As outsourcing starts to climb up the value chain, will it threaten the foundations of in-house legal departments?

The growth of India's LPO sector has led many to wonder whether the future of corporate counsel is imperiled. With an increasing number of legal functions being outsourced on a routine basis, what does the future hold in store for in-house practitioners?

Despite the possible threat, most corporate counsel are not unduly concerned. Not yet at least.

“In a corporate set up, the in-house counsel brings certain value to the table which is difficult to get from an LPO,” says Dev Bajpai, director (legal) at ICICI Venture Funds, noting that “law firms, in some ways, are already playing the role of an LPO.”

“There will always be a need for in-house corporate counsel who have a deep institutional memory and business experience in a particular industry,” adds Michael Geske, COO of Aphelion Legal Solutions.

Safe . . . for now

Rob Stichbury, the business development director at CPA agrees: “The impact on corporate counsel has been minimal so far and is likely to remain so during the next few years,” he says.

Stichbury continues, however, that “as relationships and confidence build, the trend will shift to higher value and more complex tasks.”

For the time being, it is the lower echelons of the legal profession that may face the greatest competition. “Paralegals definitely need to worry in countries like the US or UK since the outsourcing starts from this point,” says Ritesh Khosla, legal manager of Multi Screen Media in Mumbai. “With respect to corporate counsel, companies are still skeptical of outsourcing their crucial work. [But] LPOs are inching towards acquiring the complicated work that will eventually jeopardize the position of corporate counsel.”

Nonetheless, Khosla believes that recent economic changes may have given in-house lawyers a respite: “The steep and continuous rise in the salaries of Indian lawyers and depreciating dollar. This might save them from the fury of Indian LPOs,” he says.

Threats on the horizon?

Others believe that it's western lawyers at smaller firms rather than corporate counsel who should be worried. “Previously, a major law firm would instruct one of their representative law firms to assist, for example, on a major document review project . . . What we are now seeing is the corporation dictating to their US outside counsel that they must offer an offshore alternative. This will have a more immediate impact on US law firm attorneys rather than in-house counsel at corporations,” says Mark Ross of LawScribe.

But listening to the ambition of Sanjay Bhatia of SDD Global, one has to wonder if an even greater threat isn't lurking beyond the horizon. “As the users' comfort level with the providers increases, more complex tasks are being offshored,” he says. “Finally, only court appearances and offering legal advice will be functions that cannot be offshored.”

Ananth Nayak, CEO of Exactus Corporation, disagrees. Like many in the LPO industry, he says the function of companies like his is to allow corporate counsel “to expand and supplement their own resources by using offshore partners.”

“I doubt we're anywhere close to where entire in-house legal functions will be moved offshore,” he says, “but the trend is moving towards offshoring.”

UK-based entertainment lawyer Alex Hannell turned to an Indian LPO for the review of boxes of incomplete documents relating to nearly 100 films from the 1970s and 1980s. “It's the kind of thing that I just wouldn't embark on my own,” Hannell says. “It's just too big a job.”

He chose SDD Global, which “did a great job” and “saved him tens of thousands of dollars.”

Hannell, who has worked as in-house counsel at a number of large media firms, believes that Indian LPOs won't replace lawyers like him, but will instead provide them a possible remedy to the ongoing challenge of getting a large volume of work done with limited resources. Still, he does wonder what the long-term future might bring: “It may be that further down the track, it has a knockout effect on the number of people who come up through the ranks as in-house lawyers in the UK or US,” he says.

But that's not the case yet – not even close. “I don't think legal outsourcing companies are going to be any sort of threat,” says Tariq Akbar, CEO of LegalEase Solutions. “We work hard. We do good work. We're cheap. I don't think we're taking away anybody's job.”

QuisLex CEO Ram Vasudevan agrees: “we're not trying to replace the lawyers.”