San Jose Mercury News
January 2, 2005 Sunday
Opponents of Practice Cite Risks, Ethical Issues
By KARL SCHOENBERGER, Mercury News
If William Shakespeare had written “Henry VI” under today’s economic
circumstances, he might have penned that famous line as: “The first thing we
do, let’s offshore all the lawyers.”
That version of the drama is appealing to Ajit Gupta, chief executive of
Speedera Networks, who complains about the thousands of dollars an hour he
spends on fancy U.S. patent lawyers when his network infrastructure company gets into legal
sword fights. He’s entertaining the idea of looking to
India, where Santa Clara-based Speedera has a
subsidiary, for a cheaper alternative.
”I’m willing to try anything that can reduce my costs,” Gupta said. “We’re a
global company that focuses on the bottom line. We have to be competitive,
even if it means taking some risks.”
Offshoring legal work is the latest play in the rapidly changing and
increasingly global theater of business, where all kinds of white-collar
jobs—from software engineering to tax-preparation services—are being sent
abroad. It’s still not clear how big legal offshoring will be, and skeptical
audiences question the ethics involved in sending legal casework and
privileged client information overseas.
But Gupta’s Speedera is not alone among technology companies taking the cue
on legal offshoring. Cisco Systems arranged with a U.S. law firm to have
technical writing done by engineers in India for some of its patent
applications. Microsoft had patent research done in India. General Electric
has experimented with a legal team in India to draft contracts and other
In Palo Alto, the Mumbai-based law firm Nishith Desai Associates recently
raised the curtain on IP Pro, an offshoring service supplementing its core
business of advising U.S. clients on India’s legal system. IP Pro already
has three or four “big name” clients who are “trying us out,” said the
firm’s Vijay Sambamurthy. Its staff of eight paralegals in India drafts U.S.
patent claims, which are checked for quality by a domestic law firm.
”The potential is huge,” Sambamurthy said. “You can cut your costs by at
least 40 percent.”
Some of the biggest Silicon Valley companies are waiting in the wings.
”It’s not consistent with our past practices, but we certainly would be open
to evaluating it going forward,” said Intel spokesman Chuck Mulloy. Intel’s
overseas subsidiaries have relationships with foreign law firms, he said,
but its legal department in Santa Clara hasn’t farmed out
work to offshore contractors yet.
”The devil is in the details. It all depends on what kind of legal work
we’re talking about. Some of it wouldn’t make sense.”
Steven Lundberg, a Minneapolis lawyer specializing in intellectual-property
issues, said his firm first turned to India when it couldn’t find enough
qualified local talent to proofread patent applications.
”Since all our records are online, it was easy to send them over there,”
Lundberg said. “The quality has been great, and the prices are great.” He
expanded the offshore work to searches of public-records data, but drew the
line at confidential client information.
The dialogue on legal offshoring is a sensitive one that many companies want
to avoid because of a backdrop of cutbacks and job-security worries among
employees. So it’s hard to assess how many companies are offshoring legal
But a growing number of U.S.-based companies are selling the services of
skilled Indian professionals, who perform such basic tasks as patent
research and document preparation. In-house corporate legal departments and
large patent law firms are their star customers, they say.
Abhay “Rocky” Dhir, a Dallas lawyer and entrepreneur, thinks there are very
few jobs his three lawyers in Bangalore can’t perform.
For a bargain hourly rate as low as $60 (compared with $350 at the low end
of the typical U.S. scale), Dhir’s Atlas Legal Research can study legal
precedents in state law to craft arguments in a trial brief. It’s possible
because U.S. case law is available online, and India’s English-educated
lawyers work in a common-law legal system similar to ours.
Dhir said the Indian lawyers he has recruited and trained are fully
qualified to compose legal briefs, which he carefully screens and edits to
maintain quality. He thinks they offer advantages other than their low cost.
”Because they weren’t trained in this jurisdiction, they have a fresh
perspective,” said Dhir, 28, whose company has about 50 clients and grossed
$160,000 last year. “They approach the law in a very innovative way and see
solutions even I don’t see.”
Research, not advice
Leon Steinberg, who runs the legal offshoring firm Intellevate in
Minneapolis, said his Indian lawyers in New Delhi and Bangalore provide
research for law firms and in-house corporate lawyers, but they stay clear
of legal opinions.
”We will not produce the final work product, and we don’t give legal advice
or draw conclusions,” said Steinberg, who added that many of his clients
were tech companies in Silicon Valley. “What we do is provide U.S. lawyers
with information so they can use their own training and legal experience to
make legal conclusions.”
The ethical questions depend on the type of work offshored, said Matthew
Powers, head of patent litigation in the Redwood Shores office of Weil,
Gotshal & Manges.
”My view is that legal services are no different than any other
services—there are some that can be commoditized, like data collection and
low-level legal research,” he said. “But there are some that can never be
outsourced, especially when it comes to exercising legal judgment.”
But having legal work done in India involves risks for the American lawyer,
no matter what the level of service may be, said Mark Tuft, a
legal-malpractice defense lawyer with the San Francisco firm Cooper, White &
”There are a lot of risks and ethical issues that have to be managed,” Tuft
said. “The domestic lawyer has the duty of supervising any work done
overseas. You have to ask what this does for client confidentiality and
other lawyer responsibilities. Is it the client or the lawyer who benefits
from the lower costs involved? Who’s responsible if you’re sued for legal
malpractice when the work is done offshore?”
The benefits apparently outweigh the risks for the legal offshoring
companies, which include Lawwave.com, Quislex and Office Tiger, all based in
New York, and Lexadigm Solutions of Grandville, Mich. But the firms have
fewer than a dozen lawyers on each of their payrolls in Chennai, Bangalore
and suburban Delhi.
”We’re just at the starting line with this,” said Tuft. “We don’t know how
far it is going to go. But I think law firms are going into this very slowly
and very cautiously.”