August 16, 2022

Legal Outsourcing Firms Creating Jobs for American Lawyers

Top American firms have cut hiring or moved to a lower-tier pay system for many new associates. Corporations are reducing their legal departments. Legal temp companies now pay as little as $20 a hour to board-certified lawyers for document reviews that a decade ago might have been billed at $200 an hour.

But there is at least one glimmer of light. And it comes from a surprising direction.

Outsourcing firms, the companies that in recent years added to the financial woes of the American legal profession by sending work to low-cost countries like India, are now creating jobs for lawyers in the United States.

The American salaries for outsourced work, typically in the $50,000 to $80,000 range, may look meager compared with the six figures that new associates might still hope to draw at a big firm. But outsourcing jobs typically pay better than temp work — and certainly better than no work at all.

And at that salary range, American lawyers start to look a bit more competitive with their offshore counterparts — and more attractive to potential American clients that might not be comfortable sending legal work overseas.

“If we’re going to deliver a fantastic client experience, the only way to do it is to have an onshore facility,” said Sanjay Kamlani, co-chief executive of Pangea3, a legal outsourcing firm with offices in New York and Mumbai.

Pangea3, which was bought by Thomson Reuters in November, has just opened a 400-seat office in Carrollton, Tex., a Dallas suburb. The new office means Pangea3 will have lawyers working during United States business hours, on tasks that, because of logistics or American law, can be difficult to perform outside the country — like writing and vetting export control documents, military contracts and some patent reviews.

Many of Pangea3’s main competitors are already doing legal work in the United States and have been hiring steadily in recent months. And though the industry’s total number of employees in the United States is still estimated to be only in the hundreds, analysts predict fast growth for the field.

Because legal outsourcing companies grew steadily during the recession as corporations trimmed legal staffs, the industry was able to attract investors like Thomson Reuters and Intermediate Capital Group. Now legal outsourcing companies and others are opening offices and hiring lawyers in lower-cost areas in the United States, like West Virginia and North Dakota.

Legal outsourcing companies employ about 16,000 people worldwide, according to Edward Brooks, founder of the LPO Program, which matches legal outsourcing companies with potential clients.

The industry made an estimated $400 million in revenue in 2010, according to the researcher The Datamonitor Group, which was just a tiny fraction of the world’s $200-billion-a-year legal market. But Datamonitor predicts legal outsourcing revenues will grow to $2.4 billion by 2012, based on the industry’s recent rapid expansion. In part because of the harsh economic climate of the last few years, “the reality is that the United States and the United Kingdom have many lower-cost locations and good supplies of legal professionals,” said Mark Ross, a vice president at Integreon, an outsourcing company based in Los Angeles.

Integreon has lawyers and paralegals in 17 offices around the world, including India and South Africa. But the company, which is now hiring lawyers and other legal professionals in its Fargo, N.D., and Bristol, England, offices, currently has about 500 employees in the United States and expects to have 600 by the end of the year.

In the United States, outsourcing companies are hiring lawyers from temporary legal services firms or recruiting them directly out of law school. The pay is often comparable to lawyers’ salaries in smaller cities. And the jobs can come with other benefits, like equity stakes in the company and management opportunities that might not be widely available at conventional law firms.

Lily Liu joined Pangea3’s new Texas office after six years as a temporary lawyer and previous experience as a trial lawyer in Texas.

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