Information Technology

January 22, 2007
Legal Beagles take to outsourcing in a big way

Sufia Tippu

BANGALORE -- Primarily legal outsourcing entails supporting the working of corporate legal departments, large law firms and even individual lawyers through activities like drafting contracts, online research, reviewing and reporting documents, litigation support, intellectual property researching and drafting and applying for patents. According to a recent Forrester study, the US will outsource 25,000 legal jobs to India by 2010 and the number will be around 30,000 by 2015.

Legal services are a $200-billion industry in the US and in EU and they are extremely -expensive in these geographies. For instance, services of even fresh law graduates cost anything between US $250,000 and US $300,000 per annum in the US against US $6,000 to US $15,000 in India. That means when American lawyers earn US $400 to US $600 per hour, their Indian counterparts are paid a maximum of US $50 to US $70.

“Corporations are being forced to streamline operations and cut costs in order to maintain profitability. In line with this, law firms and corporate law departments are also being subject to increasing pressures from clients to reduce costs,” said Sanjay Kamalani and David Perla, co-founders, Pangea3, a pure-play legal outsourcing firm, which now employs over 100 lawyers in India to service around 40 global clients.

India has the potential to attract legal services to the tune of US $4.5 billion by 2010, says a Value Notes study. This market scenario opens up a huge career specialization opportunity for lawyers in India. The country currently has over 850,000 legal practitioners. In addition, its 500 law schools produce around 20,000 law graduates a year of which 30 percent join law firms, 50 percent get into vanilla practice, 10 percent goes for higher studies while the rest join NGOs.

Although, a majority of legal practitioners in the country are still vanilla lawyers, many bright and young lawyers are slowly getting into tech or outsourcing space. “These days, Indian lawyers are increasingly conscious about specialization, with IT and outsourcing being a great global opportunity. It offers fantastic career options, great global exposure, opportunity to work on international transactions and contracts and great money,'' said Alex.

Pavan Duggal, eminent cyber law expert and Supreme Court advocate said, “IT is an amazing space that Indian lawyers should specialise in. It will truly make them world class professionals with better status and will give them a good exposure to cross-border business transactions, regulatory frameworks, cyber laws, data security and privacy laws, e-commerce laws of various geographies like the US, the UK, Canada, Australia or Europe. Will that not take lawyers simply global?”

Echoing this same line of thought, legal luminary Fali S Nariman, is reported to have said, “IT is an amazing area from where our lawyers can benefit from it. It will help you grow fast and become a global professional.”

Huge shortage

Although the country has a large “ supply” of lawyers, the irony is that only a few hundred actually practice tech law. As result, tech firms in the country are forced to hire IT lawyers from the US, the UK or Canada.

“Unlike in the US, Indian lawyers, by and large, have not been so open to specialisation in areas like technology. However, it’s changing with many young law graduates are eager to take up IT as a specialisation. Legal fraternity is key eco-system partner in IT,'' said Susan Donegan, a tech litigator also executive director, Computer Law Association, an apex body of tech lawyers across the globe.

Steve Davidson, another tech lawyer at Leonard, Street & Deinard, a Minnesota-based law firm also shares similar sentiments. “Despite being a tech leader, it is sad that India does not have enough tech lawyers to support the industry. But soon, the country's tech outlook will have a major bearing on its law fraternity.”

Even a business contract of US $1 million, cannot be moved out without half a dozen tech lawyers from vendor and buyer side putting their heads together into it for weeks. A US $50 million trans-boarder deal become even more complex and might need over a dozen legal experts working back and forth for weeks or months.

Academic initiatives

No doubt the demand is enormous, but supply still suffers. To bridge the gap, Karnataka Judicial Academy in association with CLA had recently introduced a tailor-made curriculum to educate lawyers across the country in various aspects of cyber laws, Internet, e-governance, digital data protection, privacy issues, cyber violations and disputes, penal procedures, enforcement laws, contracting clauses and evidence handling.

Rahul Singh, assistant professor at National Law School, said: “IT has changed the entire arena of law. That's why institutions like National Law School are taking initiatives to bring IT closer to law.''

For National Law School, IT is already an integral part of its syllabus. “Our aim is to cultivate IT savvy tech lawyers. We provide our students with tech contents and tech learning tools like the IIT Kanpur-developed, Brihaspati.”

National Law School also has an Information Technology Commission and also publishes journal called Indian Journal of Law and Technology. “When it comes to tech learning, we have the first-mover advantage among other law schools in the country,” said Singh.

Industry Initiative

In fact, having realised the potential of IT, many law firms like Amarchand Mangaldas and J Sagar, Dua Associates, CZB & Partners, run by Soli Sorabji's daughter, Zia Mody and Crawford Bayley & Company, __ who otherwise had presence only in Delhi and Mumbai __ have expanded their operations to IT-centric markets like Bangalore. Today, these firms work in tandem with global law firms like Baker & McKenzie, Freshfields, Linklaters and Clifford Chance. Rahul Mathan and Nandan Kammath are two independent lawyers who have taken to IT and expanding their business globally.

A tech-law combination is high-end, global and paying, but it involves certain challenges. For instance, a little carelessly drafted business contract can lead the buyer, provider and the lawyer who drafted it in big trouble.

Under the damage compensation clause, the use of the term `resulting from' (all consequential damages) instead of `arising from' (only direct damages) can easily land a provider in trouble with his clients. Also deep understanding of the domains, implications and the nature of the business are essential for a tech lawyer to draft and link warranty/ waiver clause, limitation of liability clause, non-solicitation clause, most favoured customer clause, etc. To draft each of these contracts that run into 300 to 600 pages needs excellent articulation, assimilation and research skills.

Traditional lawyer vs. Tech lawyer

Under a traditional scenario, law graduates join family-run/proprietary law firms, where their career path is limited. They work on low-end jobs for years, with little or no client contact for a measly pay packet. Or they can work for corporates in their legal departments, which is not an option for fresh graduates. Or they can join as tutors in law institutes, but again, that's reserved only for the experienced lot.

Under a tech environment or LPO scenario, even fresh law graduates get opportunity to work with corporate clients in the US, the UK or Europe. They get easy exposure to direct liaising with clients, opportunity to work with the best legal minds in India and abroad, also they get opportunity to specialise in niche legal areas like patents, contract drafting or legal research.