Outsourcing has its boundaries

Wisconsin companies not as likely to pursue it

By Pete Bach
Post-Crescent staff writer

If all U.S. jobs at General Motors or DaimlerChrysler suddenly moved to China, people wouldn't be shocked.

Manufacturing jobs have been moving offshore for years.

But what if major corporations decided it was cheaper to work with lawyers in India?

The practice already has begun. And Wilmington, Del.-based DuPont Co. is recognized as a pioneer in the growing trend. Other corporations like Oracle, Cisco and General Electric also are trimming their legal costs as well.

The legal offshoring industry is estimated to be about $60 million to $80 million today — tiny in comparison with the estimated $225 billion U.S. legal industry — but has the potential to grow to $4.7 billion by 2012 in India alone, according to a report by Crisil Research and Information Services.

The cost of working with lawyers in India averages $50 to $70 an hour, compared with an American lawyer with equivalent experience who would be paid $200 or more.

An Indian lawyer working as a temp would cost $20 an hour or less, whereas one in this country would cost up to $70 an hour.

Godfrey & Kahn, a Milwaukee-based business law firm with an Appleton office, became the first state law firm last year to establish an office in China.

Two U.S. lawyers advise clients from the office in Shanghai.

But a lawyer affiliated with the firm doesn't foresee a huge ramping up of legal offshoring by state firms.

"I'm familiar with the trend," said attorney Michael Lokensgard, a member of Godfrey & Kahn's Appleton staff. "I don't see it happening with a lot of the firms in Wisconsin. The firms I see doing it are cross-country, or worldwide, outfits."

As more work shifts to legal companies abroad, the number of jobs lost in the United States is expected to jump from about 23,000 this year to about 79,000 in 2015, according to a 2004 report by Forrester Research.

For many years, lawyers were shielded from the offshoring phenomenon, mainly because their work was steeped in arcane U.S. law. It also often dealt with sensitive information companies feared could fall into the wrong hands. But that reluctance is fading.

DuPont has a crew of about 100 lawyers, mostly in India, who are available around the clock to review documents in such complex matters as asbestos lawsuits. The company expects to save 30 percent to 60 percent on the traditional costs, amounting to more than $6 million a year from its $200 million annual legal bill.

DuPont took what it called a leap of faith last year when it hired OfficeTiger, a New York-based business process outsourcing provider acquired last April by R.R. Donnelley & Sons, Chicago, the giant printing firm set to close its acquisition of Menasha-based Banta Corp. in a $1.3 billion deal pending approval of shareholders in a Jan. 9 vote.

DuPont called on OfficeTiger to handle some if its most important projects, including one with millions of pages of documents and more than $100 million of claims related to asbestos litigation.