Offshore Testing
By Raj Singh, Wed Dec 7th

ON EACH OF HIS FREQUENT TRIPS TO INDIA, American entrepreneurLeon Steinberg sets aside time to have a pair of

shoes made. He insists the workmanship can't be matched in theUnited States, nor can the price. "These are

the most comfortable shoes I've ever worn," he said of a pair ofleather loafers he had on recently.

Steinberg, who was standing in his office in Noida, a high-techsuburb of New Delhi, is not in the shoe

business. He believes he's found another product that can bemade in India at high quality and low cost: legal

services. His 1 1/2-year-old company, Intellevate, specializesin intellectual property work. Its staff, about

one-fifth of them lawyers, prepares patent applications andconducts technical research on intellectual

property questions. Among its clients are the legal departmentsof Fortune 500 companies.

The market for outsourced legal work is expected to reach $163billion by next year, and India is positioned

to seize the largest share. The time difference between Indiaand the United States allows for work to be done

overnight, and many people in India's enormous workforce arecollege-educated and English-speaking.

Intellevate recently placed a want ad for a patent researcher inthe Times of India, the leading

English-language daily. The company received 1,700 résumés."There are 200 million English-speaking,

college-educated Indians and there are not 200 million jobs,"Steinberg said. Such a disparity in supply and

demand allows his company to hire credentialed, capable labor,cheaply. "We're not selling shoes," Steinberg

likes to say. "We're selling cobblers."

Puneet Mohey, president of a legal outsourcing company calledLexadigm on the other side of town, has a more

straightforward pitch: "We provide large-law-firm-quality workat literally one-third the price." Lexadigm's

rates range from $65 to $95 an hour for work that large U.S.firms might bill at $250 an hour or more. Nearly

all the employees at Mohey's company are lawyers.

With outsourcing, those who are not members of an American barare supervised, and their work vouched for, by

someone who is. "To the extent that what you have them do islegal research for U.S. firms, it's not much

different than having law students do it," said GeorgeWashington University Law School professor Thomas

Morgan, a scholar of professional responsibility.

Some of the dozen or so outsourcing companies that have sprungup over the last decade in India focus on

low-level paralegal work—keeping track of filing dates anddocument reviews. But Intellevate and Lexadigm

prefer to take on more sophisticated work like patentapplications and appellate briefs because the work

commands higher rates from clients. Lexadigm recently draftedits first brief for a U.S. Supreme Court case,

involving the application to a tax dispute of the FifthAmendment's due process clause. The brief will

ultimately be filed by an American law firm, which can use all,part, or none of Lexadigm's work—the same as

if the draft had been written by one of its own associates.

With the work being done in India becoming more sophisticated,some American attorneys are skeptical of

American firms that use outsourced legal services. "I think alawyer has a responsibility over his work and he

just can't delegate it," said former ABA president JeromeShestack, now the head of litigation at the

Philadelphia firm of Wolf, Block, Schorr and Solis-Cohen. "Theproblem with outsourcing is, how do you keep

control over it? How do you see how it's being done?"

OUTSOURCING LEGAL WORK TO INDIA began in 1995, when the34-lawyer, Dallas-based litigation firm of Bickel &

Brewer opened an office in Hyderabad. Co-founder and co-managingpartner Bill Brewer, who is 53 years old,

explained that the idea was hatched when he was out to brunchwith a relation by marriage. The relative, C. S.

Prasada Rao, was originally from India. "We were looking for newways to be more efficient in handling the

millions of pieces of information that confront us in each case.I'm not sure how it came out of the

conversation but somewhere a light went off. I asked, 'You canhave a lawyer for how much an hour in India?'

He said, 'Two dollars an hour.' We didn't make it to dinnerbefore we were setting up the subsidiary in

India."

Bickel & Brewer has since spun off its Hyderabad office, run byRao, into a separate company called Imaging &

Abstract International, which handles work for Bickel & Breweras well as other American clients. In 2001,

General Electric added a legal division to a currently existingbase of operations in India to handle legal

compliance and research for two of its divisions, GE Plasticsand GE Consumer Finance.

While it has become commonplace to outsource call centers forcustomer service and

diagnostic offices for

medical imaging, American companies tend to be reticent aboutsending legal work overseas to outsourcing

firms. Third-party outsourcing companies, like Intellevate andLexadigm, are secretive about their client

lists, concerned about a backlash from workers or customers inthe U.S. According to Leon Steinberg, one

Intellevate client company was paranoid about its Intellevateagreements becoming public because it was

fearful of how its labor unions would feel about the use ofIndian labor. "In our contract with them, it says

we will not divulge that they are a client without theiradvanced written consent," Steinberg explained. "The

next sentence says we will not seek their advanced writtenconsent."

Even Microsoft, which has been widely reported to be usingIntellevate for patent research, declined to

discuss the company beyond confirming that Microsoft is a clientand issuing a statement that "[as] a global

company, we are constantly working to improve our ability toserve our customers worldwide in the most cost

effective, efficient manner."

Given this reluctance to discuss outsourcing, convincing apotential client to accept even a free sample can

take months of lobbying. Intellevate offers to prepare at no feea mock patent application for firms it

courts, but this offer is often declined. Steinberg has beenforced to resort to more aggressive tactics.

Eighteen months after applications are filed with the U.S.Patent and Trademark Office, they become public

record. Steinberg recently had Intellevate's Indian staff combthrough a company's latest USPTO applications

for errors. When they found some, one of them serious, Steinbergcontacted the large D.C. law firm that had

filed the application. He flashed a devious smile recounting apartner's response to his unsolicited help:

"This is outrageous." If the mistake doesn't convince the D.C.firm to work with Intellevate, Steinberg said,

"there's nothing stopping us from sending it to thecorporation."

AT LEXADIGM, ATTORNEYS' SALARIES range from $6,000 to $36,000.The employees, whose résumés lead off with LLMs

from top U.S. law schools and are studded with internships atthe World Trade Organization in Geneva and

apprenticeships at the Indian Supreme Court, would earnsix-figure salaries at elite U.S. law firms. But the

education visas most of these young attorneys used to study inthe United States allow for only one year of

work after graduation, so most have to return to India to findjobs.

The disparity in salaries makes this seem like a more heroicsacrifice than it is. The lifestyle a Lexadigm or

Intellevate salary buys is in many ways more lavish than anAmerican attorney's. (And more than an Indian

attorney's—Intellevate employees make 40 percent more than newassociates at corporate law firms in India;

many left such jobs to come to Intellevate.) Savinda Gupta is a2004 graduate of Delhi University's law school

who works below her education level as a paralegal atIntellevate's office. Gupta, who wore a drab khaki

sweater highlighted by a bright pink shawl, called a dupatta,thrown across her shoulders, employs three

part-time servants, one of whom washes her two cars daily."Everybody does it," she said. "Delhi is very

dusty."

While the plight of underpaid legal researchers is unlikely tobe the next cause célébre for the

anti-sweatshop movement, legal outsourcing, whispered about now,is likely to become a hotly debated topic in

American law soon. For now, third-party outsourcers likeIntellevate and Lexadigm remain popular mostly with

corporate legal departments, which use outsourcing to keep costsdown. Large law firms have been slower to

send work to overseas outsourcers.

But what if they were to come around? Thomas Morgan, theprofessional responsibility expert, says bar

association ethics rules require law firms to pass on to clientscost savings from outsourcing. In theory, at

least, it would take only one big firm looking for a competitiveadvantage to start a bidding war that could

change the cost of buying legal advice in the U.S.

In the meantime, outsourcing firms continue to find resourcefulways to improve their product. English is the

language of business in India, but not of common parlance;written Indian English has retained much of its

Raj-era formality. Not far from the offices of a legaloutsourcing company in Mumbai called Mindcrest, a sign

over a busy intersection reads, "Jaywalking Is Injurious to YourHealth." To help their employees learn to

write simple, direct, American sentences, the company has begungiving all its new hires Hemingway's The Old

Man and the Sea. A strategy an expatriate could appreciate.

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About the author:An Eminent writer in various popular newspaper and also awebmaster of various popular company