The American Bar Association (ABA) has waded into the debate over legal outsourcing by describing the outsourcing trend as "a salutary one for our globalised economy," reports the New York Law Journal. 

A growing number of legal process outsourcing (LPO) companies have launched in recent years to offer the services of lawyers abroad to handle the most labour-intensive aspects of US legal matters, especially document review in large-scale litigation. India has been the most popular destination for legal outsourcing because it has a common-law system and English is widely spoken.

Companies operating there have hailed the advisory by the ABA's ethics committee as a major step forward for their nascent industry.

"Several of us were waiting for this," said Ram Vasudevan, the chief executive officer of New York-based Quislex, which has 170 lawyers in Hyderabad, India. "This lays out the framework for how to do this."

Tuesday's announcement by the ABA states that sending legal work overseas is ethically permissible as long as the lawyer doing the outsourcing takes steps to ensure the protection of client confidences and preservation of lawyer-client privilege. The advisory also states that lawyers should check to make sure that foreign lawyers are suitably trained and competent and that bills for outsourced work be reasonable.

Vasudevan said the major LPO companies already take all of the precautions outlined by the ABA but said the advisory would help set industry standards for newcomers and also comfort potential clients still wary of outsourcing legal work.

David Perla, the co-founder and co-CEO of New York-based Pangea3, one of the largest LPOs with 300 lawyers in Mumbai, India, said the positive language of the ABA's opinion was particularly heartening. A handful of state Bar groups, including the New York City Bar Association, have already signed off on overseas outsourcing, but none has been as enthusiastic as the ABA, he said.

The advisory noted that outsourcing "affords the lawyers the ability to reduce their costs and often the cost to the client to the extent that the individuals or entities providing outsourced services can do so at lower rates than the lawyers' own staff." The ABA also said outsourcing created new opportunities for smaller firms to handle larger matters.

Such language would "lessen the fear and uncertainty that opponents of this are spreading," said Perla.

More US news, comment and analysis

The New York Law Journal is a US sister title of Legal Week.