These days, outsourcing of jobs has become a hot-button issue in all aspects of life. With the recent economic downturn, more companies are finding outsourcing to be a cheaper, cost-effective way of keeping productivity up, while costs stay down. Unfortunately, this is not great news for the American public, who are still fighting with high rates of unemployment. Current statistics show that as the unemployment rate stands at around 8%, the number of jobs being outsourced has climbed to 2,273,392. [1][2]
Statistics show that the legal industry is by no way immune to these same problems facing the overall job force. According to a recent survey conducted by the National Association for Law Placement (NALP), the overall employment rate for 2011 law school graduates is at 85.6%. This is the lowest employment rate for law school grads since 1994. [3]
One new phenomenon that may be affecting the legal industry’s ability to create jobs is a new reliance on outsourcing by law firms. As American’s struggle to find work, often times they cannot afford the often overwhelming costs a typical lawyer would charge. In an effort to maintain production, while being able to justify lower charges by lawyers, many firms are using lawyers in India, among other places, to do “grunt work,” such as document reviews, that would have been completed by young lawyers in the past. [4][5]
As firms find more and more benefit in utilizing these outsourcing firms, the industry has grown to accommodate them. As of 2009, the number of legal outsourcing companies has ballooned from 40 in 2005, to over 140 by the end of 2009. Additionally, India’s legal outsourcing firms have seen their revenue’s skyrocket 38% from 2008-2010, with estimates showing continual growth through 2014. Clearly, this new phenomenon is only in its’ infancy. [6]
Although on the surface, this may sound like bad news for newer lawyers, the outsourcing may have unique solution to the unemployment problem; young lawyers moving overseas to work for the outsourcing companies. Legal outsourcing companies currently employ about 16,000 people worldwide, with that number expected to grow with the demand for the service. Many unemployed lawyers are choosing to move out of the U.S. to find work. Although the pay is far less than what many lawyers expected to make in the past, at $50,000-$80,000, the pay is nothing to scoff at. [7][8]
Only time will tell if the rise in legal outsourcing will cause a major impact in the legal industry. Although, as more and more firms are choosing to utilize these companies, one can imagine that we will learn the answer to this sooner than later.
Resources:
[2] http://www.statisticbrain.com
