply Russell Smith

    For the most part, I don’t think U.S. law firms and solo practitioners look to India as their first choice, but rather as a last resort. If there were plenty of contract lawyers who are readily available, in adequately-sized teams, easy to locate and vet, highly qualified, consistently reliable, and better, more responsive and less expensive than the best-ranked LPO providers in India, then I doubt we would be having this conversation. Although I’ve seen plenty of bias against Indian attorneys on the part of Western lawyers and corporations, I’ve never seen anyone in the West who irrationally discriminates against Western lawyers in favor of Indians. And I personally have no complaints about U.S. contract lawyers. However, some clients of SDD Global Solutions in India have chosen our company over U.S. contract lawyers because, according to the clients, the contract lawyers they tried were (a) not consistently available to do the work, (b) required training by the clients, (c) delivered a work product that required extensive revision, and (d) usually, but not always, charged higher fees. As you have pointed out, Lisa, it also is easy to find examples of unsatisfactory Indian LPOs, so I’m certainly not saying Indian providers are always better, or even always less expensive. But when they are better, or just as qualified, and when they are less expensive, they are going to be hired. For the sake of U.S. contract attorneys, I hope no one is suggesting that lawyers or other clients should always “Buy American,” even if the result is more expensive and not any higher in quality. Consumers of legal services are increasingly unwilling to do that, just as consumers of goods are not going to stop shopping at Wal-Mart (where most of the products are from China), or stop buying foreign-made clothes, etc. And if anyone wants to appeal to compassion for the human suffering caused by unemployment and poverty, as one of your colleagues seems to have done, then suggesting a boycott of the people of India may not be the most logical or effective means, in my opinion. (And Lisa, I know you are not doing that.) A better alternative might be to find ways to compete with the Indian providers regarding all of the above-mentioned attributes that clients are seeking. It seems that a number of on-shore providers are rising up to try to meet that demand, and I wish them well!

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  8. Reply Tariq Akbar

    The handbook (barring your opinion of it) was actually written by a US attorney. As is our blog on our website.

    Your ranting appears to be flawed with the assumption that the handbook was written in India. Now that you bring it up, I think the attorneys in India may have done a better job.

  9. Reply Lisa Solomon

    Tariq, does the US attorney who wrote the Handbook do quality control on work product produced by your Indian attorneys? If so, that, too, would give me significant pause.

    If the attorney who wrote the Handbook doesn’t do QC on work produced by your Indian attorneys, what is his or her role in the company?

    Either way, the work product is objectively substandard.

  10. Reply Melody Kramer

    I think the recent reports regarding the Fronterion’s unsuccessful attempts to survey large law firms about their use of legal outsourcing is very telling. (Firms Don’t Want to Talk About Outsourcing http://t.co/guIEIZM)

    If legal outsourcing, especially in high volumes to Indian-based vendors, is so great, why won’t anyone talk about it?

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