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May|June 2005
Double Daylight By Margot Sanger-Katz
Made in India By Daniel Brook
Sleepstalking By Aaron Dalton
Rodzilla By Suzanne Sataline
Old Yeller By Suzanne Snider
Cases & Controversies
The Prudent Jurist By William H. Simon

Made in India

Are your lawyers in New York or New Delhi?

By Daniel Brook

ON EACH OF HIS FREQUENT TRIPS TO INDIA, American entrepreneur Leon Steinberg sets aside time to have a pair of shoes made. He insists the workmanship can't be matched in the United States, nor can the price. "These are the most comfortable shoes I've ever worn," he said of a pair of leather loafers he had on recently. Steinberg, who was standing in his office in Noida, a high-tech suburb of New Delhi, is not in the shoe business. He believes he's found another product that can be made in India at high quality and low cost: legal services. His 1 1/2-year-old company, Intellevate, specializes in intellectual property work. Its staff, about one-fifth of them lawyers, prepares patent applications and conducts technical research on intellectual property questions. Among its clients are the legal departments of Fortune 500 companies.

The market for outsourced legal work is expected to reach $163 billion by next year, and India is positioned to seize the largest share. The time difference between India and the United States allows for work to be done overnight, and many people in India's enormous workforce are college-educated and English-speaking. Intellevate recently placed a want ad for a patent researcher in the Times of India, the leading English-language daily. The company received 1,700 résumés. "There are 200 million English-speaking, college-educated Indians and there are not 200 million jobs," Steinberg said. Such a disparity in supply and demand allows his company to hire credentialed, capable labor, cheaply. "We're not selling shoes," Steinberg likes to say. "We're selling cobblers."

Puneet Mohey, president of a legal outsourcing company called Lexadigm on the other side of town, has a more straightforward pitch: "We provide large-law-firm-quality work at literally one-third the price." Lexadigm's rates range from $65 to $95 an hour for work that large U.S. firms might bill at $250 an hour or more. Nearly all the employees at Mohey's company are lawyers.

With outsourcing, those who are not members of an American bar are supervised, and their work vouched for, by someone who is. "To the extent that what you have them do is legal research for U.S. firms, it's not much different than having law students do it," said George Washington University Law School professor Thomas Morgan, a scholar of professional responsibility.

Some of the dozen or so outsourcing companies that have sprung up over the last decade in India focus on low-level paralegal work—keeping track of filing dates and document reviews. But Intellevate and Lexadigm prefer to take on more sophisticated work like patent applications and appellate briefs because the work commands higher rates from clients. Lexadigm recently drafted its first brief for a U.S. Supreme Court case, involving the application to a tax dispute of the Fifth Amendment's due process clause. The brief will ultimately be filed by an American law firm, which can use all, part, or none of Lexadigm's work—the same as if the draft had been written by one of its own associates.

With the work being done in India becoming more sophisticated, some American attorneys are skeptical of American firms that use outsourced legal services. "I think a lawyer has a responsibility over his work and he just can't delegate it," said former ABA president Jerome Shestack, now the head of litigation at the Philadelphia firm of Wolf, Block, Schorr and Solis-Cohen. "The problem with outsourcing is, how do you keep control over it? How do you see how it's being done?"

OUTSOURCING LEGAL WORK TO INDIA began in 1995, when the 34-lawyer, Dallas-based litigation firm of Bickel & Brewer opened an office in Hyderabad. Co-founder and co-managing partner Bill Brewer, who is 53 years old, explained that the idea was hatched when he was out to brunch with a relation by marriage. The relative, C. S. Prasada Rao, was originally from India. "We were looking for new ways to be more efficient in handling the millions of pieces of information that confront us in each case. I'm not sure how it came out of the conversation but somewhere a light went off. I asked, 'You can have a lawyer for how much an hour in India?' He said, 'Two dollars an hour.' We didn't make it to dinner before we were setting up the subsidiary in India."

Bickel & Brewer has since spun off its Hyderabad office, run by Rao, into a separate company called Imaging & Abstract International, which handles work for Bickel & Brewer as well as other American clients. In 2001, General Electric added a legal division to a currently existing base of operations in India to handle legal compliance and research for two of its divisions, GE Plastics and GE Consumer Finance.

While it has become commonplace to outsource call centers for customer service and diagnostic offices for medical imaging, American companies tend to be reticent about sending legal work overseas to outsourcing firms. Third-party outsourcing companies, like Intellevate and Lexadigm, are secretive about their client lists, concerned about a backlash from workers or customers in the U.S. According to Leon Steinberg, one Intellevate client company was paranoid about its Intellevate agreements becoming public because it was fearful of how its labor unions would feel about the use of Indian labor. "In our contract with them, it says we will not divulge that they are a client without their advanced written consent," Steinberg explained. "The next sentence says we will not seek their advanced written consent."

Even Microsoft, which has been widely reported to be using Intellevate for patent research, declined to discuss the company beyond confirming that Microsoft is a client and issuing a statement that "[as] a global company, we are constantly working to improve our ability to serve our customers worldwide in the most cost effective, efficient manner."

Given this reluctance to discuss outsourcing, convincing a potential client to accept even a free sample can take months of lobbying. Intellevate offers to prepare at no fee a mock patent application for firms it courts, but this offer is often declined. Steinberg has been forced to resort to more aggressive tactics. Eighteen months after applications are filed with the U.S. Patent and Trademark Office, they become public record. Steinberg recently had Intellevate's Indian staff comb through a company's latest USPTO applications for errors. When they found some, one of them serious, Steinberg contacted the large D.C. law firm that had filed the application. He flashed a devious smile recounting a partner's response to his unsolicited help: "This is outrageous." If the mistake doesn't convince the D.C. firm to work with Intellevate, Steinberg said, "there's nothing stopping us from sending it to the corporation."

AT LEXADIGM, ATTORNEYS' SALARIES range from $6,000 to $36,000. The employees, whose résumés lead off with LLMs from top U.S. law schools and are studded with internships at the World Trade Organization in Geneva and apprenticeships at the Indian Supreme Court, would earn six-figure salaries at elite U.S. law firms. But the education visas most of these young attorneys used to study in the United States allow for only one year of work after graduation, so most have to return to India to find jobs.

The disparity in salaries makes this seem like a more heroic sacrifice than it is. The lifestyle a Lexadigm or Intellevate salary buys is in many ways more lavish than an American attorney's. (And more than an Indian attorney's—Intellevate employees make 40 percent more than new associates at corporate law firms in India; many left such jobs to come to Intellevate.) Savinda Gupta is a 2004 graduate of Delhi University's law school who works below her education level as a paralegal at Intellevate's office. Gupta, who wore a drab khaki sweater highlighted by a bright pink shawl, called a dupatta, thrown across her shoulders, employs three part-time servants, one of whom washes her two cars daily. "Everybody does it," she said. "Delhi is very dusty."

While the plight of underpaid legal researchers is unlikely to be the next cause célébre for the anti-sweatshop movement, legal outsourcing, whispered about now, is likely to become a hotly debated topic in American law soon. For now, third-party outsourcers like Intellevate and Lexadigm remain popular mostly with corporate legal departments, which use outsourcing to keep costs down. Large law firms have been slower to send work to overseas outsourcers.

But what if they were to come around? Thomas Morgan, the professional responsibility expert, says bar association ethics rules require law firms to pass on to clients cost savings from outsourcing. In theory, at least, it would take only one big firm looking for a competitive advantage to start a bidding war that could change the cost of buying legal advice in the U.S.

In the meantime, outsourcing firms continue to find resourceful ways to improve their product. English is the language of business in India, but not of common parlance; written Indian English has retained much of its Raj-era formality. Not far from the offices of a legal outsourcing company in Mumbai called Mindcrest, a sign over a busy intersection reads, "Jaywalking Is Injurious to Your Health." To help their employees learn to write simple, direct, American sentences, the company has begun giving all its new hires Hemingway's The Old Man and the Sea. A strategy an expatriate could appreciate.

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