Connecticut proposes to bar outsourcing of legal work

Legal process outsourcing (LPO) company Copal Partners is planning to increase its India headcount by another 200-300 by the end of this year, even as State Representative Patricia Dillion of Connecticut has proposed a legislation to bar law companies from outsourcing legal work.

Under the legislation, offshore, unlicenced workers, engaged in the drafting, reviewing or analysing of legal documents for clients in Connecticut, could be charged with the offence of the “unauthorised practice of law.”

Joel Perlman, president and co-founder of Copal Partners, believes the industry is still at a very nascent stage and any such legislation will have limited impact in terms of job creation. “The legal outsourcing industry is still very small in terms of jobs it creates. Globally, the industry would be employing about 20,000-30,000 people,” he said.

 

Anti-outsourcing rhetoric is not new. Before the Connecticut move, Ohio Governor Ted Strickland had issued an order banning outsourcing of government information technology and back office projects. In 2009, Senators Dick Durbin and Chuck Grassley proposed a bill to amend the H1-B and L-1 visas. Despite this, US companies continue to offshore work to India and other countries.

“Offshoring American jobs is nothing new. We have seen it in manufacturing. We have seen it in customer service call centres. Now, we are seeing an undertow of white-collar jobs heading to foreign soil,” said Dillion in her news blog on the House Democrats of Connecticut.

Copal that has 1,200 employees on board, has majority of its work being delivered from its centres in Gurgaon, Delhi. It also has centres in China and Argentina that employees around 60 and 30 people, respectively.

Copal, which has around 80 clients from verticals like hedge fund, private equity funds, equity research department of multinational banks and others, saw its business grow by 35 per cent last year.

“This growth was despite the downturn that hit the financial sector hard. Our investment research practice in the credit segment grew very well throughout the year as well as business from investment banking. We are expecting to grow our top line at least 30 per cent this year,” said Perlman.

Sanjay Kamlani, co-chief executive officer of Pangea3, who recently was in talks with a client from Connecticut, feels the bill is nothing but a way to gain votes. “There is no ground for the legislation, rather it is contrary to the US Bar rules. It will not get enacted,” said Kamlani.

According to him, the LPO market in the US and Europe combined will be around $400 billion, of this only about $1 billion worth of work comes to India.

Kamlani also pointed out that lawyers with no experience get paid $160,000 per annum in the US, whereas lawyers in India will do the same work in one-tenth of the salary. “Besides every State in the US allows a lawyer to hire anybody they need to assist in their work, irrespective of geography,” said Kamlani. “Our clients are aware of the work that we are doing and from where we are doing. In no way has this impacted business. We are rather hiring more in India as there is demand for work,” said Perlman. He said deals had become bigger after the recession.

P D Mundhra, executive director, eClerx, a knowledge process outsourcing company, feels such legislations generally do not have any major impact on business.

“We do not have much play in the legal outsourcing segment. But our business model allows clients to add value and compete better on the global platform,” said Mundhra.