Can you imagine being on Christopher Columbus’s boat when he discovered the New World? To eat corn, potatoes, beans, hot peppers, tomatoes, avocados, cocoa, and turkeys for the first time?
Columbus Day is a federal holiday celebrating the discovery of the Americas by Christopher Columbus on October 12, 1492. But, it’s also a critical moment in history for free and open international trade.
Today, it’s often forgotten how the simple exchange of goods and services is responsible for supporting the U.S. economy.
In the case of law, outsourcing legal services to India has been a popular win-win solution allowing American legal services providers to lower costs and their Indian counterparts to reap a portion of the industry’s revenue. By 2014, India’s legal outsourcing firms are expected to surpass $1 billion, which is an increase of 38 percent from 2008, Valuenotes, consulting firm in Pune, India, estimates (via NYT).
Needless to say, both sides profit monetarily from this arrangement.
Nevertheless, just like small pox in the New World, sometimes the benefits of trade have drawbacks, as well.
Take, for example, a decision by the 2nd U.S. Circuit Court of Appeals against the company Glenwood, who operates a Connecticut-based medical billing business. Glenwood outsourced its operations to India, but instead of lowering costs and increasing revenue, the company alleges three former Indian employees used proprietary trade information to start competing companies in India and California (via Law.com).
To make matters worse, according to the suit, these new companies now serve some of Glenwood’s former clients (via Law.com).
However, the Court of Appeals ruled that the three alleged offenders in India could not be brought to court in Connecticut because the companies do not provide services for clients in the state. In sum, the court made it clear that U.S. law does not apply to business disputes overseas.
“In the face of an increasingly interconnected global economy and unbelievable advances in technology, the U.S. courts are going to resist any trend that leads to universal jurisdiction over commercial disputes,” said Attorney W. Glen Pierson, a partner at Wallingford-based Loughlin Fitzgerald, about the suit, according to Law.com.
“It’s unfair for any party that outsources to get the benefits of outsourcing while avoiding the risk of having to litigate whatever claims they may have overseas.”
Indian law already forbids foreign lawyers from practicing on Indian soil. So, if there’s further risk in terms of intellectual-property theft or increased competition by bringing your business abroad, suddenly the advantages to outsourcing legal services comes into question.
In a recession, firms nationwide are looking to cut costs, but is outsourcing to India worth the risk of client poaching?
In every decision about money, there are always hidden social and economic consequences to consider. Does the cost of hiring a few additional paralegals or an attorney outweigh the cost of losing a client, for example?
When managing a law firm, success is not always measured by the bottom line. Keeping services local or in-house can sometimes be an appropriate method for protecting your firm’s confidential information and legal strategies.
