Abstract
“The Legal Forest LPO report is the only objective and realistic
information source on the legal outsourcing industry available. The authors
understand both the US legal industry and the Indian outsourcing industry from
an insider perspective, and their opinions are free from the usual hyperbole.
Anyone seeking to use LPO services or invest in this industry would do well to
read this report and take Legal Forest' s advice.” - Alok
Aggarwal, Founder and Chairman of Evalueserve
INTRODUCTION
The economy of India today has a white-hot, frenzied feel to it, reminiscent
of Silicon Valley' s web 1.0, dot.com era. In the past decade, the country' s
economy has changed from a highly-regulated, moribund local economy to one
that is a player on the international stage. Significant exports in IT and
other services industries have led to recurrent GDP growth of nearly 10%.
Young Indian professionals no longer merely speak with optimism about India' s
future, they now say that “India is the future,” as the bromide
says on t-shirts displayed by Indian Institute of Management students.
Money, the likes of which has never been seen before, is pouring into the
country at an ever-accelerating rate. The competition for labor in the major
cities is intense. Workers are swarmed upon by hungry recruiters, who come
offering huge raises and signing bonuses, and who are often empowered to hire
people on the spot. A typical young professional in India' s new economy feels
that he or she, with some gumption and a little luck, will soon become a
handsomely paid CEO or successful entrepreneur.
There are, of course, dis-analogies between the two eras. For one, this flow
of money is unlikely to stop anytime soon - in other words, this is not a
bubble. While there are some speculative investments going on, most of the
money is being invested by well-heeled MNCs looking to carry out relatively
mundane tasks, rather than investors betting on some abstract new economy.
There are bound to be blips along the way, but overall, the trend is
inexorable. And the actual amount of money being invested in India, compared
to the overall revenues of these companies is still miniscule, so it is
unlikely to dry up anytime soon.
But there is one analogy between the two eras that we think is particularly
useful for the readers of this report. And that is the phenomenon of shoddy
operations, started by inexperienced entrepreneurs with little operational
experience and flimsy business models, hoping to cash in on the boom times.
Just as many an American once thought that he or she could make a fortune by
selling X item online (e.g., socks, pet food), today there are many Indian
entrepreneurs who decide, on a whim, to start an outsourcing company in
industry Y, even if they have little or no experience in that industry.
As the readers of this report will realize, such an approach is particularly
foolish in an industry as reputation-based and conservative as the legal
industry is. If a group of callow twenty-something software engineers from
Chennai decided to put together an IT outsourcing group, we, if we were
advising them, would be circumspect about their prospects, but probably not
outright dismissive. If a group of young lawyers were to try the same thing in
legal process outsourcing (“LPO” industry), we would be highly
skeptical, to say the least. The fact that the authors of this report even
have to give such advice (and we have seen even worse, that is, LPO
entrepreneurs with no legal background at all) illustrates what we mean by the
current “dot-com” mentality in India. And it is with this caveat
emptor that we begin our exploration into the world of outsourcing.
This Legal Forest LPO industry report is the only report we are aware of that
has been written by individuals with actual operational experience in the LPO
industry, rather than by research analysts. The authors have had multiple,
extensive meetings with top-management at many of the major LPO providers, and
have visited multiple facilities.
Some other distinguishing qualities of this report:
- Authors with real US legal experience (Silicon Valley high-technology law)
- Sections on legal ethics, unauthorized practice of law and export control
- Discussion of outsourcing geographies other than India
- Written with potential consumers of LPO services (Western law firms and
law departments) as the main audience
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