North American law firms outsourcing legal research

They can’t practice on North American soil, but their work often forms the basis American and Canadian lawyers build their legal arguments on.

In recent years, Filipino lawyers retained by outsourced IT services firms in Manila have built a steadily growing online legal process and research market. Legal process and research is among the new tech services being pushed by the Philippine government, which last year saw combined outsourced IT services revenues soar to $7 billion.

Electronic discovery legislation in Canada and the U.S. is largely fueling the demand for outsourced legal work, according to Jay Manahan, director for business development of Sencor, a Philippine online knowledge process outsourcers specializing in legal processes, business intelligence, competitive intelligence research and content development, headquartered in Makati City, the business district of the country.

“Twenty-five years ago, we were purely a data entry shop. E-discovery legislations in the U.S. and Canada, which began surfacing in 2005 and 2006, added another dimension to our attorney-level services,” said Manahan.

The company now employs more than 100 full-time lawyers. That number can swell up to 400 employees during “peak seasons” according to Manahan who looks more like a fresh college graduate than a business executive in his mid-thirties.

“Essentially, we’re a big law firm, but our lawyers don’t appear in the Philippine courts,” Manahan said.

Three-tiered legal services

Of last year’s $7 billion total IT outsourcing revenues, some $5 billion could be credited to work brought in by call centres. So-called knowledge process outsourcing (KPO) such as legal and medical transcription and processing was a close second with more than $1.18 billion in revenues for the same period.

Firms like Sencor typically offer three types of legal services:

• High-end analysis of contracts, articles of incorporations, pleadings as well as preparation of legal documents. This is often carried out by full-time attorneys who have passed the bar.

• Lower-level legal work such as reviewing legal documents and some legal research. This type of work is primarily done by law school graduates.

• Low-end research and documentation. These are often assigned to law students who have been trained in U.S. and Canadian legal and regulatory requirements and practices

According to Manahan, his company can often save clients up to 50 per cent or more in expenses. “For some services, top-level corporate attorneys in large firms could easily charge anywhere from $300 to $600 per hour for their services. Lawyers in Manila can do the job for half of that amount.”

The 12-hour time-difference between continents provides another market advantage. In many instances, North American clients send over assignments to Manila at the end of the day. While the client sleeps at night, Filipino researchers work on the assignment because it is morning in the Philippines. The client returns to work the next day to find the finished work in his e-mail in-box.

Canadian connections

More Canadian firms are expected to resort to outsourcing IT services in 2010, according to a recent report from IDC Canada.

Canadians are typically slow to adopt global outsourcing compared to the U.S. said Sebastien Ruest, vice-president of service and technology research at IDC Canada.

However, an expected shortfall of some 162,000 IT positions in within the next five years could bump up demand for offshore services. “If 2009 was a strong year for outsourcing in Canada, we can look forward to a positive market for 2010,” Ruest said.

Many North American firms are buckling under the pressure of e-discovery requirements, according to Manahan. “Studies have shown that in some cases organizations have been relying on IT staff to carry out some portions of e-discovery work.”

He said one alternative to ease the burden on staff and to ensure that e-discovery work is up to legal standards is to outsource the job to legal professionals.

“One advantage of using Filipino lawyers is the affinity of the Philippine legal system with those of the U.S. and Canada,” Manahan said.

Currently, Sencor services several large legal firms and small to medium-sized law offices in the U.S. Manahan said his company is also doing legal case summaries for a publisher in Canada.

During a recent business development mission to Canada, Sencor was approached by several Toronto-based law firms for more information about their services, he said.

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