An interesting read on legal process outsourcing, though we strongly disagree with Mr. Perla’s view that the only lawyers who work for staffing agencies “are the ones who couldn’t make it as real lawyers.”

The problem lies not in the quality of the lawyers who work for staffing agencies (there are many former associates, partners, GCs, and sole practioners who have graduated from top-tier law schools and worked at top-tier firms and businesses who either do this temporarily or on the side as they work on other ventures) but in the lack of feedback regarding work quality that is transmitted to the marketplace and, in turn, the lack of incentives for contract attorneys to perform at a high level.  There are highly-qualified lawyers both in the U.S. and in India and, as pointed out in the article, the administrative costs are often lower when using resident U.S. licensed attorneys.

That is not to say that outsourcing certain legal work overseas does not have its merits, but rather that an open and transparent marketplace is what is needed and that is why we launched HireTrade.

We came across an interesting article on the billable hour.  While critics have been saying for years that the billable hour is dead, the billable hour does retain usefulness as a means of calculating output in a field such as the legal field where output is so variable and otherwise hard to quantify.  Thus, we think the death of the billable hour is greatly exaggerated.

However, we certainly agree with Mark Chandler and other critics regarding misalignment of interests between clients and service providers.

 “Put most bluntly, the most fundamental misalignment of interests is between clients who are driven to manage expenses, and law firms which are compensated by the hour,” said Cisco’s general counsel, Mark Chandler.

We think transformative changes to the legal industry are already occuring and that competition and change will benefit clients and the legal marketplace. 

In fact, our solution is our patent-pending HourlyValue Ratings System, whereby professionals and firms are still free to charge by the hour (or through other methods), but where the value they provide per hour billed is transparently communicated to the market.  Thus, there is a disincentive to overbill and every incentive to do the best work possible, as service providers remain accountable to the marketplace for their output per unit billed.

While we will stick to business, legal, and IT services at HireTrade, it seems that no market is immune to the Indian outsourcing boom.

As reported by the Associated Press, outsourcing pregnancies is a growing business in India:

Experts say it could take off for the same reasons outsourcing in other industries has been successful: a wide labor pool working for relatively low rates.

As with outsourcing generally, the economics are attractive for both the buyer and seller of services.  As a result, we suspect the trend will only continue and accelerate for the foreseeable future.

As reported by legalweek.com, a number of clients are attempting to devise their own internal ratings of outside counsel.  As the article suggests, many clients have abandoned such attempts in the past, finding them unwieldy and not very useful.

The task of ranking firms does get complex with different types of work — you have to look at different types of standard transactions and then look at how much different types of lawyers charge.

Our HourlyValue Ratings System solves many of these problems and is also a system built upon the collective wisdom of all clients, rather than an internal system with limited data.

by Neil Sandhu 

As I pointed out in my last post, the best legal staffing agencies certainly do make the market for contract legal work more efficient. However, inefficiencies still abound in the contract legal staffing marketplace.

At HireTrade, we believe that one of the major factors contributing to an inefficient market is the lack of information transparency in the marketplace regarding individual contract legal professionals. To date, we have had a one-sided system where contract legal professionals are viewed as interchangeable and have little or no market power. With little information transparency, high-performing contract attorneys have a difficult time building an identity, being rewarded for their good work, and branching out to more substantive work. Given the lack of identity and reward, even the really bright contract attorneys (of which there are many) don’t have the incentive to perform at a high-level— there is essentially a “race to the bottom” where contract attorneys make the same money and have the same rewards whether they perform at a high-level or a low-level, so the rational thing to do is to perform at a low level. The whole system is set up for mediocrity at best (with the resulting low wages).

The problem to date is that each staffing agency has its own limited closed database of professionals and professional performance data. This proprietary information does not reach the market and, even if it did, it can not be easily aggregated with information from other hiring parties. Furthermore, the limited nature of the information causes it to be of little value even to those agencies who have access to some performance information – i.e., a professional could have performed mediocre on a project for one agency while the same professional did great work for another agency, so each agency has an inaccurate view of the professional’s overall average performance. The agencies (and high-performing professionals) would all be better off if the information from multiple hiring parties could be aggregated and accessed by all hiring parties.

Our HourlyValue Ratings System represents a breakthrough in aggregating professional performance data and presenting it in a standardized and intrinsically valuable format available to all hiring parties. The point of our ratings system is not to punish contract attorneys, but rather to provide information to the marketplace such that high-performing contract attorneys are not treated as fungible and that such contract attorneys can command a higher pay rate. In addition, we allow independent legal professionals to create a unique profile and include a variety of information in such profile, so as to level the playing field between contract legal professionals and attorneys at law firms, who have had such profiles on their law firm websites for years.

There is no reason why contract attorneys cannot become high-end free agent legal professionals and, in effect, have their own practice where they freelance for various agencies, and also get direct work from other hiring parties and clients. Competition and market transparency are, on the whole, good things for high-performing contract attorneys. Many contract attorneys are highly-qualified, very bright attorneys with a myriad of experiences, including diverse legal and business experiences that often far surpass the limited skill-set of associates at law firms - the problem is that the marketplace does not have easy access to information about individual contract attorneys. As a result, the high-performing contract legal professionals in effect subsidize the low performers and all are treated as a group, with each individual fungible. Differentiation is the key to prosperity in the global professional marketplace that is emerging. If you are just an interchangeable legal temp in the eyes of agencies, clients, and other hiring parties, you have no market power—as a result, you have little power to demand a higher wage and are vulnerable to being outsourced as a result of technology in the coming years. However, if you are known as a high-performing contract legal professional, you have the ability to use technology and the Internet to your advantage in order to gain access to additional work and new clients more easily than ever before and, as a result, have hiring parties compete for your services.