Sunday, May 11, 2008

Outsourcing legal work to India

In a May 11 article U.S. Legal Work Booms in India, the Washington Post notes:

Indian workers who once helped with legal transcription now offer services that include research, litigation support, document discovery and review, drafting of contracts and patent writing. The industry offers an attractive career path for many of the 300,000 Indians who enroll in law schools every year. India and the United States share a common-law legal system rooted in Britain's, and both conduct proceedings in English.

Although the Post mentioned patent writing, a key area of work moving to India is in the discovery area:

"The new e-discovery rules sent American companies scurrying all over the place. Neither the corporates nor the law firms in America are geared to do this kind of work at short notice. And that is where the Indian players come in. We can bring together a large number of skilled lawyers in no time at all and at one-fifth the cost," said Srinivas Pingali, executive vice president at Quatrro, which also offers technical support, credit card fraud management, consumer research and architectural services for American clients, among other work.

One recalls the post on PatentHawk titled A New Kind of Patent Boutique? which included text:

Another reason that was obvious after hearing the panelists is the relatively inelastic supply of talent graduating from law schools every year. That pool of talent hasn't grown much in decades, even as the demand for legal services has exploded.

The PatentHawk post neglected that the number of new US law grads (in range 25,000 to 50,000 (per year) over the last 20 years) is tiny compared to the overall number of lawyers (about 1 million) and that a large fraction of law grads end up with lousy jobs. Further, with India producing 300,000 grads per year, who will work at 1/5 the cost, it's not difficult to see how this is playing out.

The PatentHawk post was suggesting patent firms take a slice of patent royalties: Lawyers who (a) believe in the value of their services, (b) understand the technology patented, and (c) believe in the prospective value of the market that the patents are meant to cover should be willing to accept lower rates in exchange for a slice of future profits. The trouble is that there just aren't that many lawyers who understand law, technology, and venture capital investing. And the ones that do (think of senior partners at big law firms) generally are too comfortable with the status quo.

The PatentHawk post does not seem to reflect knowledge that the overwhelming majority of issued US patents make NO money in royalties. Large companies create big patent portfolios as bargaining chips for later cross-licensing deals. For this purpose, the patent scribes in India will work just fine.

Outsourcing and India did NOT show up in the main post, although one comment related to patent prosecution:

You're right that there's no problem on the prosecution side. The supply of talent there isn't a problem -- in addition to patent agents in the U.S., there are plenty of good ones now in India.

See also


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Blogger Unknown said...

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