The Madras high court ruled on Tuesday that lawyers not registered in India could advise clients on foreign law and continue to participate in international commercial arbitration within the country, saying it’s in the “national interest”. The court’s ruling brings clarity to the role lawyers registered overseas can play in the practice of law in India—until now a grey area.

Legal process outsourcing units (LPOs, the legal version of business process outsourcing units, or BPOs) are permitted to function in India as they are not violative of the Advocates Act, 1961, but they could not render legal advice to clients, the court ruled.

The decision does not allow foreign lawyers and firms to set up a permanent establishment in India. The court has ruled that their entry will be on a “temporary” basis, according to lawyers present in the courtroom when the operative portion of the judgement was read.

Tuesday’s ruling stems from a 2010 case brought by a Chennai lawyer, A.K. Balaji, who filed a writ petition seeking a permanent ban on foreign lawyers entering India to advise clients. Balaji filed the case against 31 foreign law firms whose representatives were “flying in and out” of India to service domestic clients.

The Union law, home and finance ministries, the Bar Council of India, the income- tax department and the Reserve Bank of India were also made parties to the litigation. Foreign law firms do not fall under the jurisdiction of the Bar Council of India, the legal profession’s regulator.

Madras high court chief justice M. Yusuf Eqbal, delivering Tuesday’s ruling, said the court found “force” in submissions made by foreign law firms that if they were not allowed to take part in negotiations and conduct arbitration proceedings in the country, “it will have a counter-productive effect on the aim of the government to make India a hub of international arbitration”.

“Therefore, to advocate a proposition that foreign lawyers or foreign law firms cannot come into India to advise their clients on foreign law would be a far-fetched and dangerous proposition and in our opinion, would be to take a step backward,” said the judgement.

“The learned counsel appearing for the foreign law firms have taken a definite stand that the clients whom they represent do not have offices in India, they do not advise their foreign clients on matters concerning Indian law, but they fly in and fly out of India only to advise and hand-hold their clients on foreign laws,” it said.

As per the ruling, foreign lawyers cannot litigate or advise clients in India on Indian law.

“I still haven’t read the judgement. It seems only ‘fly-in, fly-out’ (temporary visit) is permitted,” lawyer Senthil Kumar told Legally India, an industry website. Kumar represented 13 US law firms in the case.

Neither side chose to call the decision a victory or a defeat. “The court appears to have said that the practice of foreign lawyers assisting their clients in the course of international arbitration as well as transactional work (commercial work and negotiations governed by foreign law) isn’t violative of the Advocate’s Act. It isn’t a question of victory or defeat,” said T.K. Bhaskar, a lawyer with HSB Partners.

Bhaskar represented London-based legal firms Herbert Smith Llp and Norton Rose Llp in the case. “The judgement recognizes that foreign lawyers can accompany clients for international litigation as well as non-litigation issues,” he said.

Foreign lawyers would be permitted to participate in arbitration between Indian and foreign entities, according to Kumar.

Some issues don’t appear to have been clarified, including so-called best-friend relationships that Indian firms have with foreign partners.

Indian firms have in recent years established ties with foreign firms to benefit from each other’s practices. Employees—known as secondees—are exchanged between firms to understand each other’s work culture and clientele. Secondees from foreign companies are also employed by companies, often acting as liaison between the foreign law firm and the Indian company.

The petition in the case (A.K. Balaji vs the government of India, Ashurst Llp, White & Case et al) contended that various arms of the state were “mute spectators” and were allowing foreign lawyers to continue “illegally practising” in India.

“In a globalized scenario, we can’t keep foreign lawyers out,” said N.L. Rajah, a civil lawyer practising in the Madras high court. “But it’s important to ensure there is a reciprocal arrangement with the foreign country that’s honoured.”

In December 2009, the Bombay high court had ruled in the Lawyer’s Collective case that foreign lawyers were not permitted to practise law in India as they were not citizens of India and not enrolled under the Advocates Act.

“The Bombay high court, therefore, rightly held that establishing liaison office in India by the foreign law firm and rendering liaisoning activities in all forms cannot be permitted since such activities are opposed to the provisions of the Advocates Act and the Bar Council of India rules. We do not differ from the view taken by the Bombay high court on this aspect,” said the Madras high court, referring to the Lawyer’s Collective case.

Bar Council of India chairman Ashok Parija said he would comment on the matter only after reading the judgement. Law minister Salman Khurshid was not immediately available for comment.

Western law firms have been trimming their staff and curtailing hiring plans

As an assistant attorney general for New York State, Christopher Wheeler used to spend most of his time arguing in courtrooms in New York City.

Today, he works in a sprawling, unfinished planned suburb of New Delhi, where office buildings are sprouting from empty lots and dirt roads are fringed with fresh juice stalls and construction rubble. At Pangea 3, a legal outsourcing firm, Wheeler manages a team of 110 Indian lawyers who do the grunt work traditionally assigned to young lawyers in the United States – at a fraction of the cost.

India’s legal outsourcing industry has grown in recent years from an experimental endeavour to a small but mainstream part of the global business of law. Cash-conscious Wall Street banks, mining giants, insurance firms and industrial conglomerates are hiring lawyers in India for document review, due diligence, contract management and more.

Now, to win new clients and take on more sophisticated work, legal outsourcing firms in India are actively recruiting experienced lawyers from the West. And American and British lawyers — who might once have turned up their noses at the idea of moving to India, or harbored an outright hostility to outsourcing legal work in principle — are re-evaluating the sector.

The number of legal outsourcing companies in India has mushroomed to more than 140 at the end of 2009, from 40 in 2005, according to Valuenotes, a consulting firm in Pune. Revenue at India’s legal outsourcing firms is expected to grow to $440 million this year, up 38 per cent from 2008, and should surpass $1 billion by 2014, Valuenotes estimates.

Historical movement

“This is not a blip, this is a big historical movement,” said David B Wilkins, director of Harvard Law School’s programme on the legal profession. “There is an increasing pressure by clients to reduce costs and increase efficiency,” he added, and with companies already familiar with outsourcing tasks like information technology work to India, legal services is a natural next step.

So far, the number of Western lawyers moving to outsourcing companies could be called more of a trickle than a flood. But that may change, as more business flows out of traditional law firms and into India. Compensation for top managers at legal outsourcing firms is competitive with salaries at midsize law firms outside of major metropolitan areas of the United States, executives in the industry say. Living costs are much lower in India, and often, there is the added allure of stock in the outsourcing company.

Right now, Pangea3 is “getting more résumés from United States lawyers than we know what to do with,” said Greg McPolin, managing director of the company’s litigation services group, who divides his time between India and New York.

Outsourcing remains a highly contentious issue in the West, particularly as law firms have been trimming their staffs and curtailing hiring plans. But Western lawyers who have joined outsourcing firms are unapologetic about the shift to India.

Leah Cooper left her job as managing lawyer for the giant mining company Rio Tinto in February to become director of legal outsourcing for CPA Global, a contract legal services company with offices in Europe, the United States and India. Before hiring Cooper, CPA Global added lawyers from Bank of America and Alliance & Leicester, a British bank. The company has more than 1,500 lawyers now, and Cooper said she planned to hire hundreds in India in the next 12 months. At Rio Tinto, Cooper said, she became a champion of the idea of moving work like document review to a legal outsourcing company “because it works really well.”

Many legal outsourcing firms have offices around the world to interact with clients, but keep the majority of their employees in India; some also have a stable of lawyers in the Philippines. Thanks to India’s low wages and costs and a big pool of young, English-speaking lawyers, outsourcing firms charge from one-tenth to one-third what a Western law firm bills an hour. Even global law firms like Clifford Chance, which is based in London, are embracing the concept. “I think the toothpaste is out of the tube,” said Mark Ford, director of the firm’s Knowledge Centre, an office south of New Delhi with 30 Indian law school graduates who serve Clifford Chance’s global offices. Mr. Ford lived in India for six months to set up the Centre, and now manages it from London.

Best litigators

Many corporations agree that outsourcing legal work, in some form or another, is here to stay. “We will continue to go to big firms for the lawyers they have who are experts in subject matter, world-class thought leaders and the best litigators and regulatory lawyers around the world – and we will pay a lot of money for those lawyers,” said Janine Dascenzo, associate general counsel at General Electric.

What G E does not need, though, is the “army of associates around them,” Dascenzo said. “You don’t need a $500-an-hour associate to do things like document review and basic due diligence,” she said. Western lawyers making the leap to legal outsourcing companies come for a variety of reasons, but nearly universally, they say they stay for the opportunities to build a business and manage people.

“In many respects it is more rewarding than jobs I had in the United States,” said Wheeler, who moved to India when his Indian-born wife took a job here in 2006. “If you’re talking about 15 employees in a windowless basement office, I’m not interested in making that my life’s calling,” he recalled thinking when he started talking to Pangea3. “But building a 500-person office, now that is a real challenge.”

Shelly Dalrymple left her job as a partner at a firm in Tulsa, Oklahama, in 2007 and is now based in India as the senior vice president of global litigation services at UnitedLex, a legal outsourcing company with offices in the United States, Britain, Israel and India.
Moving to a legal outsourcing firm, especially in India, is not for everyone. About 5 per cent of Western transplants cannot handle it and move back home, managers estimate.
Some find it hard to adapt to India. Other times, the job itself does not suit them-after spending years working nearly independently as a litigator, for example, it can be hard to transition to managing and inspiring a team of young foreign lawyers. Even lawyers who stay are sometimes wistful about their previous careers. “Of course I miss litigation,” Wheeler said. But, he added, “watching people learn some of the same skills I did is gratifying.”

• Cloud concerns will increase – although I expect more companies to start implementing cloud-based solutions into their IT infrastructure, the struggle of complying with data protection laws, and a lack of contractual safeguards, will continue to slow the take-up by larger organisations.

• Mergers will increase – service providers, particularly the technology service providers, are likely to continue to find their established markets hard to predict, as customers take longer and longer to make decisions about their outsourcing strategy. I expect these pressures to lead to more consolidation in the market, and I would not be surprised to see 2 or 3 major deals announced over the next 12 months. In particular, I expect to see further consolidation among the second and third tier Indian vendors.
• Less established countries to increase their profile – Countries like Brazil and China, and possibly South Africa, Sri Lanka and Vietnam, are going to be seriously considered by companies looking to outsource beyond the traditional destinations such as India. The profile of these countries, and availability of skilled talent, has been steadily increasing and Brazil in particular is now looking to become a major player within Latin America. The introduction of data protection laws across Latin America over the last 12-18 months will also give comfort to organisations who might otherwise have been concerned about a lack of security and protection for the processing of sensitive data. Similarly, service providers are starting to shift their data centres to these regions to take advantage of these growing markets.
• Smaller deals will dominate. The trend for some time has been for customers to require shorter deals with easy routes of escape if required. Risk mitigation is the theme for most customers, and that requires a service provider to accept a shorter term, and “get out” clauses that enable the customer to exit the deal if market conditions change, or there is a change in strategy. This is, however, leading to a less strategic and more procurement-oriented mindset around outsourcing – which carries with it a risk that there will be less innovation and little in the way of transformation from service providers who have no incentive to be creative.
• Data Protection will become an increasing concern. The laws in Europe around data protection are set to change over the next couple of years, and fines for data breaches will be significantly higher. Data processors (ie: service providers) will also have regulatory responsibilities for the first time, forcing the industry to potentially adopt higher standards of security. Deals being signed will therefore need to anticipate some of these changes, and give more focus to this area, or face being renegotiated once the laws come into force.
• Legal Process Outsourcing to increase dramatically. One area of outsourcing likely to increase significantly over the next 12 months is LPO. Law firms are actively trying to minimise costs in all areas – and saving money through outsourcing is now becoming standard practice. Expect to see more service providers try to enter into this market, and for firms to continue to explore the outsourcing of legal services to offshore destinations such as India and South Africa.

There’s a startling statistic in the new “Salary Survey & Market Landscape” about law firm litigation support staffing, from New York-based The Cowen Group, a headhunter and research consultancy that focuses on electronic data discovery staffing. The sixth annual survey, released Jan. 18, 2012, was conducted in 2011, with 22 firms participating. But for the first time, the report attempted to evaluate the ratio of salary to revenue, says managing partner David Cowen. The results are intriguing.
The most dramatic finding: Revenue from litigation support services, estimated at $275 million for 2011, is expected to spike this year to $535 million — a spike of 105 percent. During 2011, law firms employed about 2,600 litigation support and EDD professionals, spending $200 million on salaries, and generating $275 million in hourly revenue, the survey reports. Cowen predicts that 57 percent of firms will add staff this year, to the tune of 375 positions — a market growth rate of 13.7 percent.
The predicted breakdown of percentage of firms adding positions in 2012:
• 44 percent analysts (100 positions), 2011 headcount 1,200.
• 38 percent specialists (85 positions), 2011 headcount 800.
• 29 percent project managers (65 positions), 2011 headcount 400.
• 22 percent regional managers (15 positions), 2011 headcount 220.
• 7 percent firmwide managers (5-7 positions), 2011 headcount 100.
8 percent firmwide directors (5-7 positions), 2011 headcount 80.
Says Cowen in the survey’s executive summary: “2011 was a pivotal year for executives who are managing litigation support at major law firms.” E-discovery practice groups converged with litigation support departments, “causing firms to invest in attorneys to manage technologists, cases, and client relationships,” while some firms struggled with “how to offer competitive, value-added support by evaluating widely varying service models and alternative billing arrangements,” he continues. The report also says that directors, firmwide managers, and EDD practice group heads have taken on “elevated executive leadership roles” and are managing departments that spend millions of dollars on salaries alone, and in return are realizing comparable revenue.
What’s driving the growth? Cowen cites four factors:
1) Exploding workload: 86 percent of firms reported that their litigation support caseload had increased in 2011, and 95 percent cited increase in volume.

2) “Hiring is concentrated in positions that are relatively highly billable and low cost,” including analysts, specialists, and project managers. The report says that analysts billed an average of 1,600 hours, at $160/hour. Specialists: 2,000 hours at $185/hour; PMs: 1,150 hour at $200/hour.
3) “Highly profitable firms are making larger investments in headcount,” the report notes, with a quarter of firms accounting for 65 percent of 2011 revenue. Those same firms are expected to add 45 percent of the new positions, and generate 68 percent of new 2012 revenue, TCG predicts.
4) Some firms are investing in upgrading their departments, “turning cost centers into revenue generators.”
Methodology: TCG surveyed 22 firms, 17 in major urban areas (five from New York; two each in San Francisco, Los Angeles, Boston, and Atlanta; one each in Chicago, Dallas, Philadelphia, and Washington, D.C.). Three participants were from secondary markets: Pittsburgh, Columbus, and Columbia. Seven firms were in the Am Law top 50, six were in the top 51-100, seven in the top 101-200, and two “others.” Respondents included 12 directors, one CIO, one chief knowledge officer, and eight managers; 95 percent of participants were heads of their departments.
A strong motivator, to no one’s surprise, appears to be corporate counsel. “Sophisticated corporations continue to invest in e-discovery capabilities, records management, and service provider relationships, creating a new client landscape for law firm e-discovery and litigation support departments,” the report notes. “Evolving client expectations require law firms to provide elevated levels of strategic, tactical, and operational competencies — all with direct implications on their hiring needs.”
The survey also evaluates trends in how firms are billing for specific EDD tasks. For example, 56 percent of respondents say they bill hourly for collection and preservation, and only 2 percent bill per gigabyte, and 33 percent say “other.” Document review — an area where many firms have struggled to find the best formula (see LTN’s February cover story, “True Grit”) — shows a whopping 79 percent of respondents saying their firm bills by the hour for those services.
MIXED REACTIONS
We polled e-discovery experts, as well as members of LTN’s Editorial Advisory Board, to get their take on the Cowen survey assertions. The reactions were mixed.
“These results don’t surprise us at all,” said attorney Matthew Kesner, CIO of Mountain View, Calif.-based Fenwick & West. “We have seen the amounts of electronically stored information increase at a rate of 150 percent every nine months. The increasing amounts of data created by all businesses seems to be the primary driver. Clients also seem more able to access the data quickly,” he said. Kesner notes that Fenwick’s workload for in-house litigation support is “way up. We are worried about burning them out.” But, he caveats, “as our methods get better and we get faster we do seem to be helping clients resolve matters an investigations faster. In that sense it is a ‘win-win.’”
Phoenix consultant Michael Arkfeld, a former federal prosecutor, says firms of all sizes are still adapting to their legal responsibilities for ESI. The rise in personnel, he suggests, may reflect the growing sophistication of counsel about the need to more thoroughly conduct identification, location, and collection, triggering the need for more skilled personnel.
Attorney Albert Barsocchini, a San Francisco-based consultant, agrees: “The growth of regional vendors and outsourcing confirms the survey,” he says. “With the current state of technology, corporations are reaching the proper balance between insourcing and outsourcing.”
David Kessler, partner and co-chair of Fulbright & Jaworski’s e-discovery and information governance practice group, says the figures may reflect “the rise in importance of litigation support groups, given our clients’ increased focus on value, innovation, and project management in the delivery of legal services. With the rise of e-discovery, sophisticated litigation support departments were the first to adopt these principles to address highly complex ESI challenges in a cost-effective manner.”
Philadelphia-based Paul Weiner, a shareholder and national e-discovery counsel at Littler Mendelson, is a member of that choir. “Even lawyers (and clients) who resisted entering the digital age now realize that there are baseline standards that must be followed when handling electronic data in litigation, and there are serious consequences for not meeting those standards. Thus, the demand for e-discovery litigation support services and skilled professionals to staff those departments has spiked,” he said. “While some law firms were early adopters, most major law firms that have not already done so have recognized that they need to have, develop, or build some in-house e-discovery and litigation support capabilities to handle modern litigation.”
Thomas Lidbury, partner at Drinker Biddle & Reath and chair and president of its subsidiary, Drinker Discovery Solutions, agrees that law firms are playing “catchup,” which may explain the hiring surge. “Litigation support services are natural law firm functions. As e-discovery emerged, the volume of data that needed to be managed grew beyond many law firms’ ability to handle it and their clients’ ability to pay for it under the traditional law firm model,” said Chicago-based Lidbury. “The gap was filled by outside technology companies and contract attorney services, and law firms were slow to adapt. Law firms are now catching up and providing the litigation-related services that their clients need. As David concludes, that means people, process and technology.”
One manager of litigation support at a Global 50 firm, who asked to speak anonymously, says that new technology is helping deliver shorter turnaround, suggests that the economy may be a key factor: “The revenue increase may also possibly relate to the willingness of clients to pursue litigation in a seemingly more stable financial environment than experienced in 2009 through 2011, thus creating more work.” While the managers’ firm has not created new posts, it is still looking to fill existing positions that are vacant.
Steve Fletcher, CIO of Parker Poe, suggests that email may be a factor in the employment hike. “Our litigators know the profound value of emails and attachments — people say things in email that you’d never find in a formal report or letter. Our daunting challenge is to make sure we deliver those key emails at trial that we culled from a hundred gigabyte mountain of data — and at a fair price to our clients,” says Fletcher, who is based in Charlotte, N.C.
Craig Ball, LTN’s e-discovery columnist, said that as the “need for and cost of litigation support has grown, firms have become more adept at accounting for the effort and passing the costs on to clients. Clients, in turn, increasingly push counsel to delegate work to lower-cost skilled personnel.” Ball, an Austin-based attorney/consultant, says that “in part, it’s a recognition that the highest paid personnel in the firm are too often the least adept at scoping or managing projects requiring significant litigation support in areas like electronic discovery.”
But Ball offers a caveat: “While it’s encouraging to see litigation support personnel grow in stature as profit centers, I hope it’s not an indication that lawyers are becoming less hands-on with the digital evidence in their cases. Each time someone stands between the lawyer and the evidence, the lawyer gleans a little less and edges closer to failure. With luck, it’s a harbinger that firms are moving beyond the creation of e-discovery practice groups as a marketing ploy and genuinely seeking to develop real expertise that clients are willing to pay for.”
One CIO at a national firm, who spoke only on condition of anonymity, said his team initially evaluated the amount of money spent sending the work to vendors about $3 million a year before the firm decided to bring much of the work in house. In the past, the equipment and software was too expensive to bring this work in house, he said, but with prices dropping, and technology improving, in-house operations now can handle more. His firm uses LexisNexis’LAW PreDiscovery, and kCura’s Relativity, among other technologies, and can now “equal the vendors” in cost and production.
“My lit department showed value to the firm by increasing monthly billing from $9K a month to $70K plus,” he said. “We did the work quicker and without errors. The lawyers did lose the free breakfasts and sports tickets brought by the vendors, but they quickly forgot about the vendors when the lawyers saw the revenue generated by the lit department,” he said.
“My costs are about $400K (people and equipment), we bring in about $900K, and we are just getting started. I expect this to hit $3 million plus as the growth of e-discovery continues. The genie is out of the bottle,” he said.
DISSENTERS
But not everyone is on the bandwagon. A few privately quipped that they expect Cowen’s numbers to “always point towards ‘Law firms must hire!’” because, after all, he’s a headhunter. Said one, “I feel like Spock from ‘Star Trek,’ with one thought, ‘Interesting … .’ ” Several suggested that the distinctions between the job titles were vague, and might need better definition.
Nixon Peabody’s John Roman Jr., director of IT operations and legal technology services, questioned the assertion that lit support staff bill an average of 2,000 hours per year. “The problem with Cowen’s analysis is it provides a 50,000-foot level of detail.” It is also a bit contradictory, says Roman, who is based in Rochester, N.Y. “For example, if tech is allowing firms to do more with less people, why will there be 375 new positions created,” an observation echoed by New York-based consultant George Rudoy, CEO of Integrated Legal Technology. Rudoy suggests that larger firms may be replacing their directors/managers with more junior staff — following a trend at both corporations and law firms for fewer high-level specialists and decision makers. “But even then the number is just too big,” he says.
But Parker Poe’s Fletcher rebuts that position: “Sure, the new technology enables our litigation teams to do twice as much — but when the mountain of e-discovery increases 10-fold, you’ll have to find other ways to increase efficiency and overall value to clients.”
Chicago’s Bruce Blank, director of litigation services and support at Foley & Lardner, says the 375 number is possible. “We increased staff by two positions last year. However, not because of increase volume, but more for efficiencies and address the quality of life for our team by adding staff and lowering overall hours per person.”
Roman also wants to know what tasks constitute billable time and “how much of the EDD specialist fees are actually being collected, as opposed to written off,” and “what specific technology are the specialists using to make their jobs so much more efficient that they can do so much more?” He agrees that data volume are growing, as is productivity from legal technology specialists, but he attributes that more to streamlined process and experience, rather than the latest tech tools. “Our litigation case load is up, which contributes to more e-discovery and billable hours per [specialist], but our intellectual property litigation cases have increased a lot of data) as well as labor … lawsuits.
Scottsdale-based Sally Gonzalez, senior director with HBR Consulting, also questions the role of write-offs. “One of the historical problems was that firms tended to write off a lot of in-house lit support for a number of reasons: Clients refused to pay but expected firms to provide the services, lawyers thought the in-house services were not efficient and so should be discounted, clients pushed for write-offs on entire bill for some reason and lawyers pushed the write-off to lit support so as not to penalize lawyers, etc.,” she observed. “How much of the increase has to do with firms dealing more realistically and proactively on these write-off pressures?”
RELATIONSHIPS
Then there are the ever-cranky relationships between firms and their counsel: “Law firms are less and less in control of the EDD process — the number of corporations calling shots in e-discovery with assistance from consultants is growing rapidly,” observed Rudoy. “It would be more logical to predict that corporations will be hiring more staff to be even more in control of their process … but law firms hiring more? Unlikely. If a law firm is not in control the process and completely at the mercy of their clients, how do you create new positions and add staff?”
Said Foley’s Blank: “I think the biggest factor that will cause the growth in lit support is the corporate and vendor demand. Litigation support in the corporate market has dramatically grown as well as the vendor market. It was if you could hear the sucking sound in the void of supply for quality people,” he said. “Technology is not getting simpler but extremely complex. Lets face it, assisted reviews using artificial intelligence is not the same discovery of our fathers. The days of attorneys just doing discovery are long, long gone and for the most part attorneys failed to stay with the technology, which is understandable. As a result the need for specialized staff grows.”
FUTURE OPPORTUNITIES
Kenneth Jones, COO of Xerdict Group, a subsidiary of Sedgwick, says current e-discovery technology is just the beginning of how litigation support teams can streamline costs and generate revenue. He suggests that firms “use collaboration technologies in non-traditional, creative ways to provide client service in new-but-related areas.” For example, firms could implement a workflow-based discovery/research system to help a corporate client track and manage discovery requests; build systems to track and manage internal investigations at companies (vis-à-vis managing legal cases); or create systems to track and manage the location of litigation document and artifacts within a company facility.
If your litigation support technology is agile and nimble litigation support teams can quickly construct a tool matching what are usually unique business needs at a corporate client, says Jones. “When you can do that, it is a great opportunity to improve client service, strength the relationship and ties between law firm and client, and provide billable services to a client.”
2) “Hiring is concentrated in positions that are relatively highly billable and low cost,” including analysts, specialists, and project managers. The report says that analysts billed an average of 1,600 hours, at $160/hour. Specialists: 2,000 hours at $185/hour; PMs: 1,150 hour at $200/hour.
3) “Highly profitable firms are making larger investments in headcount,” the report notes, with a quarter of firms accounting for 65 percent of 2011 revenue. Those same firms are expected to add 45 percent of the new positions, and generate 68 percent of new 2012 revenue, TCG predicts.
4) Some firms are investing in upgrading their departments, “turning cost centers into revenue generators.”
Methodology: TCG surveyed 22 firms, 17 in major urban areas (five from New York; two each in San Francisco, Los Angeles, Boston, and Atlanta; one each in Chicago, Dallas, Philadelphia, and Washington, D.C.). Three participants were from secondary markets: Pittsburgh, Columbus, and Columbia. Seven firms were in the Am Law top 50, six were in the top 51-100, seven in the top 101-200, and two “others.” Respondents included 12 directors, one CIO, one chief knowledge officer, and eight managers; 95 percent of participants were heads of their departments.
A strong motivator, to no one’s surprise, appears to be corporate counsel. “Sophisticated corporations continue to invest in e-discovery capabilities, records management, and service provider relationships, creating a new client landscape for law firm e-discovery and litigation support departments,” the report notes. “Evolving client expectations require law firms to provide elevated levels of strategic, tactical, and operational competencies — all with direct implications on their hiring needs.”
The survey also evaluates trends in how firms are billing for specific EDD tasks. For example, 56 percent of respondents say they bill hourly for collection and preservation, and only 2 percent bill per gigabyte, and 33 percent say “other.” Document review — an area where many firms have struggled to find the best formula (see LTN’s February cover story, “True Grit”) — shows a whopping 79 percent of respondents saying their firm bills by the hour for those services.
MIXED REACTIONS
We polled e-discovery experts, as well as members of LTN’s Editorial Advisory Board, to get their take on the Cowen survey assertions. The reactions were mixed.
“These results don’t surprise us at all,” said attorney Matthew Kesner, CIO of Mountain View, Calif.-based Fenwick & West. “We have seen the amounts of electronically stored information increase at a rate of 150 percent every nine months. The increasing amounts of data created by all businesses seems to be the primary driver. Clients also seem more able to access the data quickly,” he said. Kesner notes that Fenwick’s workload for in-house litigation support is “way up. We are worried about burning them out.” But, he caveats, “as our methods get better and we get faster we do seem to be helping clients resolve matters an investigations faster. In that sense it is a ‘win-win.’”
Phoenix consultant Michael Arkfeld, a former federal prosecutor, says firms of all sizes are still adapting to their legal responsibilities for ESI. The rise in personnel, he suggests, may reflect the growing sophistication of counsel about the need to more thoroughly conduct identification, location, and collection, triggering the need for more skilled personnel.
Attorney Albert Barsocchini, a San Francisco-based consultant, agrees: “The growth of regional vendors and outsourcing confirms the survey,” he says. “With the current state of technology, corporations are reaching the proper balance between insourcing and outsourcing.”
David Kessler, partner and co-chair of Fulbright & Jaworski’s e-discovery and information governance practice group, says the figures may reflect “the rise in importance of litigation support groups, given our clients’ increased focus on value, innovation, and project management in the delivery of legal services. With the rise of e-discovery, sophisticated litigation support departments were the first to adopt these principles to address highly complex ESI challenges in a cost-effective manner.”
Philadelphia-based Paul Weiner, a shareholder and national e-discovery counsel at Littler Mendelson, is a member of that choir. “Even lawyers (and clients) who resisted entering the digital age now realize that there are baseline standards that must be followed when handling electronic data in litigation, and there are serious consequences for not meeting those standards. Thus, the demand for e-discovery litigation support services and skilled professionals to staff those departments has spiked,” he said. “While some law firms were early adopters, most major law firms that have not already done so have recognized that they need to have, develop, or build some in-house e-discovery and litigation support capabilities to handle modern litigation.”
Thomas Lidbury, partner at Drinker Biddle & Reath and chair and president of its subsidiary, Drinker Discovery Solutions, agrees that law firms are playing “catchup,” which may explain the hiring surge. “Litigation support services are natural law firm functions. As e-discovery emerged, the volume of data that needed to be managed grew beyond many law firms’ ability to handle it and their clients’ ability to pay for it under the traditional law firm model,” said Chicago-based Lidbury. “The gap was filled by outside technology companies and contract attorney services, and law firms were slow to adapt. Law firms are now catching up and providing the litigation-related services that their clients need. As David concludes, that means people, process and technology.”
One manager of litigation support at a Global 50 firm, who asked to speak anonymously, says that new technology is helping deliver shorter turnaround, suggests that the economy may be a key factor: “The revenue increase may also possibly relate to the willingness of clients to pursue litigation in a seemingly more stable financial environment than experienced in 2009 through 2011, thus creating more work.” While the managers’ firm has not created new posts, it is still looking to fill existing positions that are vacant.
Steve Fletcher, CIO of Parker Poe, suggests that email may be a factor in the employment hike. “Our litigators know the profound value of emails and attachments — people say things in email that you’d never find in a formal report or letter. Our daunting challenge is to make sure we deliver those key emails at trial that we culled from a hundred gigabyte mountain of data — and at a fair price to our clients,” says Fletcher, who is based in Charlotte, N.C.
Craig Ball, LTN’s e-discovery columnist, said that as the “need for and cost of litigation support has grown, firms have become more adept at accounting for the effort and passing the costs on to clients. Clients, in turn, increasingly push counsel to delegate work to lower-cost skilled personnel.” Ball, an Austin-based attorney/consultant, says that “in part, it’s a recognition that the highest paid personnel in the firm are too often the least adept at scoping or managing projects requiring significant litigation support in areas like electronic discovery.”
But Ball offers a caveat: “While it’s encouraging to see litigation support personnel grow in stature as profit centers, I hope it’s not an indication that lawyers are becoming less hands-on with the digital evidence in their cases. Each time someone stands between the lawyer and the evidence, the lawyer gleans a little less and edges closer to failure. With luck, it’s a harbinger that firms are moving beyond the creation of e-discovery practice groups as a marketing ploy and genuinely seeking to develop real expertise that clients are willing to pay for.”
One CIO at a national firm, who spoke only on condition of anonymity, said his team initially evaluated the amount of money spent sending the work to vendors about $3 million a year before the firm decided to bring much of the work in house. In the past, the equipment and software was too expensive to bring this work in house, he said, but with prices dropping, and technology improving, in-house operations now can handle more. His firm uses LexisNexis’LAW PreDiscovery, and kCura’s Relativity, among other technologies, and can now “equal the vendors” in cost and production.
“My lit department showed value to the firm by increasing monthly billing from $9K a month to $70K plus,” he said. “We did the work quicker and without errors. The lawyers did lose the free breakfasts and sports tickets brought by the vendors, but they quickly forgot about the vendors when the lawyers saw the revenue generated by the lit department,” he said.
“My costs are about $400K (people and equipment), we bring in about $900K, and we are just getting started. I expect this to hit $3 million plus as the growth of e-discovery continues. The genie is out of the bottle,” he said.
DISSENTERS
But not everyone is on the bandwagon. A few privately quipped that they expect Cowen’s numbers to “always point towards ‘Law firms must hire!’” because, after all, he’s a headhunter. Said one, “I feel like Spock from ‘Star Trek,’ with one thought, ‘Interesting … .’ ” Several suggested that the distinctions between the job titles were vague, and might need better definition.
Nixon Peabody’s John Roman Jr., director of IT operations and legal technology services, questioned the assertion that lit support staff bill an average of 2,000 hours per year. “The problem with Cowen’s analysis is it provides a 50,000-foot level of detail.” It is also a bit contradictory, says Roman, who is based in Rochester, N.Y. “For example, if tech is allowing firms to do more with less people, why will there be 375 new positions created,” an observation echoed by New York-based consultant George Rudoy, CEO of Integrated Legal Technology. Rudoy suggests that larger firms may be replacing their directors/managers with more junior staff — following a trend at both corporations and law firms for fewer high-level specialists and decision makers. “But even then the number is just too big,” he says.
But Parker Poe’s Fletcher rebuts that position: “Sure, the new technology enables our litigation teams to do twice as much — but when the mountain of e-discovery increases 10-fold, you’ll have to find other ways to increase efficiency and overall value to clients.”
Chicago’s Bruce Blank, director of litigation services and support at Foley & Lardner, says the 375 number is possible. “We increased staff by two positions last year. However, not because of increase volume, but more for efficiencies and address the quality of life for our team by adding staff and lowering overall hours per person.”
Roman also wants to know what tasks constitute billable time and “how much of the EDD specialist fees are actually being collected, as opposed to written off,” and “what specific technology are the specialists using to make their jobs so much more efficient that they can do so much more?” He agrees that data volume are growing, as is productivity from legal technology specialists, but he attributes that more to streamlined process and experience, rather than the latest tech tools. “Our litigation case load is up, which contributes to more e-discovery and billable hours per [specialist], but our intellectual property litigation cases have increased a lot of data) as well as labor … lawsuits.
Scottsdale-based Sally Gonzalez, senior director with HBR Consulting, also questions the role of write-offs. “One of the historical problems was that firms tended to write off a lot of in-house lit support for a number of reasons: Clients refused to pay but expected firms to provide the services, lawyers thought the in-house services were not efficient and so should be discounted, clients pushed for write-offs on entire bill for some reason and lawyers pushed the write-off to lit support so as not to penalize lawyers, etc.,” she observed. “How much of the increase has to do with firms dealing more realistically and proactively on these write-off pressures?”
RELATIONSHIPS
Then there are the ever-cranky relationships between firms and their counsel: “Law firms are less and less in control of the EDD process — the number of corporations calling shots in e-discovery with assistance from consultants is growing rapidly,” observed Rudoy. “It would be more logical to predict that corporations will be hiring more staff to be even more in control of their process … but law firms hiring more? Unlikely. If a law firm is not in control the process and completely at the mercy of their clients, how do you create new positions and add staff?”
Said Foley’s Blank: “I think the biggest factor that will cause the growth in lit support is the corporate and vendor demand. Litigation support in the corporate market has dramatically grown as well as the vendor market. It was if you could hear the sucking sound in the void of supply for quality people,” he said. “Technology is not getting simpler but extremely complex. Lets face it, assisted reviews using artificial intelligence is not the same discovery of our fathers. The days of attorneys just doing discovery are long, long gone and for the most part attorneys failed to stay with the technology, which is understandable. As a result the need for specialized staff grows.”
FUTURE OPPORTUNITIES
Kenneth Jones, COO of Xerdict Group, a subsidiary of Sedgwick, says current e-discovery technology is just the beginning of how litigation support teams can streamline costs and generate revenue. He suggests that firms “use collaboration technologies in non-traditional, creative ways to provide client service in new-but-related areas.” For example, firms could implement a workflow-based discovery/research system to help a corporate client track and manage discovery requests; build systems to track and manage internal investigations at companies (vis-à-vis managing legal cases); or create systems to track and manage the location of litigation document and artifacts within a company facility.
If your litigation support technology is agile and nimble litigation support teams can quickly construct a tool matching what are usually unique business needs at a corporate client, says Jones. “When you can do that, it is a great opportunity to improve client service, strength the relationship and ties between law firm and client, and provide billable services to a client.”

LONDON—Amid the worsening euro-zone crisis, a trade official here said British private investments in the Philippines and Southeast Asian countries would continue to increase, particularly in the outsourcing sectors on finance and legal services as cash-rich companies remain on a “wait and see” mode on European economies.

An official of the UK Trade and Investment said Britain seeks to intensify its outsourcing services now that the euro-zone crisis is crippling half of Europe’s economies.

“UK companies now tend to diversify investments abroad and there is a bigger shift toward Southeast Asia,” an official of UKTI told visiting journalists here.

The trade official also said it is “extremely unlikely to happen” that Britain will restrict its private businesses to outsource services similar to the US pending bill to ban American companies to outsource services to generate domestic jobs.

“There is no suggestion that we would go down that route [US restriction on outsourcing],” said the trade official, stressing that “free marketers in the UK is a good thing.”

At the same time, the trade official assured that there will be no job losses for Filipino nurses in the UK even as the domestic economy is highly exposed to the euro-zone crisis.

“The Philippines is covered by strict visa regime but since there is still high shortage of nurses here so UK will continue to hire nurses from the Philippines,” said the trade official.

An estimated 100,000 Filipino nurses are currently deployed in Britain.

She said Britain is strengthening shift to knowledge-intensive sector which is benefiting a lot from outsourcing services.

The Philippines, as a second top source of outsourcing services, with 600,000 Filipinos employed in business process outsourcing (BPO) sector, is worried over possible job losses as US president Obama is backing a legislative measure to restrict American companies to outsource services.

The trade official said the Philippines is among the top 19 countries in Asia for British investments and likely to get a huge share of interests particularly in outsourcing.

Britain tops foreign direct investments in the Philippines particularly in retails shops, insurances and BPO companies.

20 Jan 2012 | 00:00 |

• Law Firm: Olswang
• Tags: Outsourcing

Top 50 firm to appoint three-strong panel of low-cost providers to respond to client calls for value

Olswang is set to appoint a panel of legal process outsourcers (LPOs) to carry out low-value document review work for the firm.

The firm has identified a shortlist of seven LPOs with a view to selecting three to act as its preferred providers 
when required.

Olswang has previously only used LPOs for document management work on contentious cases on an ad hoc basis. However, the firm has now taken the view that it would be better served by having a panel of LPOs in place to call on when required.

Chief executive David Stewart commented: “We  have identified a panel of LPOs to ensure that we have a better understanding of the sector and to help us  establish good working relationships with our preferred providers. Our aim is to have real and innovative relationships  with a range of LPOs, as the market continues to require us to deliver more for less, and LPOs are a part of the way we can do that.”

Mid-market firms are facing increasing pressure to demonstrate that they have the capability to take on large mandates and maintain competitive pricing, with Travers Smith outlining plans to appoint a three-strong panel of organisations to outsource legal work 
to in anticipation of growing client demand last spring.

The firm is still deciding on the make-up of the panel, which will comprise either three LPOs, three regional firms or a combination of the two.

Olswang held its annual partnership conference in November last year in Madrid, with the firm outlining its strategic direction for 2012, which will see it focus on integrating its international platform, growing its technology practice globally and capturing more work from Africa, India and the Middle East, where the firm does not currently have any offices.