Contract attorney work grows … but in onshore centers, not India
Feb 20th, 2009 | By mrposse | Category: Changing Legal Landscape, India/Offshoring 
Even with contract attorneys providing law firms the opportunity to cut their bills/its costs with respect to e-discovery, the expenditures can still be prohibitive, particularly in high-cost regions like D.C. and New York where the cost to house document reviewers on a contract basis is higher than elsewhere in the U.S. As we have reported in the past, besides the state-of-the-art technology driving costs down, the drive to cut costs has led corporations and law firms to seek other ways to cover their e-discovery work — without sending it overseas (click here and click here).
These outsourcing discussions highlight a law firm or client’s desire to simply seek lower cost alternatives, and that has led to a growing development of “farmshoring” or “onshoring” by staffing projects in preferred locales that the industry calls the lower cost “on shore” centers of, for example, Atlanta, Charlotte, Columbus, Houston, Indiana and Tennessee, as well as working with law firms in smaller metropolitan areas where billable rates are lower but quality is just as high, or going with lower cost niche firms throughout the country.
As Lumen Legal says in its recent white paper: “As such, the industry is re-thinking its cost-saving strategy even further, expanding it to ask not only who is performing document review, but where. Companies are starting to accept that the location of the contract lawyers is irrelevant.”
And so we’ve seen this greater movement to “outsourcing” document reviews but to these “on shore” centers — to U.S.-licensed lawyers in less-populated, less expensive areas of the country. It’s the alternative to offshoring that many clients and attorneys find unattractive. Ohio, North Carolina, Tennessee and Texas, for instance, have a wealth of law schools, a supply of legal skills and legal services capacity, and housing document reviews is not as expensive as other regions.
And that’s why we’ve recently seen a 50+ lawyer document review in San Antonio, a 45+ attorney document review in Tennessee and a soon-to-launch 50-75 attorney document review in Ohio.
And that’s why our staffing agency list keeps growing . You can find a complete list of staffing agencies (with more to come) under “Staffing Agencies” on our home page.
Yes, there is work — and it’s not all foreign language and definitely not like the work flow in days of yore — but it definitely is not all in India. We are certainly NOT discounting the power of offshore centers but there is also an undercurrent in the U.S., away from the metro centers.
So we are expanding the job lists to serve new Posse List members and new agencies. You can find a complete listings of all our job lists by clicking here. And there will be more lists to come as we add several cities.
I now know of at least 6 document review centers in Houston, 3 of which have been set up since last summer. In addition, one firm in town has been hosting an in-house contract attorney review that has been in the 50 plus range for the last year. I can’t say that the review centers have been busy the whole time, though. In fact, 2 of the centers have run at about 10% capacity since last summer. There also, unfortunately, appears to be some downward pressure on hourly rates as well.
[...] I had been thinking about how many document review centers had sprung up in Houston lately when the Posse List came up with this post about on-shore document reviews. [...]
This is interesting, however I would like to know what the going rates for document review work are in those other states where the cost of living is less. I am not so sure that the rationale espoused in your article is sound. Rates have come down in New York City. I’m sure they are going down in other states too. So, I’m not so sure the fact there is less work here (in NYC) has to do with the fact that legal staffing agencies couldn’t find attorneys to work at $30/hour as opposed to the $35-40/hour which had become the norm only in the past year or so. If the rates in those states were in the teens or low 20s, then perhaps your rationale would hold up. Why don’t you tell us what the rates are?
Claire – it’s not just the hourly rate that matters. A huge part of the agencies’ cost concern has to do with housing these projects. How do you think they are able to find short term or month-to-month commercial leases on such short notice? These agencies can’t own all the real estate in big cities like DC and New York. And projects may only last a few weeks to a few months. The cost savings of leasing a center in a small city cannot be overestimated as a driving factor here. The wage differential between NYC and Tennessee may only be $5-8/hour. The REAL savings is on the office space!
Certain smaller cities outside major metro centers are now becoming “mini meccas” for doc review calls. One notable venue is Wilmington, Delaware.
I wonder if some kind of house-sharing program between residents of nearby cities can be arranged. Attorneys with living quarters in DC, Philly, Wilmington and Richmond might put their houses or apartments on a regional list. If I live in DC, and have just finished a project here when another comes up in Wilmington, I could take that and use a shared residence in Delaware, while another doc reviewer uses my place in DC.
Bicoastal arrangements could also be worked out between NYC and LA, etc.
Of course, all involved would have to be comfortable putting their houses on the list. But it’s kind of like reciprocity — I’ll trust you if you trust me.
The shared living arrangements wouldn’t necessarily be directly reciprocal, though. I might have a place in the DC metro area (say, in Arlington, VA) and be doing a doc review project in Wilmington, while a lawyer from Philly might be using my place in Arlington, and a lawyer from NYC might be in his house.
If one participant’s project ended abruptly, he/she would have to be comfortable with living with that person temporarily while sh/she finishes the project they’re working on, or, if there are enough lawyers signed up in the network, a guest could easily be reassigned to a new place in the same city.
I think this idea could be set up pretty easily and would have huge benefits…
Ideas??
The competitive pressure on solos is growing. If previously you could make a living on document review, this becomes more and more difficult, regardless of whether your Indian colleague or your learned friend from Ohio is driving down prices.
Dilbert, many law firms in places such as NYC already have the space. They don’t need to pay additional rent. They already have the long-term leases (which they, for the most part, have not relinquished yet) or they own their spaces. So, there wouldn’t be any additional cost with regard to leasing space. I am perfectly aware of the cost of leasing space in New York City. Perhaps you’re thinking about the agencies that set up makeshift document review space. Most of the work I’ve done in NYC has been at a large law firm. Or are you insinuating that the law firm passes on the cost of using its space in the rates even if it already leases or owns the space?
commercial rent has got to be coming down like crazy in NYC as the major banks vacate millions of square feet of space…I wonder if this will have a boomerang effect
[...] In several earlier posts (here and here) we noted how the drive to cut costs has led corporations and law firms to seek other ways [...]
[...] vast majority let business requirements drive the location decision”. As TPL has reported (click here) we have seen a dramatic increase in [...]
[...] 5. A good portion of the subprime and credit crisis-related doc review work seems to be centered in the Atlanta area, the Carolinas and the Midwest — lower cost regions. As we have mentioned before, farmshoring has been gaining favor (click here). [...]