A new offshoring strategy?

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Another day, another article about a major international law firm getting involved in India’s legal market. Pretty soon, the question’s going to change from “Why is your firm in India?” to “Why isn’t your firm in India?” But today’s entry is notable for other reasons.

Howrey LLP, reports The American Lawyer, is opening a new office in Pune, India. Note, however, that Howrey is not contracting with an offshoring company like Pangea3 or SDD Global to have that company’s lawyers do work for them. Instead, Howrey is opening its own branded office, not to practise law (still illegal for foreign firms in India) but to handle document management, a labour-intensive task for this litigation/IP-heavy firm.

Howrey becomes the first US-based firm to go this route; previously, Clifford Chance set up a back-office operation in a New Delhi suburb. And as Ron Friedmann has noted, Seyfarth Shaw and Lovells have done more than just dip their toes in Indian waters too.

But here’s what’s really interesting. In the article, Howrey’s managing partner and CEO, Robert Ruyak, leads off by making very clear, “It’s not offshoring.” And the article goes on to include this quote:

Ruyak concedes that clients “don’t want to use outsourcing.” But this, he repeats, will be different. “We will have our own people working on this. It’s training, it’s control, maintaining the security, the quality of the results.” He adds that clients will have the choice of whether to use the Indian office to cut costs or to have their work done in the U.S.

Howrey evidently perceives that there is a reputational risk associated with offshoring — that some clients (and no doubt, more than a few partners) have reservations relating to quality, process or security. I haven’t heard of any Indian offshoring firm accused of any of these defects, but perception usually trumps reality, so Howrey seems to want a different approach.

That approach couldn’t be any clearer from Ruyak’s choice of words: “we’ll have our own people working on this.” Howrey wants to stamp its own brand on the work product it receives from India, reassuring nervous stakeholders inside and outside the office that only Howrey-trained and -approved lawyers will be working on their files. In the long term, then, Howrey and Clifford Chance might just be harbingers of a new strategy towards the Indian offshoring market: co-opt, re-brand, and profit.

Globalization is creating discontent. We live in an age when even the purchase of a port management company can bring about media panic and Congressional investigation if the perfectly ordinary business that made the purchase happens to be headquartered in the Middle East. In the midst of doubt and suspicion about foreign suppliers, businesses through the centuries have found success by sailing into the foreign territory, planting a flag, and letting their trusted brand be a guiding light to customers back home. I wouldn’t call it the most internationally mature or least xenophobic approach ever adopted, but it has proven to be effective.

Here’s what Clifford and Howrey might be thinking: on the plus side, there’s obvious economic and strategic value in having some tasks performed by low-cost, high-quality Indian legal talent. Offshoring really is a no-brainer in that regard. On the minus side, though, offshore firms are mostly new, largely untested quantities with which clients and firms haven’t yet built up solid relationships, so there are barriers of persuasion to be overcome. Even with the best Indian partners, that could take time, especially these days.

So why not take a more direct route? Why not affix the tested law firm brand with the solid history onto the less tested yet rich-in-potential offshore market? The persuasion barriers go down, the professionals in India can go about their business, and everyone benefits sooner. Why not do the law firm equivalent of opening a Burger King in Beijing, or buying the grand hotel of Ankara and rebranding it as a Hilton?

Nor need this be limited to the folks back home who sleep a little easier at night, knowing that the firm’s brand promise is insuring the work in Mumbai or Lahore. India, in the event you haven’t noticed, is an economic colossus in the making, especially in the knowledge industries. It faces challenges, absolutely; the infrastructure issues alone are daunting. But smart Western companies realize that the market potential within India’s borders is at least the equal of what lies outside it, and they’re more than willing to take some risk for a chance at great reward.

Foreign law firms can’t practise law in India. But they can plant their flags in a related industry (document management), build up relations and goodwill with the local Bar, let their brands seep into the marketplace, and prepare for the inevitable day when foreign law firms can open up full shops. Contracting with a Pangea3 is great for getting high-quality legal work for your Western clients, but it doesn’t give you market presence and first-hand experience and expertise in India itself. Maybe Howrey and Clifford have decided to buy, not rent, that expertise. If so, that could presage a whole new dimension in the relationship between the legal industries of India and the West.

I don’t want to wrap up this entry without pinpointing Howrey LLP as maybe one of the world’ s most innovative law firms. Outsourcing its legal work is nothing new; as the article indicates, the firm already operates a large document management operation in a Virginia suburb. But Howrey has also shown itself to be a trailblazer in training its lawyers and devising a new way to compensate its associates. If a willingness to innovate (and a knack for doing it well) is a harbinger of great success down the line — and I think it is — Howrey is a firm to watch.

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