Legal outsourcer Mindcrest taps India for talent

The recession has been hard on law firms, as struggling corporations look to cut costs and see their legal services bills as an easy target. At the same time, the volume of work is still there, creating an opportunity for companies that can provide legal services efficiently and inexpensively.

So while many big firms are laying off associates, Mindcrest Inc., a Chicago company that uses a full-time staff of lawyers in India to perform low-level legal tasks for U.S. corporations, is growing.
 
Considering the value proposition, it’s no surprise: Mindcrest charges $20-$30 per hour for the kind of work that a young associate at a U.S. firm might do for $300.

George Hefferan, Mindcrest’s vice-president and general counsel (and a former big-firm attorney at McGuire Woods LLP), tells Crain’s contributor Steve Hendershot about Mindcrest’s business model, and why the offshore legal services industry is growing.

George Hefferan

Crain’s: What types of legal work are corporations most willing to send overseas, and has that changed over time?

George Hefferan: Initially, the idea of sending legal work offshore was fairly novel, and we received lower-risk work such as basic legal research. (Mindcrest began in 2001.) More recently, as our market and our industry have grown, coupled with a bad economy, companies and law firms have been looking for lower-cost solutions for more voluminous work. For example, a big chunk of the cost of large-scale litigation is taken up by document review, part of the discovery phase of litigation where you’ve got large volumes of data that require review for purposes of relevance to the litigation and attorney-client privilege. Historically, law firms have used young associates to do that kind of work. But for the last several years, clients have balked at that, so instead firms have subcontracted or hired contract lawyers to do that kind of work.

We’re able to do that same work at lower cost and in a more process-oriented way. There’s been a tremendous increase in interest among corporations in using companies like ours. Even at law firms, lawyers are handling more cases on a fixed-fee basis, and they want to devote less of the pie toward first-pass document review so they can reserve more of it for paying the partners to do what they do best, which is provide sophisticated, complex legal advice to their clients. So on a big litigation case, they’ll go to their client and say, "We’re using Mindcrest to do first-pass document review at reduced cost. Then our law firm will do the subsequent reviews and provide advice to you on how to handle this litigation matter."

As confidence grows among our client base that the work that they give us can be done well, there’s an increased willingness to try out more complex work.

Crain’s: Indian lawyers are trained to practice law in India, which of course has a different legal system than the U.S. Does that put them at a disadvantage in performing U.S. legal work? How do you counteract it?

GH: India has a common law system that is based on the United Kingdom system; ours is, too. So a lot of the concepts that Indian lawyers are taught in law school are very similar, and they’ve been trained in the legal analytical process.

In terms of document review, a lot of the knowledge required to determine whether documents are relevant or privileged is specific to that particular review and you just need a sharp young lawyer — it doesn’t matter if you’re putting a young Indian lawyer or a young U.S. lawyer on it. Also, we emphasize the process and quality control we bring to the game. We’re putting our full-time employees on this; this is what they do all the time. They work within a process we’ve created that’s geared toward achieving the highest quality we can.

That may differ from a U.S. firm that’s using contract lawyers who tend to be hired on a per-project basis. A lot of them are just doing document review to pay the bills until a better opportunity comes along. And no young associate coming out of a good law school wants to be stuck on a document review — they want to be involved in more challenging work. Whereas, if we do work for one client on a litigation document review, and then the same client comes back in six months, we’re able to put the same employees on that second document review, and at that point they’ve become familiar with the client’s business and even the types of documents they might be called upon to look at.

Crain’s: If young U.S. associates don’t want to do document review, what makes it more compelling for young Indian lawyers?

GH: Lawyers’ options in India are more limited than they are here. There’s only a handful of very large firms that are desirable there; most firms there are mom-and-pop shops, and if you’re not related to mom or pop, your chances of upward mobility are very limited. We provide a very stable work environment and the opportunity to work for well-known global corporations. We compensate them at a fairly high level in that market and provide a very stable workday, 9 a.m. to 6 p.m. in a nice office. In comparison with the other options available for young lawyers, it’s very desirable, and we’ve kept our attrition rates very low. Working for a company in our industry represents a very desirable career path there.