Nick Kozak / For the Toronto Star
Gavin Birer owns a company called Legalwise which provides outsourced legal services.
When you think of jobs that move offshore to countries with lower labour costs, information technology, call centres and manufacturing come to mind. But legal work?
Some Toronto law firms and in-house lawyers are also delegating high volume, repetitive work to lawyers in countries like India and the Philippines. Contract reviews, drafting standard documents, and summarizing electronic discovery transcripts are all legal projects suitable for outsourcing abroad.
That’s because a lawyer in India charging $25 per hour is well paid by local standards but much cheaper than a Canadian lawyer who bills hundreds of dollars an hour.
Six years ago Gavin Birer was vice president of legal and business affairs at the foreign exchange company Travelex when he began considering better and more efficient ways to complete routine, repetitive legal tasks.
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As an in-house lawyer he had limited people available to do the work and a limited budget to delegate work to external law firms. Therefore he began investigating different models for outsourcing this type of legal services.
Birer discovered that India was already a major legal outsourcing destination because the country had English-speaking lawyers with common law training. “I was surprised to learn that these less expensive offshore lawyers were doing quality work and turning it around quickly and efficiently.”
Later in 2006 he set up the Canadian company Legalwise Outsourcing Inc. but he proceeded cautiously. Initially he sub-contracted work from his Canadian clients through a large U.S. legal company with offices and lawyers in India. But by early 2008, he started hiring his own legal team.
Legalwise now employs 35 full-time lawyers in Bangalore, India and additional lawyers are hired on contract depending on client needs.
All new hires have three-year Indian law degrees, but the company gives them additional training using materials developed for the Ontario Bar Admissions course. They also learn on the job, based on the requirements of the specific project.
The majority of Birer’s clients are internal law departments of companies with their headquarters in Toronto but he also works with law firms.
“Generally our clients are ongoing and they give us work that is volume-oriented. We recently did a project for an international publishing company that needed us to review thousands of their contracts for specific clauses.” he says.
He bills clients $25 to $30 an hour. However, the 2012 Canadian Lawyer Legal Fee Survey reports that the average hourly rates for Ontario lawyers range from $243 for new graduates to $365 for lawyers practising for 10 years.
Prospective clients considering legal outsourcing abroad always ask about quality control and privacy, but Birer says the processes he has put in place fully address these issues.
“Every piece of work is thoroughly reviewed by both a quality team in Bangalore and Legalwise’s Canadian team before it goes to the client. Our information management system is also in Canada and it is accessed by Indian lawyers via a secure connection.”
Legalwise focuses on offshoring, but there are local companies that provide outsourcing services using Canadian lawyers. Stephen Taran started the legal outsourcing network TVA in 1997. He has a network of about 75 lawyers who are independent contractors available to provide agency services for law firms, companies and government departments.
He says one reason outsourcing to Ontario lawyers can be more attractive for law firms is because law society rules allow them to increase the actual amount they paid out when they charge their own clients so they make money on the deal. In contrast, exact fees paid to foreign lawyers have to be charged as disbursements.
This means that if TVA pays the contract lawyer $150/hour, TVA can charge its lawyer client $175/hour and the lawyer retaining TVA can in turn charge his client $200/hour.
But Birer doesn’t see this as a problem, particularly for in-house legal departments that have embraced legal process outsourcing as a way to ration scarce legal resources and not as a method of generating income.
The hourly rate billed by Indian lawyers may be low as compared to Canadian rates but the future is bright for those who land jobs with LPOs. Because in India there are only five large national law firms of more than 200 lawyers and around 30 to 50 mid-size law firms with more than 20 lawyers, the market for lawyers working in law firms is limited. The vast majority of law graduates are left to practice as sole practitioners.
Raghunath Kanwa joined Legalwise in 2008. He likes the variety of the work and the international contact. He also says that in addition to a competitive, very stable income, the company offers opportunities for advancement and great work/life balance. After only five years, he is the Managing Director of the company’s Indian operation.
As offshoring for various services has matured there has been upward pressure on the cost of labour. However, Birer is not worried about wage inflation because Indian law schools are graduating 60,000-70,000 new lawyers every year.
In June 2012 Ontario licensed 1,362 lawyers to practice law. At that time, 25 per cent did not have a job related to their profession.
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