The 2009 economic downturn created a boom in the offshore review industry. The cost of review still dominates the eDiscovery lifecycle and is the top target for budget-conscious corporate legal departments. Corporate counsel tends to start with the actual hourly wages of reviewers because that does not change their current workflow. Some work with pools of contract attorneys to bring the hourly rates down to $25-$80 per hour. But this still requires outside or inside counsel to manage the review and invest in the review platform to host the data. Outsourced service providers have traditionally handled the large, multiparty matters and supplied both project management as well as offshore contract reviewers. This is the root of the new Legal Process Outsourcing (LPO) service model. Integreon, one of the largest LPO players, announced that it had been named in a writ for unlicensed practice of law to the Madras High Court in India.

The root issue seems to be a culture clash between the ‘Noble Profession’ that India advocates aspire to and the harsh economic reality of global law firms as multinational business entities. The writ from the Association of Indian Lawyers accuses the firms of using the LPOs to effectively practice law in India without being enrolled as advocates as required by law. There are monetary arguments and issues, but the Association seems to care more about the territorial intrusion as well as the way that the LPO’s have commoditized legal services. They even go so far as to level charges of immigration law violations due to the practice of using tourist visas for associates and visiting counsel.

Before you dismiss this as a ‘tempest in a teapot’, you should realize that the Indian review shops dominate the offshore review market. In order to meet the demands of cost-conscious corporate clients, every hosting company or service provider has been forced to have an offshore LPO company that could be called in if the client insists on the lowest review rate possible. So this writ could be considered a warning shot that India’s legal community is not going to allow there next generation of legal talent to be co-opted by the equivalent of litigation sweat shops.

Last August, the Union Law Minister of India stopped foreign law firms from setting up practice in India, although the decision is to be revisited after consultation and discussion with the Bar Association of India. So this is an ongoing conflict that should be watched closely for potential impact on the review outsourcing market. Given that this latest writ names Clifford Chance, Linklaters, Allen & Overy and Simons & Simons, they seem to be trying to make an example of the big boys. It will be interesting to see how this plays out.

The first concerns over the large volumes of sensitive data being shipped over the internet to India arose in 2008 when a U.S. firm filed a complaint and requested ethics opinions from state bars regarding the potential waiver of privilege from offshore service providers. The primary concern was the expectation that any data sent via the internet to foreign countries was monitored/read by the NSA’s programs and could result in waiver of privilege. The ABA subsequently issued a formal opinion approving offshore outsourcing so long as it is done in adherence to the standards of the ethics rules. The law firm eventually withdrew the complaint and later dissolved.

The market drive to commoditize legal review continues to push contract attorney rates lower and more work overseas. If India does not want our review money, I am certain that there are other dual language countries that will step up if given the opportunity. My guess is that the Indian legal community will find a compromise that gives them an oversight role and a piece of the pie, but business will continue to grow.