Open the newspaper, go to an online periodical, or surf the blogosphere and you will see dominance by one legal issue that every lawyer and law student is concerned with: unemployment. The ABA’s recent figures on attorney job attrition are quite alarming; the Legal Services Industry Lost 7,000 Jobs Last Year, 1,487 legal layoffs in January, and another 2,000 attorneys and legal staff laid off in February.
Why this tsunami of legal layoffs? Large firms claim declining demand for legal services, decreased fees for the work that's left, and that cutting back on “copies, car services, and partner retreats is not an option. What many firms are not admitting to is their growing dependence upon cheap-as-all-hell outsourcing to India. This massive trend in outsourcing is not just limited to major law firms; Corporate in-house counsel has embraced this trend as well. Some of these companies include General Electric, American Express, Microsoft, and Motorola. It is not just paralegal and research that is being outsourced either, 48 of the 111 confirmed legal outsourcing companies specialize in intellectual property and patent law.
The difference in costs in choosing professionals in India over their US attorney counterparts to perform the same exact task (such as patent drafting and prior art research) is as dramatic as $6,000 annually versus $130,000 - $160,000 annually. The Indian government, seizing upon the attractiveness that legal process outsourcing has in the US, has recently finalized the rules under India’s new LLP Act which allows foreign law firms to establish a place of business in India.
So the next time the economy becomes the general scapegoat in mass legal firings, remember that the law firms themselves are to blame in part.
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