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Cheap foreign labor has long been a frightening specter for some American industries. But these days, garment and steelworkers aren’t the only ones competing with lower-paid counterparts abroad. Many in-house legal departments are cutting costs by relying less on U.S. counsel and more on lawyers in India, New Zealand, South Korea, and other countries where salaries are lower. Sending legal work overseas is far more complicated than sending copying, accounting, and other back-office functions to offshore providers. Nonetheless, law departments have found ways to use foreign employees to handle such matters as patent prosecution, legal research, and contract drafting. While no one expects the American legal profession to be exported wholesale, the result could be less business for U.S. patent and litigation shops and perhaps even large general practice firms. Forrester Research Inc., a Cambridge, Mass.-based market research firm, predicts that more than 489,000 U.S. lawyer jobs — nearly 8 percent of the field — will shift abroad by 2015. Take the General Electric Co. GE began adding legal staff to its office in Gurgaon, India, in late 2001. It now has eight lawyers and nine paralegals there and has saved more than $2 million in legal fees, according to GE Senior Counsel Suzanne Hawkins. Like many companies, GE uses senior in-house counsel in the United States to interview, hire, and supervise its overseas lawyers. That should alleviate concerns about unauthorized practice of law, says legal ethicist Geoffrey Hazard Jr., a professor at the University of Pennsylvania Law School. A NEW ZEALAND SOLUTION It is not just large conglomerates like GE that use foreign lawyers. The Andrew Corp., an Orland Park, Ill., manufacturer of telecom equipment, has cut back on U.S. outside counsel by sending some patent application work to Baldwin Shelston Waters, a law firm in Wellington, New Zealand. James Petelle, the company’s secretary and vice president of law, says that outsourcing to Baldwin Shelston works particularly well because New Zealand’s patent rules are similar to those in the United States. “We wouldn’t be afraid to send anything to these guys,” says Petelle. At the Chicago-based outsourcing firm Mindcrest Inc. — which has a subsidiary in India that handles legal work — inquiries from U.S. corporations about outsourcing legal work “have easily tripled in the last year,” says George Hefferan III, the firm’s vice president and general counsel. Hefferan emphasizes that Mindcrest’s full-time Indian staffers do not practice law. But much of their work, such as drafting research memos and surveying the laws of various jurisdictions, are duties that American lawyers may otherwise have performed. Nonetheless, many Americans remain skeptical about the quality of work done by foreign lawyers. Citing such concerns as language barriers, time zone differences, and the fact that foreign workers are often neither trained in U.S. law nor bound to the same ethical obligations, many attorneys in the United States maintain that U.S. lawyers are irreplaceable. Patent lawyer Gregory Maier, a partner at Alexandria, Va.’s Oblon, Spivak, McClelland, Maier & Neustadt, contends that patent prosecution “is something like brain surgery. You really don’t want to necessarily have the low bidder. You want it to be done right.” Another patent lawyer, Carl Oppedahl of Dillon, Colo.’s Oppedahl & Larson, acknowledges that foreign workers may be equipped to prosecute patents for basic inventions. But when it comes to more complex creations, he thinks clients will want to stick with U.S. lawyers. FEWER JUNIOR ASSOCIATES? Even so, many expect the amount of legal work shipped offshore to keep on growing. That could be bad news for U.S. firms specializing in low-margin patent prosecution or contract work. But Hefferan contends that firms could benefit. Firms that want to focus on complex matters could use offshore lawyers to “get away from doing the quote-unquote commodity legal work,” he says. Much of the work done by junior associates could be handled by offshore workers for a fraction of the price. Howrey Simon Arnold & White, a law firm with a large IP practice, does not currently outsource any legal work. But managing partner Robert Ruyak says he would not rule it out. “I think that the quality or technical capability [of foreign lawyers] may rival or be even better than in the U.S.,” says Ruyak. “The reason we haven’t at this point is that there are some things we don’t know. If you go to a foreign country, there may be technology transfer issues, legal issues, that hamper your ability to do things.” So while it is hard to imagine junior associates losing their jobs to workers in Calcutta, it is clear that American law firms will need to think about how to keep pace with — or even take advantage of — a pool of foreign legal professionals. And for U.S. lawyers who already jokingly refer to their firms as sweatshops, the irony may soon fade. Jennifer Fried ([email protected]) is an assistant editor at The American Lawyer , an ALM publication based in New York. Additional reporting from Catherine Aman and Susan Hansen.

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