WestlawNext was the topic of the day on The Law Librarian show on Blogtalk Radio last Friday. Although I wasn’t able to listen to the show live, I caught the recording.

Though much of the discussion was focused on the WestlawNext algorithm, the participants touched on pricing as well. One of the featured guests expressed this concern: “If this is as cool as it appears, it widens the gap between what large law can do versus the self-represented litigant or even the small law firm. Because large law firms can afford to buy this right away . . . .”

Later, one of the guests, extrapolating from the fact that 80% of lawyers in the country practice in firms with fewer than 20 lawyers that don’t employ law librarians, posited that most of West’s revenues come from small firms.

Greg Lambert recounted the disdain of his co-blogger, Toby Brown, for West’s excuse for charging a premium for WestlawNext (which is that the company has invested significant resources in the upgrade). I agree with Toby’s view that customers expect a company like West to take R&D costs out of its own pocket, rather than so blantanty reaching into its customers’ pockets to cover them.

The show’s chatroom transcript also contains some great nuggets about pricing:

Marcia Dority Baker
How many people are firm librarians? have you bought westlawnext yet?
Mar95
I’ve had the my rep onsite and had a demo. The product looks great, much simpler for users, the problem is the pricing.

mar95
It’s being sold as a seperate product – $900 month in addition to our current subscription. Or there is a pay-as-you-go option, $10 per search, $5 to view/print document, $2 for keycite

mnlawfirmlib
Does anyone else feel reps weren’t very well prepared for the rollout? While I’m glad TR invited bloggers to preview it and greatly appreciate their insights and feedback but reps seem behind the 8 ball and don’t have all the information.
mnlawfirmlib
Example of conflicting information: our rep told us it was $60 per search.

weblawlib
But if you’re able to bill back most Westlaw charges, how does this impact a law firm library budget?
Ken Hirsh
Many corporate clients want flat billing from outside counsel
mnlawfirmlib
That’s just it – we’re not able to bill back many charges b/c many large clients won’t pay for online research or attorneys write it off for a variety of reasons.

cblib
recovery rate is never where it needs to be. i can’t take risks.

Marcia Dority Baker
Hmm, are small firms West’s bread & butter?

mar98
I think smaller firms are probably very important business, many don’t keep books, and just use electronic material on West.

I think it’s fascinating that large firm librarians think that small firms are important to West’s bottom line, since my WestlawNext upgrade negotiations have led me to believe that West isn’t interested in the solo market at all.

It’s also interesting to hear about biglaw’s experience with cost recovery, a topic I posted about last May.

Finally, I’m going to take this opportunity to update my last post (for some reason, the update is breaking that post):

Update 2/25/10, 8:30 p.m.

On Monday, I received a response (by snail mail) from my rep’s sales manager. Included with the response was a long list of the databases included in the National Secondary Sources – Premium plan. Although I haven’t had a chance to review the list in detail, as I expected, it appears to be nearly identical to the All Analytical Library content (which, as noted above, is far from comprehensive, and is nowhere close to offering equivalent value to the sources available in Results Plus), plus Corpus Juris Secundum.

The sales manager’s response to my pricing questions was classic West:

There are no URL [sic] or press releases regarding our pricing modules or programs. As I stated earlier, that information is confidential.

Oh, and the post-February 28 prices for all of the WestlawNext plan components I discussed with my sales rep? “That has not been released.”

So, let me see if I have this straight: First, my sales rep quotes me prices for several WestlawNext libraries. Weeks later—after I prove myself to be a tough customer—the sales manager tells me that my rep forgot to mention that those prices are only the introductory prices. But he can’t tell me what the regular prices will be, even though they’ll be going into effect next week.

While I don’t have a business or marketing degree, I know a little bit about marketing from personal experience. Whenever a company offers a special introductory/early bird price, they tell you what the regular price will be. Why? To motivate you to buy now. And when a company offers an early bird price, they actually advertise it; after all, what’s the point of creating urgency if nobody knows about the special offer?

My last post is two weeks old. I’ve invited West to respond to the issues. A week ago, I raised them in a comment on West’s own blog. Other bloggers have commented on the lack of pricing transparency. Yet West hasn’t offered an official response. The company’s silence speaks volumes about the regard in which it holds its customers.

A few weeks ago, I wrote about my preview of West’s new search product, WestlawNext. At the end of the post, I said that I’d like to upgrade, but I know I don’t want additional content within my subscription plan. I promised to report back on my negotiations with my account rep. This is my report.

My Background with Westlaw

I’ve been a Westlaw user for five years, and am currently two years into my second three-year contract with them. Since I work with lawyers nationwide, I have a very broad Westlaw plan (especially for a solo), with particular depth in New York secondary sources (about 50% of my clients are in New York). I currently pay $489/month for my subscription, with a scheduled price increase in March to $514/month. Here’s what my current plan looks like:

Total	$489.84
All Cases & Statutes NY Gold w/Regs Plus	$301.88
Law Reviews & Journals	$ 54.61
Results Plus	$133.35

I picked up ResultsPlus when I signed my current contract. I love it. Basically, the ResultsPlus plan allows you to click on any of the documents you see listed on the right side of your Westlaw screen without incurring an out-of-plan charge (without ResultsPlus, you’d get an out-of-plan warning screen). Only the “first click” is free: while you can browse through the table of contents of the analytical source you’ve linked to at no cost, if you view any other section of the source from the table of contents, it will be considered out-of-plan (you’ll get a warning screen and can then choose to cancel or continue). At the preview meeting in Eagan, West explained that ResultsPlus was somewhat of an early step towards the development of WestlawNext (which extensively features suggested links to materials in databases other than what you may be focusing on).

My Views About Westlaw Pricing

I expanded the views expressed in my last blog post on Twitter (@ reply indicators have been deleted):

Suppose it’s possible @Westlaw could req. NDA re: Westlawnext pricing, but there would be a huge backlash.

What @Westlaw thinks is “modest.” Frankly, I believe “upgrade” 2 WestlawNext should be free 4 current customers.

After all, @Westlaw will still make $ when customer accesses out-of-plan document from WestlawNext results list. [cont.]

Charging 4 upgrade to WestlawNext is shortsighted, b/c WLN is designed to reveal all relevant docs (incl. out-of-plan).

A WestlawNext user who frequently accesses out-of-plan docs, will convince *him/her self* to expand scope of subscription.

Also want to know what WestlawNext equiv is to WL’s Results Plus add-on (=1st click to doc outside of plan is free).

Agree that there were large R&D costs. WestLawNext algorithm relies on much more than what’s in pub domain.

Still, @Westlaw shld treat current customers better than new 1s; it will still profit as explained in my prev twts

Whether current @Westlaw pricing is outrageous depends on ur view of the added value it provides. I think it’s worth it 4

…my practice, which is research-heavy. If ur use is very light, not much value in a monthly subscription at their prices

My WestlawNext Upgrade Negotiations

After I explained my upgrade goals to my Westlaw rep, I received this response:

Proposal #1

This proposal contains a straight migration of your All Cases & Statutes NY Gold with Regs Plus and adds the All Analytical library. The Law Reviews & Journals portion of your plan is a part of the All Analytical plan and therefore is not listed as a stand alone database. This proposal contains ALR, AmJur, AmJur POF, Causes of Action, Federal Practice and Procedure, etc., and captures the vast majority of your Results Plus usage. Based on your usage, the biggest missing piece in this proposal is CJS which you accessed approximately once a month through Results Plus.

Proposal #2

This proposal is a step up in analytical content and includes CJS and the Restatements.

Proposal #3

For this proposal I took a look at your usage of the CFR. Over the past year you have accessed the CFR 8 times, so it is a database that you may consider dropping. I kept you in All Cases & Statutes and added the NY Analytical plan to replicate the content of a NY Gold package. I added the All Analytical and included CJS as a stand alone subscription.

As I mentioned, WestlawNEXT is a premium product and while I have discounted my proposals to the highest order allowed, the prices reflect that premium. After we spoke I had the opportunity to speak with a reference attorney who has been using WLN for the past few months. Despite her exceptional skill at boolean searching she finds that WLN’s search engine allows her to find the most relevant cases quicker than boolean searching on Westlaw. The reason, she explained, is the intuitive nature of the search engine and its ability to look beyond your search to find the most relevant cases, statues and secondary sources.

As an existing customer, with any of these three proposals you will be eligible for up to $1000 in print at no charge.

Note also that your current plan is scheduled for an annual increase at the end of this month. Starting in March your monthly payment will be $514/month.

Here’s how the plans compare (all monthly prices have been adjusted to reflect the 45% discount I would get for being willing to sign a new 3-year contract at this point):

	Proposal #1	Proposal #2	Proposal #3
Total	$567.05	$777.15	$560.45
All Cases & Statutes NY Gold w/Regs Plus	$357.50	$357.50
All Analytical Library	$209.55		$209.55
National Secondary Sources - Premium		$419.65
All Cases & Statutes			$235.95
NY Analytical			$114.95

(I’ve omitted the cost for CJS from Porposal #3 because I don;t need it as long as I have Am Jur, which is included in the All Analytical library.)

As you can see from the chart above, when a database (such as All Cases & Statutes NY Gold w/Regs Plus) comes over from Westlaw to WestlawNext without any change in its coverage, there is an approximately 11% price increase.

Here’s my response to the proposals:

Please provide me with a complete list of (1) All Analytical sources in WestlawNext; (2) New York Analytical sources in WestlawNext and (3) Results Plus sources in Westlaw. I would prefer if you provide me with links to where I (or anyone else for that matter) can find the sources lists online, as West should be transparent about what libraries/databases are available. If this information is not readily available online to the public (including individuals who are not current Westlaw Subscribers), please provide it as attachments.

Doesn’t All Analytical include everything that’s in New York Analytical? If not, the name of All Analytical is misleading.

Just to clarify: is the only difference between All Analytical ($381) and National Secondary Sources – Premium ($763) the fact that the latter includes Restatements and CJS?

He sent the database lists I requested, which I’ve linked to above. He also responded:

Remember that Results Plus allows the first click into the listed databases, while subscribing to the All Analytical Plan gives you unfettered searching in many of the same titles.

Re: All Analytical v. NY Analytical: The “all” refers to national analytical titles such as ALR, AmJur, etc. As evidenced by the attached documents, NY Analytical is targeted to NY specific analytical sources.

Re: The difference between All Analytical and National Secondary Sources, premium, is primarily the restatements and CJS. I haven’t cross checked all the databases (the list is too long), but those are the major titles.

Re: Proposal #3: The NYCRR is contained in the All Cases & Statutes portion of the proposal.

Any person can always go to www.west.thomson.com and find a complete list of databases for any of our online plans. It is my understanding that they are current with WestlawNEXT as well. As you mentioned, West should be and is transparent with the content of their plans.

Here’s my response:

The All Analytical list is far from comprehensive, and is nowhere close to offering equivalent value to the sources available in Results Plus. Specifically, the vast majority of the All Analytical database seems to be composed of Law Reviews and Journals. Another huge chunk of All Analytical is composed of what appears to be redundant portions of larger works. Here’s one example:

ALR American Law Reports [doesn't this include all of the segments below?]
ALR-BKR American Law Reports–Bankruptcy
ALR-BUS American Law Reports–Business Organizations
ALR-CML American Law Reports–Commercial Transactions
ALR-CSTR American Law Reports–Construction
ALRDIGEST West’s ALR Digest
ALR-DUI American Law Reports–Driving While Intoxicated
ALR-ELD American Law Reports–Elder Law
ALR-ENV American Law Reports–Environmental Law
ALR-EPP American Law Reports–Estate Planning and Probate
ALR-FAM American Law Reports–Family Law
ALRFED American Law Reports, Federal
ALR-GOVK American Law Reports–Government Contracts
ALR-IMM American Law Reports–Immigration
ALRINDEX ALR Index
ALR-INS American Law Reports–Insurance
ALR-IP American Law Reports–Intellectual Property
ALR-LB American Law Reports–Labor and Employment
ALR-MRT American Law Reports–Maritime
ALR-MUN American Law Reports–Municipal
ALR-PAT American Law Reports–Patents
ALR-RP American Law Reports–Real Property
ALR-SEC American Law Reports–Securities
ALR-US-INT American Law Reports–Multinational (Issues Arising in the U.S.)
ALR-WC American Law Reports–Workers’ Compensation
ALR-ZONING American Law Reports–Zoning

Moreover, hardly any of the sources included in Results Plus Pro are included in All Analytical. Significant omissions from All Analytical include the state Jurisprudence works (e.g., CALJUR, FLJUR), the Witkin publications (re: California law) Couch on Insurance, Fletcher Cyclopedia of the Law of Private Corps. and Williston on Contracts. Only a tiny handful of non-law journal sources that are included in All Analytical are excluded from Results Plus (e.g., Handbook of Federal Evidence, West’s Federal Forms)

Since the biggest chunk of All Analytical is equivalent to Law Reviews and Journals, while All Analytical is missing perhaps 90% of what is included in Results Plus, the value of All Analytical is much closer to $54.61/month (the current charge for Law Reviews & Journals) than the $209.55/month (after 45% discount) that you propose to charge me for All Analytical. At most, I would pay $100/month for All Analytical, as that database is currently comprised. I would pay $209.55/month for National Secondary Sources – Premium, but only if that plan includes all (or a significant number) of the databases included in Results Plus Pro.

I understand that, in WestlawNext, I have access to the entire secondary source in All Analytical, as opposed to only the first click in Results Plus. However, the whole point of the new WestSearch algorithm is to display the most relevant content alongside my search results (that is also the model for ResultsPlus). Therefore, the first click is generally all I need.

I proposed the following solution:

If National Secondary Sources – Premium, does not include all (or a significant number) of the databases included in Results Plus Pro and/or I can’t get it for $209.55/month, then can I do the following: in WestlawNext, take All Cases & Statutes + NY Analytical and retain in Westlaw only ResultsPlus + Law Reviews and Journals (all of which I calculate to come to $539.06)?

My rep’s response:

The value of the All Analytical package is in its inclusion of ALR, AmJur, Federal Practice & Procedure, Causes of Actions and Proof of Facts. These are huge and popular national analytical sets containing a great deal of information across all areas of law. The content is vastly more comprehensive than the Law Reviews & Journals database.

In all my pricing I have maxed out the available discount. I cannot change the pricing any further and exceptions beyond our discretionary discount (which is, as you know, a generous 45%) are not being considered.

Additionally, accounts can choose from Westlaw or WestlawNEXT. It is not possible to purchase databases from WestlawNEXT and Results Plus. (Practically, this would force you to run all your searches in both search engines).

We do have plans that allow you access to virtually all databases outside of your plan at a discount of up to 90%. For example, for $100/month you get up to $1000/month of ancillary usage. This would be a good way for you to expand your universe of available databases while maintaining cost certainty.

Perhaps you would be interested in a trial password for WestlawNEXT? This way you can use the two products side to side and make the best value decision for your practice.

And mine:

I find substantial value in having access to the 90% of Results Plus sources that are NOT included in All Analytical. In fact, I would appreciate if you can take a look at my account and provide me with a report detailing all of the sources I have used through Results Plus and the frequency of access.

I have used Westlaw Next. I am familiar with the value it can provide. The plans you suggest ($100/month for up to $1,000/month of out-of-plan usage) are not a good choice for me, since $1,000/month adds up very quickly. I want complete certainty.

The “discretionary discount” has a benefit for West, in that it locks in customers for 3 years.

I have no problem running my searches in both engines: it’s a simple copy and paste.

I asked my rep to put me in touch with his sales manager if he couldn’t do anything more for me. Here’s the sales manager’s response:

I received your message from [your sales rep]. You may contact me at your earliest convenience.

In advance, I will let you know that West has painstakingly put together its packages and prices with careful consideration. I assure you [your sales rep's] proposal has met the limits of pricing negotiation and options.

We will understand if you feel your current plan which includes Results Plus remains a better solution for you.

So the bottom line is this: even if I’m willing to pay an 11% premium for the power to search with the WestlawNext algorithm in the same databases I currently have access to on Westlaw, tough cookies. They’re going to change their offerings around enough to make it difficult for you to compare apples to apples. And, most importantly, they’re not going to let you eat just you want to eat: they want to stuff you until you explode, like some crazed Jewish grandmother on Shabbos. Oh (and to beat this food metaphor to death), they’re not going to let you eat just a few courses at the fancy new WestlawNext (the Bouley Restaurant of legal research), and pick up the rest of your meal next door at good ol’ Westlaw (Bouley Bakery/Market): if you don’t want to eat your whole meal at WestlawNext, it’s No soup for you!

Update 2/11/10, 11:30 a.m.: I received this message from my rep’s sales manager this morning:

After reviewing the proposals we sent, I noticed we failed to mention that this is an introductory pricing that we will not be offering after February 28th.

As with all of our proposals and emails, I am hoping this information would be kept confidential.

Not smart, West. Not smart at all.

Update 2/13/10, 1:00 a.m.: Last night, I sent the sales manager an e-mail requesting a complete list of sources included in the National Secondary Sources – Premium plan. I also responded to his request for confidentiality:

With respect to confidentiality, in my view there are no trade secrets involved in our negotiation. The process of upgrading to WestlawNext is like buying a new car. There’s an MSRP, and each option also has its own price. Packages can bring down the price of certain options. But would a car salesman ask you to keep your negotiations confidential? There is no reason—other than a desire to divide and conquer your customers and potential customers—to request confidentiality for these negotiations. “Transparency” goes beyond providing complete source lists (see Elwyn’s message of February 9): it must extend to pricing, too.

Just now (yes, I’m burning the midnight oil), I sent the sales manager this message:

Further to your message of 2/11, please advise what the prices will be for all WestlawNext plan components that I have discussed with [my sales rep] after February 28.

Additionally, please provide the URL(s) for any public statements by Westlaw informing the legal community that it would be offering “introductory pricing” for a total of 14 business days after launch, at a time when very few customers have had a chance to be exposed to WestlawNext, and before “Johnny and Jenny Westlaw” have even had an opportunity to visit six major markets. Certainly, there’s no way each rep can pitch all of his or her accounts, and negotiate plans for all interested customers, in that time frame.

I’ll update again once I hear back (which may not be until at least Tuesday, since Monday is a holiday).

Back in October, I co-presented Powerful Writing Techniques to Help You Persuade Judges and Win Clients with Hon. Gerald Lebovits. The ABA’s GP|Solo Division recorded the session, and will be offering it as part of a teleconference and live audio webcast on Wednesday, February 17 from noon-1:30 p.m. (Eastern). The program will start with a playback of the recorded session, followed by a live Q&A session with Judge Lebovits and me.

This program teaches lawyers to write more persuasively by using the same powerful techniques that copywriters have relied on for years. Topics covered in this course include:

• The greatest challenge your writing must overcome to persuade readers to take a desired action
• Basic concepts underlying all effective persuasive writing—ignore these and you’re sunk
• How to write a compelling brief that the judge just can’t put down
• The role of emotion in jurisprudence and how to trigger the reader’s emotions
• The things readers absolutely hate—and how to avoid them
• How to deal with objections to your position
• Closing the deal: conclusions and calls to action
• And more . . . .

CLE accreditation (for 1.5 hours in 50-minute states and 1.8 hours in 60-minute states) is pending.

You can register for the program at the ABA’s website.

Westlaw will be launching its new search engine, called WestlawNext, at Legal Tech New York next Monday. Yesterday, the folks responsible for WestlawNext gave a pre-launch presentation about the new platform to a group of bloggers and legal journalists who write for various audiences. Carolyn Elefant and I were there representing the small firm and solo practitioner perspective. Other participants included Greg Lambert of 3 Geeks and a Law Blog (large firm perspective), Donna Tuke of Legal Information Alert (a publication for law librarians) and Canadian practice management advisor David Bilinsky (among others). (Disclosure: West paid the participants’ expenses to travel to its Eagan, Minnesota headquarters for the meeting). Everyone at the Eagan meeting (as well as a few others who were not able to attend) had already had an opportunity to use the beta version of Westlaw Next and to provide feedback to the developers.

How Does WestlawNext Differ from Westlaw?

Although he couldn’t make it to Eagan, Bob Ambrogi (who was one of the bloggers who got a beta preview) hit most of the high points of the new search tool in a post published yesterday. Laura Bergus of Social Media Law Student and David Bilinsky have also posted product reviews.

A few additional points are worth mentioning. First, although the ABA Journal reported that, as of December, West was still considering whether or not would allow users to perform boolean (terms and connectors) searches, at yesterday’s meeting the West representatives clarified that boolean searching is not being eliminated.

Second, although both Ambrogi and the ABA Journal refer to the ability to do “natural language” searches in WestlawNext, the West representatives explained that the WestlawNext algorithm for non-boolean searches is much more sophisticated than the algorithm used for natural language searches on Westlaw.com. In particular, it leverages West’s human-created content—including the key number system and other proprietary analytical content (such as statutory annotations and treatises)—along with KeyCite results and customer usage information to return more relevant results earlier in the research process.

Third, I’m intrigued by the fact that you can search in a database that is outside your subscription plan, and review the results list, without incurring search charges. Instead of charging for the search, with WestlawNext, you’ll be charged only for accessing the documents that you view in full text.

Pricing: the Elephant in the Room

There’s no question that WestlawNext is superior to Westlaw. Unfortunately (as the ABA Journal noted on Monday), that performance comes at a price.

When we asked, point blank, what that price would be, the West representatives didn’t have a simple answer. Instead, they explained that the company’s sales reps will try to convince customers to add additional content to their subscriptions at the time of upgrade. When pressed as to whether the upgrade would be pegged at a certain percentage of the cost of a subscriber’s plan, West denied taking that approach.

West’s non-response essentially leaves its subscribers in the dark and on their own when it comes to upgrade negotiations. As I see it, the best way to counter West’s strategy is to crowdsource solutions, a la BidonTravel.com. Perhaps some enterprising legal tech expert will set up a site like BidonTravel.com in the not too distant future; in the meantime, I invite you to discuss your experiences in the comments below.

I’d like to upgrade, but I know I don’t want additional content within my subscription plan. How West will respond to this position remains to be seen; I’ll report back on my negotiations with my account rep.

Finally, some advice for West: although I don’t have any statistics at the moment, my sense is that, since it lowered its prices a number of years ago, West has captured a significant portion of the small firm lawyers and solo practitioners who previously used Lexis. If WestlawNext comes at too high a premium, West may lose the ground it’s gained.

In a recent post over on the TechnoLawyer Blog entitled SmallLaw: 2010 Legal Profession Predictions, legal tech commentator Mazyar Hedayat prognosticates about the forces that will shape the small firm world this year.

Among Hedayat’s six predictions is that “[o]utsourcing [will] give[] way to insourcing.” According to Hedayat,

[i]n a world where the Internet has flattened space and shortened our time to think about nearly everything, location has become nearly irrelevant. Research done in Texas or Hyderabad can be combined with drafts produced in Tennessee or Hong Kong to be presented by an attorney in New York.

Outsourcing is nothing new. However, as costs fall and people overcome their skepticism, this kind of scenario will become increasingly common in 2010. In addition, as communication and collaboration costs fall to zero clients will demand to benefit from the savings (translation: downward pressure on rates).

Every lawyer has heard about “outsourcing” to foreign destinations, but this year more of us will discover that work can be “insourced” to states with higher attorney unemployment. Does it sound like I’m celebrating the misfortune of others? Maybe a little, but at least this way we can keep the jobs from going overseas. Besides, I heard the lawyers in India are asking for competitive wages now. Where do they think they are? America?

I agree wholeheartedly with Hedayat’s basic premise here, which is that more small firms will be using the services of U.S.-based contract lawyers. However, I take issue with both his terminology and his explicit and implicit underlying assumptions.

The Semantics

As I explained in my analysis of Richard Susskind’s 2009 ABA Techshow keynote address (which was based on his book, The End of Lawyers?: Rethinking the Nature of Legal Services), outsourcing, is generally defined as “subcontracting a process . . . to a third-party company.” A process or task can be outsourced to either a foreign provider (offshoring) or a domestic one. Domestic outsourcing (a/k/a subcontracting, from whence we get the term “contract lawyer”)—particularly to the flyover states—is sometimes referred to as homeshoring (a/k/a homesourcing) (though, to make things even more confusing, that term can also be used to refer to the provision of services from an employee’s home).

Insourcing, by contrast, is most often defined as the delegation of operations or jobs from production within a business to an internal (but ’stand-alone’) entity that specializes in that operation. (Steve Matthews of Stem Legal tackles insourcing in the legal context over at the Vancouver Law Librarian Blog.)

On this blog, I generally stick with the broad (and common) “outsourcing,” and qualify whether I mean foreign legal outsourcing (a/k/a LPO or legal process outsourcing) or outsourcing to independent U.S.-based contract lawyers. (Yes, I know that’s a clunky phrase, but it also serves to distinguish solo contract lawyers from lawyers who work through temp agencies, primarily performing document review for large firms.)

The Substance

The basis for my disagreement with the substance of Hedayat’s prediction about outsourcing is his assertion that “[e]very lawyer has heard about ‘outsourcing’ to foreign destinations, but this year more of us will discover that work can be ‘insourced’ to states with higher attorney unemployment.”

First, although (as Hedayat notes) it doesn’t matter where a lawyer working on “inside” work (such as legal research and writing) is located, many solo and small firm lawyers nevertheless outsource to local contract lawyers. This makes sense from the perspective of both the contract lawyer and the hiring attorney. From the contract lawyer’s perspective, although all kinds of lawyers are getting more and more business via the web, in-person networking within the local legal community remains a valuable source of business. (Heck, although I have a fairly robust national presence, probably 50% of my clients are in New York, where I’m admitted.) And hiring attorneys may prefer to outsource to contract lawyers who are admitted in their state, because those contract lawyers are more familiar with the state’s procedural rules.

Second, Hedayat’s observation that “[e]very lawyer has heard about ‘outsourcing’ to foreign destinations” (emphasis supplied) is critical: I don’t know of a single solo or small firms that has outsourced legal work to a foreign country. Instead, those who’ve outsourced legal work have homeshored—they’ve hired independent U.S.-based contract lawyers. Have you (or any of your solo or small firm colleagues) used a foreign LPO provider? If you have, I’d like to hear about your experience; please share it in the comments below.

Fronterion, an international management consultancy that focuses exclusively on advising law firms and corporations on outsourced legal services, recently released a report called Ten for 2010: Top Ten Trends for Legal Outsourcing in 2010. While the report is aimed at convincing large American and UK firms and corporations to outsource to offshore LPO providers, it contains valuable nuggets for both independent, U.S.-based contract lawyers and the solos and small firms that hire them.

Two of the trends Fronterion identified are particularly significant for independent, U.S.-based contract lawyers. The first (which the ABA Journal focused on in an article last Friday), is the prediction that,

[a]s legal outsourcing vendors gain prominence in 2010, they will have much greater access to talent as more lawyers consider outsourcing as a genuine career path.

Client confidence in the outsourcing legal services market is translating into a rising talent pool, both on and offshore. Positions at outsourcing vendors will increasingly become an attractive alternative career path for entrepreneurial and global-minded legal professionals as pay, positions and prestige increase.

While Fronterion doesn’t specify exactly what types of onshore positions might be available with large outsourcing vendors, it’s likely that those positions would include (1) sales and marketing; (2) legal technology training and support; and (3) top-level supervision and quality control of foreign lawyers’ work. If you love being a lawyer, only the third type of position would be of interest to you.

But if you’re really an “entrepreneurial . . . legal professional,” chances are you won’t be happy working for someone else: instead, consider starting your own practice working exclusively (or primarily) as a contract lawyer. As an independent contract lawyer since 1996, I’ve always been more than satisfied with my income and the regard in which I’m held by my clients and colleagues. With the legal industry still reeling from the (supposedly now-over) recession, more and more lawyers are pursuing “alternative” careers such as contract lawyering.

The second Fronterion-identified trend that’s particularly important for independent, U.S.-based contract lawyers is the fact that,

[d]ue to the continued uncertain economic outlook in 2010, many firms may be hesitant to lock into long-term, multi-year contract agreements with legal outsourcing vendors. Instead, firms will consider flexible outsourcing agreement structures with third-party vendors which will allow for increased resources on-demand.

Just as the economy has made large firms are hesitant to lock into long-term, multi-year contract agreements with legal outsourcing vendors, it has made the small firms and solos that hire independent U.S.-based contract lawyers reluctant to hire associates, even as their workload increases. As I noted just over a year ago, a bad economy is good news for independent, U.S.-based contract lawyers.

One trend identified in the Fronterion report is of special interest to hiring attorneys. Fronterion predicts that

[l]egal organisations will take a more strategic approach to their outsourcing arrangements as opposed to an ad hoc, cost-focused approach.

* * *

. . . [S]trategic opportunities include better allocation of internal firm resources, increased access to scale, advanced restructuring opportunities and more effective variability management.

In the solo and small firm context, smart hiring attorneys will realize that they can reallocate the time that they (and their current associates) spend doing tasks that either

1. they don’t enjoy doing;
2. they’re not very good at;
3. don’t directly help grow the firm; or
4. some combination of (1)-(3)

by outsourcing those tasks. Hiring attorneys (and their associates) are then free to spend their time on tasks that

1. they enjoy;
2. they’re good at;
3. help grow the firm (such as in-person marketing and relationship-building); or
4. carry some or all of these benefits.

For example, a small firm might give an associate an opportunity to develop a new practice area (and thus diversify the firm’s offerings), while outsourcing some back-end tasks (such as legal research and writing) that would otherwise occupy an inordinate amount of associate time.

Fronterion’s conclusion is a rousing call to action for hiring attorneys:

Industry leaders will not only adapt to change but will also use change to their advantage. Successful law firms and corporate counsels will study the trends in 2010 and ask, “How can our firm not only adjust to change but thrive in the midst of it?” The answer to that question will most likely involve changes in the delivery of legal services.

Supporting—not supplanting— firm operations with an outside legal services vendor has emerged as a successful strategy and will gain momentum in 2010.

In a changing and dynamic legal industry, firms that understand these emerging trends will be able to leverage the full value of their outside legal and litigation support vendors.

Trends mean change. Responding to change means success.

As law practice experts such as Carolyn Elefant, Allison Shields and Susan Cartier Liebel have observed, solos can respond to changes in the legal industry much more quickly than large firms can; I would expand this to small firms as well. There’s no better time than now—at the threshhold of a new decade—to use this agility to incorporate outsourcing as an integral component of a 21st century business model.

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You can find complete descriptions of all of our memberships on our products page; this handy-dandy chart compares the features of all of the memberships side-by-side.

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I’ve taken a fair amount of heat for pointing out that ABA Formal Op. 08-451, which states (with some important caveats) that foreign legal outsourcing is ethical, is actually good news for independent US-based contract lawyers because the same principles that allow firms to send legal work overseas also allow law students and graduates awaiting admission to do actual legal work when they’re working at firms, and allow lawyers to work as contract attorneys in jurisdictions in which they are not admitted. However, I’ve never taken a position on whether foreign legal process outsourcing is a good idea for hiring lawyers—solos and small firms who need the assistance of a qualified contract lawyer. Until now.

Yesterday, I saw a post in a LinkedIn group to which I belong, called Legal Research & Writing. Here’s the post, by Jagriti Mishra, the head of business development at an Indian LPO company called Draft N Craft:

Bursting the 7 Myths behind Legal Process Outsourcing.

This article attempts to address 7 common myths associated with the LPO industry

1> Whether outsourcing is synonym to compromise in quality?
2> Outsourcing is a compromise with confidentiality
3> It is unethical to outsource
4> By outsourcing, the vendor takes away outsourcer country’s jobs.
5> Indian LPO vendors compete with foreign law firms.
6> LPO vendors need malpractice insurance
7> Legal outsourcing starts instant savings and has no obligations

Please refer the link below:-

http://lpowatch.blogspot.com/

Curious, I clicked through to the post, where I was immediately struck by Mishra’s discussion of the first “myth” behind legal process outsourcing:

Myth 1> LPO stands for PLPO (Para-Legal Process Outsourcing) and/or there is a compromise in quality.

The legal process outsourcing industry is at nascent state but is growing both monetarily and intellectually. Although it is true that High cost, more routine, lower risk legal works are easy to outsource, it in no way circumscribes the potentials of legal process outsourcing. The PLPO perception is a backlog, as the Legal outsourcing industry begun with routine work. Suffice it is to mention that various important player like (SDD and Lexadigm) have prepared Briefs and Motions to be filed in US courts. Our attorneys are trained for Multi jurisdictional research and assist:-

• US debt collection attorneys prepare Consumer Complaints, Briefs, and Motions for FDCPA, FCRA, FCBA and TILA violations.
• Social security attorneys in filing FIT, research on GRIDS, De novo appeal before ALJ.
• Bankruptcy attorney in intake form fill up and entering the information on Bankruptcy software.
• Foreclosure attorney in preparing complaints, motion and briefs to help the homeless.
• Contract review and management attorneys in contract Review including red lining and blue lining.
• Merger and Acquisition attorney for due diligence.
• For e-discovery solutions with cost advantage.

Quality is a term that takes new face with new situations. Clear guidelines, good teamwork and 100% quality check are the factors that coordinate in determining standards. It requires involvements from both the ends, keep a track of milestones and guidelines and the Outsourced service provider will ensure quality. We however, from our end add extra input to provide best quality deliverables. Had all vendors failed in providing quality this industry would have collapsed by now, the continuous growth reflects value.

Ironic, no?

Before other LPO companies get up in arms, I’ll concede that no doubt many of them have much better quality control than Draft N Craft (which I’d never heard of before reading Mr. Mishra’s post) appears to have. Nevertheless, the trainwreck of grammar and usage errors in Mr. Mishra’s post is a red flag. If the reading comprehension abilities of the foreign lawyers who work for a company like Draft N Craft is on par with the writing ability demonstrated in this post, any US lawyer who hires a company like this will have to do quite a bit of due diligence to ensure that the work product meets the standards set forth by the disciplinary authorities (to say nothing of the courts).

The other red flag in Mishra’s post is his claim that foreign LPO companies don’t have to carry malpractice insurance. Since at least 2003, experts have recommended that companies providing contract lawyering services carry malpractice (or errors and omissions) insurance. While it’s true that most malpractice policies should cover you for work performed on your behalf by a qualified contract lawyer, I’m unaware of any cases in which this has been challenged in the context of foreign legal outsourcing. I’d hate to be the test case.

Since I have never personally worked with a foreign LPO firm, I can’t comment on Mishra’s claims concerning security and confidentiality issues. And since I’m not an economist (heck, I didn’t even take Econ 101 in college), I won’t comment on Mishra’s analysis of the question of whether foreign outsourcing results in a net loss of jobs in the outsourcing country.

I agree with only two of Mishra’s arguments. An ethical foreign LPO company, like any ethical US-based contract lawyer, will not compete with you for your clients. The foreign LPO company (or a US-based contract lawyer who is not admitted in your jurisdiction) simply can’t represent your clients directly. And even a US-based contract lawyer who is providing services in a jurisdiction in which he or she is admitted to practice law won’t compete with you for your clients: simply put, we don’t want your clients—we want to work only for other lawyers.

I agree only to a point with Mishra’s analysis of the ethics decisions. Not a single bar association has determined that foreign legal outsourcing is per se unethical. However, Mishra gives short shrift to the caveats included in many of the opinions. You can find a more detailed discussion of the caveats in ABA Formal Op. 08-451 here.

The last thing that a busy solo or small firm lawyer wants to deal with when outsourcing substantive legal work is having to practically rewrite a brief to get it signature-ready. Sure, it costs more to outsource to a qualified, US-based independent contract lawyer than to send work overseas. But remember: you get what you pay for.

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