When Henry David Thoreau said, "Success usually comes to those who are too busy to be looking for it," he could have been referring to lawyers. Maximizing billable hours is paramount and particularly challenging for lawyers affiliated with small firms or working as solo practitioners. It's paradoxical that with every new case comes a workload that demands attention, taking precious time away from other projects that can lead to more business. For this reason, outsourcing in the legal industry has become an established practice.

More recently, the potential of legal outsourcing has broadened, with the advent of global service delivery capabilities that include a wider range of legal service offerings. No longer are lawyers limited to sourcing contract lawyers domestically; skilled legal services are available in regions where labor costs are lower. In some cases, it's possible to source the services of expatriate American lawyers whose services are available on a flexible basis and at lower cost.

Law firms have been outsourcing highly labor-intensive back-office tasks such as document indexing, transcription, and discovery mining for many years--all under the broad category of litigation support. The major enabler for this was technological change. The dominance of the PC and the emergence of electronic document management capabilities made it possible for administrative tasks to be sent offshore to cheaper labor centers. Risk was mitigated by the fact that the tasks handled typically were not mission critical and did not require the services of highly skilled personnel. By contrast, the business drivers in today's legal outsourcing environment result from the maturation of the outsourcing industry rather than technological advances.

While innovations such as broadband connectivity, cheap telecommunications, and content management systems have made the benefits of outsourcing even more compelling, it is the progression of the legal outsourcing business model itself that has validated the market and sparked growth. Today, law firms have the option of outsourcing more sophisticated legal work to experienced lawyers who are living overseas. This is because outsourcing firms have made a conscious effort to move up the value chain. This requires investment in both the requisite technical infrastructure and skill sets. Client law firms recognize this and are generally less price sensitive in favor of fostering a partnering relationship that takes time to cultivate. In a field historically characterized by commoditized services, the payoff for outsourcers that get it right is twofold: higher margins and long-lasting client relationships.

It appears that for the time being, however, smaller firms continue to be ignored as outsourcers focus their efforts on generating business from big-name law firms. Interestingly, smaller law practices stand to greatly benefit from these improved service offerings, in some ways to a greater extent than larger firms. Outsourcing is a business of skill and scale. Larger firms generally have access to skill; their challenge lies in having the scale to economically handle large cases that can last for several months at a time or to find ways to extend their service offerings to existing customers at competitive price points. Small firms, on the other hand, have a need to "do more with less" and can gain a powerful boost by utilizing outside lawyer resources to help with core business needs if a sustainable and cost-effective model is available.

Access to skilled lawyers can level the playing field for smaller firms and sole practitioners. Traditionally, big firms in any industry have had the advantage of going global to seek low-cost labor. This is accomplished in one of two ways: either open an offshore branch or enter into an arrangement with an outsourcing firm. These choices usually aren't available to smaller businesses because economies of scale can't kick in.

With a greater proportion of small firms, the legal profession is highly fragmented. According to the U.S. Department of Labor, the vast majority of the 35,000 American law firms consist of 10 or fewer lawyers and almost one-half of all lawyers in private practice are sole practitioners. To make serving this market segment economically feasible for legal outsourcers, it's a matter of having the ability to absorb the less-predictable flow of work that comes with serving smaller customers. This can be accommodated gradually by investing in customer acquisition and amortizing service delivery costs over numerous customers.

For the legal outsourcing market to flourish and live up to its potential of supplementing law firms of all sizes with high-skill capabilities, vendors will need to target their services to the full spectrum of law firms. This is because it's the smaller firms in aggregate that are driving the need for lawyers and transforming the market from just being a low-cost provider of low-end support labor.

To date, the bulk of outsourced legal work continues to be lower-end support services. The strongest evidence pointing to this is that the bulk of work sent overseas continues to be handled by nonattorney labor. Low-end work that doesn't require the skill of a lawyer can be performed in traditional third-world destinations for as little as one-tenth of the domestic cost when overhead is factored in. India controls about two-thirds of the legal outsourcing market, which suggests that it's mostly office-support services that are being outsourced. While that's an appealing alternative to hiring temps or paralegals to handle work that doesn't require the expertise of a lawyer, further value can be derived by outsourcing more complex needs.

There remains a lot of potential for law firms to advance their outsourcing strategy and further optimize the level of skill they're accessing. Since the legal field carries high overhead, cost reduction remains an important motivator. Accordingly, the legal outsourcing business continues to be dominated by English-speaking countries in Asia such as India and the Philippines because they offer the best prospects for cost reduction in instances where low to moderate skill is required. U.S. Census data indicates that in addition to nearly one million lawyers, there are about 300,000 paralegals and legal assistants and slightly more than 200,000 legal support staff. Ancillary staff represent one-third of the legal profession's workforce!

To be sure, the promise exists for these resources to perform higher-skilled tasks that enter the domain of a skilled lawyer. If the medical field is an indicator, consider that many HMOs now offer patients the option of getting major procedures done in India at greatly reduced out-of-pocket expense. Similarly, low-cost labor destinations deploy native lawyers trained in American law to assist law firms by managing higher-level services such as patent searches, writing of briefs, and contract review. A small number have even passed a U.S. bar exam.

In spite of all the cause for optimism, these countries have cultural limitations where the best outcome one could hope for is to manage obstacles rather than eliminate them altogether. Business communication and protocols are a stark contrast from that of the unabashedly vocal nature of Americans. Even senior personnel have difficulty saying "no" to challenging deadlines or to acknowledging potential shortfalls. This isn't borne out of a desire to intentionally deceive, but rather a truly cultural tendency to avoid conflict or to be the bearer of bad news. So, when a manager in India says, "Yes, we'll meet the deadline," it may sometimes be more accurately interpreted as "I'll do my best." This same behavior is evident in junior workers, who avoid voicing a contrarian view. This behavioral norm stems from living in a crowded population that competes for scarce resources. Put another way, it's as natural a part of their culture as it is for Americans to become visibly agitated on a crowded bus with no elbow room.

Just as managing expectations through effective communication is a factor in successful outsourcing relationships, so is cultural literacy. Projects where there are clearly defined methods or outcomes can be managed well in traditional outsourcing settings. More subjective requirements are not immune to difficulty. In India, where the legal system, as in America, is rooted in British common law, the spoken and written English tends to be in a British style that is difficult to modify. There is also commonly understood slang that is regularly used in American English that is easily taken for granted. For example, the phrase "no brainer" is understood among Americans but would likely be misconstrued by someone not familiar with that term. This is an example of the type of knowledge that can only be imparted through experiential learning. In an ideal outsourcing relationship, workers are integrated to serve as a seamless extension of operations. This can be difficult to accomplish when cultural tendencies exist and law firms must be prepared to manage this as part of the trade-off when electing to outsource to such vendors.

Choosing the right outsourcing arrangement has a lot to do with your objectives. While it's tempting to pursue cost savings, it's also important to be mindful of the limitations that exist without the involvement of American lawyers. Such a model lends itself well to simpler project-oriented assignments rather than establishing long-term strategic relationships. To satisfy the need for enhanced capabilities, a new model is emerging that utilizes American resources that are living in Israel. That they reside in Israel is noteworthy only because there is a large and growing population of Americans living there, making this model appealing since it yields access to a sustainable talent pool.

According to the Jewish Cooperative Library, 120,000 Americans are living in Israel and more than 3,000 North Americans immigrate into the country every year. This number has trended upward in recent years because organizations have formed to promote immigration to Israel and help provide the necessary resources such as housing and employment to those wishing to make the move. Among the American citizens residing in Israel are thousands of lawyers who have been raised and educated, admitted to the bar, and practiced law in the United States. What's more, because they've chosen to live there for ideological reasons, they can be counted on to remain there on a long-term basis. To American lawyers living in Israel, this is an appealing option that allows them to earn a competitive wage and continue in their field of expertise. The alternative would be to obtain admission to the Israeli bar by starting from scratch with a new legal system and a foreign language--or to abandon the legal profession altogether and compete for the limited number of jobs that would otherwise be available to Americans.

A general rule of thumb is that cost savings of about 30 to 40 percent can be achieved through Israel and about 50 to 60 percent in Asia. The cost reduction can be significant in either case and a small number of providers are further optimizing the cost/value equation by offering a hybrid solution that combines both clusters of resources. Clients may opt for a joint workflow that taps into skills as needed and integrates Asian and American resources together. This is an attractive option for larger customers where the savings would be more pronounced. An added benefit can be realized when American lawyers train and oversee their Asian counterparts; creating the opportunity for a 24/7 operation.

The impact that outsourcing has on the legal profession will remain positive because it generates an incremental benefit by helping lawyers accomplish more in an industry that continues to grow. The legal industry today is over $200 billion and the U.S. Department of Labor has forecast sustained growth of over 10 percent per year through 2012. A study conducted earlier this year by Robert Half Legal points to an emphasis on legal expertise in compliance, regulatory issues, litigation, intellectual property, and real estate. This increased demand will dramatically outpace the rate of the entire legal outsourcing market. In 2005, Forrester Research projected that U.S. legal jobs would move overseas from an estimated $70 million spent last year to a cumulative total of nearly 80,000 jobs filled offshore by 2015 to establish a $4 billion market.

Even taking into account aggressive forecasts, the total amount of legal work sent overseas will remain below 2 percent of that total, and a considerable portion of that will be attributable to lower-skilled work that is not handled by lawyers. Outsourcing is not a threat and should be embraced by lawyers who are looking to free up resources and enhance their efficiency in serving their clients.

Outsourcing has always been about providing optimal skill, operational scale, and, of course, cost reduction. The business models vary, but one thing seems clear: the small firms and solo practitioner audience is largely underserved. As the market for outsourced legal services continues to grow, you can expect that providers will be better equipped to profitably serve smaller practices.