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For Scott Rickman, the question is: Why pay big-firm associates $200 an hour to do document review when you can ship it out to India for $25 an hour?

High rates and the increasing bulk of e-discovery have pushed the associate general counsel at San Francisco-based Del Monte Foods to seriously consider using sources outside his outside law firm for the grunt work of litigation.

"What caused me to start to look into this issue was just the tremendous cost involved in discovery," said Rickman. "It doesn't make sense to pay 150 or 250 dollars an hour at some of the larger firms to do the document review -- it just seems like overkill."

Some in-house departments have already reached that conclusion. It has been reported in recent years that big companies like Microsoft Corp. and Cisco Systems Inc. offshore some patent application work. Companies like San Jose's Cadence Design Systems Inc. dabble, occasionally using Indian companies for large document review projects.

"It is a trend that I have observed -- a lot more companies are really considering it, if not doing it," said Stephen Yu, general counsel at Macrovision Corp., which doesn't outsource any legal work.

While many are still undecided or tentative, market researchers are bullish. Boston-based Forrester Research estimates the current value of legal work shipped overseas at $80 million, but predicts that $4 billion worth may head to India by 2015, according to an article last year in Legal Week, a Recorder affiliate.

With futuristic names like Pangea3, Office Tiger and Lexadigm, companies that get legal work done in India are continuing to pop up, and investors are betting they'll succeed. Pangea3, which employs 240 lawyers in three Mumbai offices, got a $4.4 million investment by GlenRock Capital Advisers, the fund headed by former top private equity lawyer Lawrence Graev, who now serves as Pangea3's nonexecutive chairman. Last year, the company scored a $7 million investment by venture capital firm Sequoia Capital, which also helped shepherd Yahoo, PayPal and YouTube.

The prices are certainly appealing for in-house counsel looking to cut costs. Rickman said he can get document review done in India for between $25 and $65 an hour. That same work also could be done for about $70 an hour by contract attorneys hired by law firms, another attractive option, he said.

The outsourcing issue takes aim at a sensitive area between companies and outside law firms who are always going back and forth about ever-rising rates.

"The private law firm partners are not enamored by it because they lose control and it cuts into their margin," said Wendy Tice-Wallner, a consultant with the Tice-Wallner Group in San Francisco.

Law firm partners -- as well as some in-house counsel -- also enumerate a number of risks associated with shipping work to foreign locales. Katherine "Kathi" Lutton, who heads Fish & Richardson's litigation practice, says it's better for lawyers who are working on the case to review related documents.

"You get a big picture of the case when you see the documents," Lutton said. "The bigger risk is, are you finding and producing the right documents?"

In mulling his decision, Del Monte's Rickman says he hears a lot about the risks of outsourcing legal work, but it's not something he's overly concerned about.

"In these articles, there's always a quote from a partner at a large law firm about the risk of sending work to India," Rickman said. "Yes there's a risk -- there's a risk to law firm profits."

WHEN IT WORKS

Mona Sabet, who heads IP at Cadence, said her company has found that some matters are better outsourced than others. Large document review projects -- Cadence is using an Indian company for one now -- make sense because of the lower cost and routine nature of the work. But for other services, like patent drafting, Cadence hasn't gotten a lot of bang for its buck, she said.

"I think some of the reason for that, at least in India, is that the business of patent drafting in India is still a relatively new one," Sabet wrote in an e-mail. "As with any complex activity, it takes years before an organization can develop the depth of proficiency necessary to compete with others who have been in the industry for decades."

Macrovision's Yu said his company doesn't outsource patent work but might consider outsourcing some document review. He said familiarity with his company, especially when it comes to patents, makes relying on existing legal relationships a better deal in the long run.

"The price is appealing," Yu said, "But it's also the quality of the work in terms of the context of the business -- knowing what's important for the business and knowing the strategy of the business."

Julie Mar-Spinola, a former VP at Atmel Corp. who headed up litigation and intellectual property, said she never liked the idea of sending document review or patent work to lawyers halfway around the world who don't know the company.

"I think to ensure quality and consistency in the patent itself, you really need someone who understands the business and technology," said Mar-Spinola, who now heads her own e-discovery consulting shop, e-Compass.

Mar-Spinola also said issues of confidentiality and conflicts -- such as the potential for an outsourcing firm to be doing work on both sides of a litigation -- are issues in-house counsel should seriously weigh.

In his search, Rickman said, he's found it difficult to find a lot of information because companies don't like to talk about sending work overseas. But he said the bright economic outlook for the legal outsourcing industry makes him realize that he's not alone.

"What that shows is that we're not the only ones looking at this," he said.

Anthony Lin of the New York Law Journal, a Recorder affiliate, contributed to this article.

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