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In the space of five years, close to 3 billion people have been brought into the mainstream capitalist economic infrastructure (India, China, Russia and some Russian satellite countries). Those countries offer substantially lower wages with comparable, or superior education to US applicants. CBS’s 60 Minutes has highlighted the quality of the IIT (India Institute of Technology) and the number of graduates providing services to U.S. technology companies either within the United States or from India. Many U.S. corporations have relocated their customer support branches to India.
Outsourcing to India will be (U.S.) $10 billion in next five years.

As Brad Hildebrandt, a legal consultant, recently stated: “Unless you’re my auto mechanic or plumber, I don’t care where the hell you’re located.”

Hildebrandt sees 3 choices:

· Consult with a firm regarding outsourcing
· Form captive outsourcing firm with several clients
· Joint venture with existing outsourcing company

Ted Martin, CEO of Martin Partners, an executive-search firm in Chicago noted:

As far as off shoring goes, the bottom line is, when a consulting firm can replace a $48,000 hire with an $8,000 hire in India, it's going to be very difficult for this trend to reverse itself. Not only are you saving $40,000 on an annual basis per person……… but you often are getting a more qualified and experienced individual than you could in the [United] States.

Business Week, February 9 2004.

The Lou Dobbs Report (CNN) recently predicted that 8-10% of all associates hired by large law firms will be offshore hires (as in India) by 2011. Skeptical? Consider this recent U.S. department of Labor and Forrester Research report which projects the following shift of legal jobs to offshore sources:

As the report noted: “The new associates will take on roughly the same work as new associates handle in the firms now at less than 20% of the cost. First it was apparel workers-the working class-who saw their $10-an-hour jobs go overseas. Now six-figure lawyers and legal support staffs are starting to sweat.”

Still skeptical? Westlaw already has a test office in Bombay. They and their competitor Lexis started using offshore resources years ago for keying case decisions. Indeed, GE and other major corporations are already using Indian lawyers to supplant work formerly done by outside law firms in the US.

Forrester Research goes further to project that by 2015 there will be 489,000 U.S. lawyer jobs moving to lower cost countries. Mindcrest Inc., a company proving legal process outsourcing, notes the benefits of enhanced levels of service with a 30 - 70% lower cost to the customer/client. “Outsourcing Hits Legal Services,” Star Tribune, January 16, 2004.

The Harvard Business School noted in their January/February 2004 article, “Bye-Bye Billable Hours – Strategy and Innovation” that “the kind of work now being sent off shore, and expected to be increasingly sent off-shore, is work normally done by first/second-year associates in the largest law firms -- research, legal memos, that kind of thing.”

The article gives a comparison of how much it costs a firm to hire an American lawyer here, and how much it costs them to get the same work done in India. While they did not address the “practice of law” issues, our guess is that firms are using, or planning to use, some sort of American lawyer supervision to get around that issue.

New associates, or those in the pipeline should be VERY concerned. We have long questioned the ability of firms to support new associates with $135,000+ starting salaries (plus benefits) with no book of business and the need for considerable training and/or supervision.

John Henry, the Founder/CEO of elawforum, a company that aggregates large company legal problems and negotiates fixed-fee deals, said: “We just saved a client $55 million in 2 deals. Our challenge now is to do a thousand of these deals.”

The trend is clear: Drive the cost of legal services down to respond to clients’ demands for fixed fees or reduced overall cost for legal services.

Charles F. Robinson is a Board Certified Elder Law Attorney in Clearwater, Florida, who specializes in Elder Law, including asset protection planning (Medicaid), incapacity planning, disability planning, special needs planning, probate, and fiduciary services (trust and estate administration). He is a futurist with special focus on the future of the legal profession. Mr. Robinson is also a past Chair of the ABA Law Practice Management Section.