New Research on Outsourcing: A Comparative Approach

Paul Caron at the Taxprof blog (click here) beat me to highlighting Professor Jay Krishnan’s excellent new article that deals with how many once thought-of purely American legal services are now being done by foreign workers (many of whom reside in India.)  Motivated by the great desire to save costs and enhance profits, more and more American law firms and corporations are engaging in such “legal outsourcing,” thereby demonstrating the increasingly globalizing nature of the legal profession.    The paper provides an empirical case study of legal outsourcing and then asks whether American firms, corporations, and clients who are benefiting from the labor of foreign workers have an obligation to give something more back to those developing societies upon which they are drawing. The paper argues yes (for both ethical and economic reasons), and in doing so the it frames the discourse of the rights owed to foreign workers and the societies from which they come in a new light.   Click here to see the paper.

The issue of outsourcing jobs abroad stirs great emotion among Americans. Economic free-traders fiercely defend outsourcing as a positive for the U.S. economy while critics contend that corporate desire for low wages solely drives this practice. This study focuses on a specific type of outsourcing, one which has received scant scholarly attention to date – legal outsourcing. Indeed because the work is often paralegal in nature, many see the outsourcing of legal jobs overseas as no different from other types of outsourcing. But by using as case studies both the United States and India, the latter which is receiving an ever-increasing amount of outsourced American legal work today, the paper describes how there are many forms to the legal outsourcing model and how this practice can entail a range of legal services. This article, however, moves beyond providing a descriptive account of legal outsourcing. Legal outsourcing to India is occurring against the backdrop of an Indian legal system in crisis. For those who are fortunate to benefit from legal outsourcing, the pay-offs are indeed rewarding. But most Indians of course are not participants in – nor beneficiaries of – this practice. In fact, in everyday parlance the word ‘legal’ itself in India is associated with a process that is delay-ridden, backlogged, and unduly expensive. On its face it might seem that legal outsourcing is unconnected to the problems that have long plagued India’s legal system. Yet as the paper argues, in addition to having an ethical obligation to provide assistance to the legal environment upon which they draw, those engaging in legal outsourcing also have an economic incentive to ensure that India has a better-operating legal system. Thus, as a means of raising much needed revenue to fund its legal reform efforts, India might levy a minimal fee on U.S. legal outsourcers, and as I explain, because strengthening the rule of law is ultimately in their financial interest, these American investors may well accept shouldering such a cost.

KJ