http://singhassociates.in/UploadImg/NewsImages/Vol%20II%20Issue%20VIII.pdf
ETHICAL OR LEGAL - Outsourcing legal services
Benjamin H Brewster once said “lawyer starts life giving $500 worth of law for $5, and ends giving $5 worth for $500”.
Interestingly, F W Taylor father of scientific management would have referred the above condition as misalignment of labor, task and rewards system. A close look would have a few similes between what is called as principles of scientific management and the purpose of outsourcing since both concepts promote division of work (specialization), de-skilling of worker and dehumanization of workplace that are key for process excellence in business.
Most of us know that virtues of outsourcing are well recognized in the information age today be it about exploiting location advantages, gaining excellence, fostering innovation, accessing new markets and so on. Corporations as we recognize in the process of multiplying value to shareholder’s wealth, are some ways demonizing the philosophy of “doing-all-of-it-by-own”, in stepping up targeted growth engines. Partnerships are sought off shores, new geographies are explored, business models are tested and talents are accessed to create significant impact on endearing value creation for stakeholders.
The subject of outsourcing however, is no new to us and in the context of India’s growth story it is just a remarkable celebration. Thanks to the growth India has experienced in ICT, Financial services, R&D etc., in the last decade to become undoubtedly the best destinations for outsourcing work in the world.
Legal process outsourcing (famously known as LPO) is today yet another high tide in the raging seas of outsourcing that carries enough currents with it to sweep away the basic nature of law as a practice and delivery of legal services worldwide. Client’s expectations and needs of quantum quality in service delivery appear to have diametrically stretched business processes and hence rewriting new corollary in client relationship management. Those who are witness to these underlying movements will ascertain that law as a practice seesaws in its content, scope and criticality particularly when legal/non legal work in the guise of cost, quality and other strategic advantages are shipping out to different destinations. On the other hand, the visible fear of losing control of the process, shrinking job profile and risking quality of service are concerns that thwart attorneys and law firms in the US and UK from outsourcing work to nations like India.
Recognizing these imperatives the bar associations for instance of Florida, Los Angeles County, New York City, North Carolina and San Diego County, which are few significant jurisdictions have framework of rules and views with ethical and practical considerations. It is noteworthy to understand that the rules of ethics and professional responsibility are conventionally delegated by the courts to the state bar associations. The proposed considerations by any state bar are enforceable by the state court in that particular state but in absence of applicable statutes, the courts then will look up to bar associations be it local or national for necessary help.
The American Bar Association (popularly known as ABA) the largest voluntary professional membership organization in the world takes practical view of professional obligations and industry imperatives from time to time. Although the ABA Ethics Committee opinions are non-binding, yet they do serve as an important guide and provide yardsticks to address issues if any..
The landmark opinion was issued last year by the Ethics Committee of the ABA and terms like jurisdiction, competent representation, layperson, client confidentiality, client consent, supervision of non-lawyers, avoid aiding non-lawyers in the unauthorized practices of law, commodity work and so on, which have seen various interpretations are dealt under a set of considerations proposed by ABA.
The following few are some of the clarifications summarized which therefore act as building blocks in the process of outsourcing legal work:
1. Responsibility: Lawyer may outsource legal or non-legal support services provided the lawyer eventually responsible for providing competent legal services to the client since lawyers also engage various parties (including both non-lawyers and lawyers) in servicing clients
2. Diligence: Ensuring conduct of the service provider is compatible with professional obligations particularly for a distant offshore location. Important considerations are reference checks/background investigations of lawyer or non-lawyer providers/intermediaries and if required conduct interview, education background vet, site visits etc
3. Client Consent: Written confidentiality is advised however depending on the level of supervision contemplated by the outsourcing lawyer, obtaining informed client consent before engaging outside (offshore or onshore) assistance may be necessary
4. Fees: Reasonability of the fees is necessary. Permission to pass along to the client the costs of using service provider, including reasonable allocation of associated overhead expenses, but without any mark up in any ways
5. Equality: No distinction between onshore outsourcing and offshore outsourcing, with the exception of the level of diligence performed and background checking
6. Offshore Regulatory Systems: Comparability of the legal education system with that of the U.S., professional regulatory systems incorporate equivalent core ethics principles and effective disciplinary enforcement systems. In addition, legal system protects or sustains client confidentiality and provides effective remedies to the lawyer’s client for disputes rising if any
7. Practicing of Law: Each of the local bar association opinions addresses this issue, and concludes that the outsourcing of legal services, either offshore or onshore, does not constitute the unauthorized practice of law since the ABA Ethics Committee noted that it lacks authority to express an opinion regarding whether any particular service provider is engaging in unauthorized practice of law
8. Endorsement: Outsourcing is good for the health of the profession itself
9. Catalysts: ABA is instrumental in necessarily setting forth clear guidelines has immensely helped in making Lawyers and Attorneys in the U.S., to pursue outsourcing for significant advantages
All such moves and considerations appear to bring about paradigm shifts in the business landscape of legal process outsourcing. The larger question remains to be answered is whether outsourcing means for a professional lawyer in the US to decide handing over either his court, the case brief or the client relationship to the Indian legal professional?
Notes & References
1. elaw forum estimates the total cost of litigation to be $210b equivalent to one third of the after tax profit of fortune 500 companies – The Metropolitan Corporate Counsel Feb 08
2. Presently only 3% of the law firms of the USA and UK outsource their back office work to India – Value notes july 09 – Value notes
3. The India revenues from legal services off shoring are slated to grow from $146 million for the calendar year 2006 to reach $640 million by end 2010 – Value notes
4. The industry employed around 7,500 people in the legal off shoring space in India as of end 2006. The number of employees is expected to reach 32,000 by end 2010 – Value notes
5. Estimates that the number of jobs outsourced in the legal services area will grow to 35000 by 2010 and up to 79000 by 2015 – Forrester Research
6. ABA Formal Op.08-451 (2008), N.Y.C Bar Assoc. Formal Op. 2006, San Diego County Bar Assoc. Op. 2007-01
7. Florida Ethics Op. 07-2; N. C State Bar, Formal Ethics Op.12, Calif. State Bar Assoc. Formal Op. 1994-138
8. Colorado Bar Assoc. Ethics Op. 1712 (Same);IL Adv. Op. 98-02
9. N. Y. C of Professional Responsibility (the Code) – DR-1-104,DR3-102,DR4-101,DR5-105&107, DR-6-101, EC2-22, EC3-6, EC4-2, EC4-5
Thursday, October 1, 2009
Tuesday, September 15, 2009
Sunday, September 6, 2009
Chimes
http://blog.nasscom.in/nasscomnewsline/2009/06/the-impact-of-global-change-on-india%E2%80%99s-bpo-industry/
I read a book a few months ago called ‘The rule of three’, by Jagdish Seth and Rajendra Sisodia that examined patterns of market evolution in the context of radical disruption that can occur when technology, regulation or a new entry in the marketplace succeeds in altering the rules. In a nutshell, it described the phenomena where three companies evolving over time dominate any industry.
My feeling is that if all such disruptions happen at one time, the magnitude of change may swing through from companies to impacting economies. The current time is such — where the global slowdown, collapse of commodity markets, geo-political risks, the growth in the iPod culture, cloud computing, green technology, sentiments of US on outsourcing, job losses, etc., are all happening together, amidst India’s attempts to sustain it’s dominance in the BPO market globally.
It is surely a matter of concern today for us (the government, industry, professionals and institutions) to resurrect policy frameworks regarding labour, education, technology and legislation, and create an ecosystem that is best suited to sustain India’s leadership position vis-a-vis emerging competing destinations. It is important that India maintains its strategic advantage in terms of demographics, outsourcing experience, etc. At the same time, India must also recognise the shifts taking place that are shaping new paradigms in the BPO industry. These are:
1. Outsourcing vendors are scouting business in non-US regions and have a learning curve2. IT-BPOs with integrated delivery models offering scale and value will play for the long-term. Models of service delivery are evolving as nearshore, home shore, among others3. Captive units are developing business from external markets other than just serving their own businesses4. A shake up is likely, as smaller undifferentiated BPOs will be negatively impacted. Smaller BPOs, low-end commoditised services will face the heat5. Differentiation in service offerings is the *key*, viz. moving up the value chain and offering specialised services
It is also important to note that buyers are shifting focus from cost reduction to cost avoidance, value to value adds, revenue to risk sharing, performance to enhanced productivity, revenue management to hedging Forex exposures.In the effort to manage cost and mitigate risk exposures, explicit contractual contingencies are provided in the service contracts. Risk mitigation factors include not just Forex exposure but also:
1. Capacity levels, data security, flexibility in approach of the service providers and not just meeting SLAs per se2. Prior direct experience and service providers’ ability to expand or consolidate the supplier base3. Supplier expansion or consolidation/ rationalisation, which is being viewed as a means to gain economies of scale, reduce overall cost and speedy implementation of new efforts to meet the short-term demands4. Buyer behaviour, which is shifting away from project–based contract labour to long-term formalised outsourcing relationships
Business model transformation is now at a stage where the top companies in the world of outsourcing are talking about a mix of domestic, nearshore and offshore shared/captives besides hybrid models. It is now time to see high-end services getting outsourced to India. Colt, Walt Disney, MGM, Warner Brothers and many others across the spectrum are betting big on the Indian market.I would like to summarise the need by quoting Donald H McGannon who has famously said: “Leadership is action, not position.”
I read a book a few months ago called ‘The rule of three’, by Jagdish Seth and Rajendra Sisodia that examined patterns of market evolution in the context of radical disruption that can occur when technology, regulation or a new entry in the marketplace succeeds in altering the rules. In a nutshell, it described the phenomena where three companies evolving over time dominate any industry.
My feeling is that if all such disruptions happen at one time, the magnitude of change may swing through from companies to impacting economies. The current time is such — where the global slowdown, collapse of commodity markets, geo-political risks, the growth in the iPod culture, cloud computing, green technology, sentiments of US on outsourcing, job losses, etc., are all happening together, amidst India’s attempts to sustain it’s dominance in the BPO market globally.
It is surely a matter of concern today for us (the government, industry, professionals and institutions) to resurrect policy frameworks regarding labour, education, technology and legislation, and create an ecosystem that is best suited to sustain India’s leadership position vis-a-vis emerging competing destinations. It is important that India maintains its strategic advantage in terms of demographics, outsourcing experience, etc. At the same time, India must also recognise the shifts taking place that are shaping new paradigms in the BPO industry. These are:
1. Outsourcing vendors are scouting business in non-US regions and have a learning curve2. IT-BPOs with integrated delivery models offering scale and value will play for the long-term. Models of service delivery are evolving as nearshore, home shore, among others3. Captive units are developing business from external markets other than just serving their own businesses4. A shake up is likely, as smaller undifferentiated BPOs will be negatively impacted. Smaller BPOs, low-end commoditised services will face the heat5. Differentiation in service offerings is the *key*, viz. moving up the value chain and offering specialised services
It is also important to note that buyers are shifting focus from cost reduction to cost avoidance, value to value adds, revenue to risk sharing, performance to enhanced productivity, revenue management to hedging Forex exposures.In the effort to manage cost and mitigate risk exposures, explicit contractual contingencies are provided in the service contracts. Risk mitigation factors include not just Forex exposure but also:
1. Capacity levels, data security, flexibility in approach of the service providers and not just meeting SLAs per se2. Prior direct experience and service providers’ ability to expand or consolidate the supplier base3. Supplier expansion or consolidation/ rationalisation, which is being viewed as a means to gain economies of scale, reduce overall cost and speedy implementation of new efforts to meet the short-term demands4. Buyer behaviour, which is shifting away from project–based contract labour to long-term formalised outsourcing relationships
Business model transformation is now at a stage where the top companies in the world of outsourcing are talking about a mix of domestic, nearshore and offshore shared/captives besides hybrid models. It is now time to see high-end services getting outsourced to India. Colt, Walt Disney, MGM, Warner Brothers and many others across the spectrum are betting big on the Indian market.I would like to summarise the need by quoting Donald H McGannon who has famously said: “Leadership is action, not position.”
Thursday, October 4, 2007
Sunday, September 2, 2007
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