Things are tough all over in the legal world these days, with even those pesky offshore outsourcing outfits likely to see a profitability squeeze, according to this 2012 outlook issued Friday from Fronterion, a group that tracks such matters for law firms.
One problem the report identified: wages are rising in developing countries such as India (per this projection from Aon Hewitt) but remain relatively soft here in the U.S. and the U.K. That could hamper profitability for the legal process outsource (LPO) industry as a whole—something unlikely to bring tears to the eyes of job-hunting young lawyers stateside.
So what’s the problem? The price gap has narrowed between offshore legal processing groups—which charge between $25-$35 an hour for basic legal services such as document review—and domestic services offered by contract review attorneys in places such as the Midwest, which might charge $25 to $30 per hour. (Here Fronterion cites our own Vanessa O’Connell’s piece this June on lawyer temps).
The glut of new law school graduates in 2012 will likely put offshore legal services outfits at a further disadvantage, the report found. “Most legal professionals, all things being equal, prefer to keep legal work domestically,” it said. In response, some offshore vendors are opening up in places such as Chicago and Washington D.C., said Fronterion managing Principal Michael Bell.
via Legal Outsourcing: Is the Bloom Already off the Rose? – Law Blog – WSJ.