Will 8% of all lawyer jobs be "outsourced" by 2015? So
Forrester Research would have
it. GE’s inhouse department claims to have already saved
$2-million by putting eight lawyers and nine paralegals in Gurgaon,
India. So the (financial) handwriting is on the wall; is this
occasion for hand-wringing about the coming impoverishment of the profession,
or for celebration about another triumph of innovation?
Neither. To begin with (unlike the ur-outsourcing example of
call centers, for instance), the vast majority of what lawyers do fails
both tests of a task susceptible to outsourcing. Those two tests
are:
- that the task be ultimately reducible to a set of rules, a grand
flow-chart, if you will; and - that it need not be performed face-to-face.
The second test will save all our waiters and hairdressers, police
and firemen, doctors and nurses, teachers and hardhats; the first test
will save all our "knowledge workers." To be sure,
as GE demonstrates, some "lawyerly" activities—massive
document reviews, drafting boilerplate, low-risk agreements—can
and should be outsourced. Not only are they intellectually unsatisfying,
they are not tremendously remunerative. (This apes my instinctive
comeback to politicians pandering to laid-off textile mill workers
with promises of subsidies or trade barriers: "So, let me understand,
your dream for your children is that they can grow up and go to work
in a textile mill?")
More intriguing than the question of low-on-the-foodchain inhouse
work being farmed out is whether there’s to be a role for outsourcing
in law firms themselves.
A far more thoughtful, and comprehensive, piece is
provided by a Hildebrandt partner writing in Legal Week. He
provides the requisite background and overview of the attractions and
demerits of outsourcing, follows with a virtual checklist of what an
Executive Director would want to analyze in reaching a go/no-go outsourcing
decision, and points out that the benefits include not just cost-saving,
but flexibility, quality-for-money, and 24/7 operational capability.
So outsourcing is here to stay, and here to grow. We
see yet another example of David Ricardo’s (1772–1823) principle of
comparative advantage, and the benefits of trade and specializing in
what one does best. Stanislaw Ulam once challenged Paul Samuelson
to name a single principle in economics that was both true and non-trivial,
and after some thought, Samuelson responded with Ricardo’s theory:
“That
it is logically true need not be argued before a mathematician; that
it is not trivial is attested by the thousands of important and intelligent
men who have never been able to grasp the doctrine for themselves
or to believe it after it was explained to them.”
The good news is
that outsourcing the mundane lets you focus on the exciting, intensive,
high-value practice of law. Or, as the Hildebrandt partner
puts it, the greatest risk is in facing the outsourcing challenge
and doing nothing.
