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Biglaw Tight-Lipped on Offshoring

Bill Heinze at I/P Updates points to an article on legal outsourcing by Bloomberg reporters Cynthia Cotts and Liane Kufchock in which they describe how clients are pressuring large law firms to cut costs by sending work to India. It is a trend, they say, that will move some 50,000 U.S. legal jobs overseas by 2015. Robert Profusek, co-head of the M&A practice at Jones Day in New York, tells Bloomberg:

"The objective is to have only the most valuable people in London or New York, and the others in India, China or Columbus, Ohio. Lawyers are service providers. We are not gods."

While Jones Day and Kirkland & Ellis both say they send work overseas, many large firms are less forthcoming about offshoring. Cotts and Kufchock write that seven of the 10 highest-grossing U.S. firms declined to comment on outsourcing. Another, Chicago's Mayer, Brown, Rowe & Maw, said it does not send work offshore.

For the firms, a key issue is disclosure, the writers say:

"U.S. law firms are required under ethics rules to disclose markups on what they pay foreign attorneys who aren't licensed to practice law in the U.S. Such rules don't apply to legal work performed by lawyers admitted to practice in U.S. jurisdictions."

Nondisclosure allows firms more leeway to mark up bills, but New York University legal ethics professor Stephen Gillers tells Bloomberg that clients are savvy to that. "They want to negotiate the markup on these charges." As for those tight lips at large firms, the CEO of one offshoring company says it is not because the firms are ashamed of outsourcing but "because they view it as a competitive advantage."

Posted by Robert J. Ambrogi on August 23, 2007 at 04:57 PM | Permalink | Comments (2)


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