The Hindu News Update Service

Chennai, Sept. 6: The majority of legal services in the West can and should be sent offshore, says Mr Russell Smith, President and Chairman, SDD Global Solutions Pvt Ltd, a Mysore-based legal services KPO (knowledge process off-shoring).

“And we are talking about services that now fetch a price tag of $250 billion per year and growing,” he adds, in a recent email interaction with Business Line.

“The vast majority of the offshored work will go to India, because of 80,000 English-speaking law graduates entering the market each year, the ‘common law’ system India shares with the US and the UK, and India’s reputation as the leader in outsourcing.”

SDD is a subsidiary of the US-based Smith Dornan Dehn (www.sddlaw.com), a law firm specialising in IP (intellectual property) and media work. “Approved by the Government of India (STPI) as an IT-Enabled Services company, and funded by State Bank of India and investors from Cisco Systems, Goldman Sachs, Merrill Lynch, and Barclay’s Capital, SDD Global Solutions provides professional solutions, by leveraging information technology and a high-quality workforce for clients worldwide,” informs the company profile.

Mr Smith, a Columbia Law School graduate and former partner at Frankfurt, Garbus, Klein & Selz, has over two decades of litigation and other legal experience relating to the television and film production industries, broadcast networks, motion picture studios, and production companies.

Excerpts from the interview.

Why did you choose Mysore for your India-based operations?

I discovered the beauty of Mysore while studying ashtanga yoga here with Sri K Pattabhi Jois. My law partners and I figured Mysore would be ideal for our offshoring company. As a university town of nearly a million people, it has plenty of talented candidates, a lower living cost but a higher quality of living in contrast to India’s big cities. When we did location research, we found out that our idea was hardly original. It’s no accident, for example, that Infosys now has its largest facility in Mysore. We found out that astute business analysts from all over the world have concluded already that Mysore is an ideal location. They’re saying it’s the next Bangalore, but hopefully without the congestion. I met someone who worked for a prominent consulting firm that did a comprehensive report for a Fortune 500 client, and the conclusion was Mysore has half the cost of living, and less than half the employee attrition rates, compared to so-called ‘Tier 1’ cities.

What made you choose India when you could have chosen China or Australia or Poland or even your good ol’ US?

For starters, an employee pool of over a million English-speaking lawyers and 80,000 English-speaking law graduates every year are hard to beat. Also, India shares the same, British-based, “common law” legal system that we have in the US and the UK, so Indian law graduates do not find it hard to learn Western legal skills.

On the big subject of money, everybody knows about the relatively low cost of living in India, which in turn means lower salaries. But another tremendous saving is in the price of office space. Many traditional law firms locate their people in expensive offices in the largest cities of the West. This has led to a situation where most of each dollar from clients goes for office rent. By contrast, the cost-per-square-foot of the SDD Global Solutions office building in Mysore India is 1/43rd the cost of space in midtown Manhattan. Our clients pay for legal services, not real estate! I would also like to say that the enthusiasm of the Indian lawyers who work for us is contagious. Unlike most American lawyers, they like their jobs!

Could you elucidate three basic activities that you think SDD would excel in when compared to similar firms across the world?

I would say our three most sought-after services are legal research, legal drafting, and the handling of US immigration visa applications. Because we are the only legal outsourcing company in India managed by a US law firm, we provide the same or better results as US attorneys do. And because we are in India, we get the work done with increased speed (often overnight), and at a fraction of the cost.

Essentially the Indian attorneys in our Mysore office are doing the same work as if they were licensed attorneys in the New York office of our US law firm. Except that they do not actually provide legal advice, and obviously they do not appear in US courts. The work here is high-end, knowledge-based. It’s most of what lawyers do in the United States.

On legal research and drafting, one example is the work we do for motion picture and television studios. We do the research and write the memos that help the clients figure out how to make film and TV productions while avoiding legal trouble as much as possible. We also draft opinion letters that allow them to get the necessary insurance. And when there are claims, we draft the legal papers needed to respond. We do this work for companies like 20th Century Fox, HBO, Sony Pictures, and Channel 4 Television. In addition, our immigration visa specialists figure out lawful ways for our business clients to get the skilled personnel visa they need in the US.

Is a good track record a sufficient condition for success? What in your opinion are the NECESSARY and SUFFICIENT CONDITIONS for your venture’s success?

A good track record is indicative but not sufficient. We think there are three key conditions for our success, and for the success of any legal offshoring company:

First is our affiliation with licensed Western attorneys. In order to really shine, any legal outsourcing provider in India needs to affiliate with, or hire, licensed attorneys in the West. Those attorneys are needed to supervise the work, train the Indian lawyers, and market the services.

Second is strong recruitment. The boom in the legal outsourcing industry will lead to a talent crunch. At the same time, as the public profile of the industry grows and improves, an increasing number of law graduates and young lawyers will gravitate to the industry, and more of the best and the brightest among 12th-graders will decide on law as a career. But till then, we think the competition for the best law graduates will be won mostly by the high-end providers, as opposed to companies focusing on document coding and transcription. This is because higher-value work, such as the legal research and drafting that we do, tends to be more interesting, and because higher profit margins allow for higher salaries.

The third key to success will be training. This will be crucial as providers move up the value chain in relation to their services, and as they recruit more deeply into the pool of available talent, most of whom will be freshers with no experience working for Western clients. Again, we think we have an edge, because of our training programs led by US law experts.

What is the typical case like for television and film industry?

In television and film, one of the biggest indicators of success is getting sued! At SDD Global, we work hard to help Hollywood and London studios avoid getting into trouble by researching the laws that would apply, and by drafting the most protective contracts. But when a movie like “Borat” is number one at the box office and earns over $300 million, the lawsuits start flying. Plaintiffs figure they can cash in, on the theory that the studios are afraid of legal fees. But now the legal defence can be done mostly from Mysore. There is really no “typical” claim. Some people sue because they were shown in a movie or a TV show and claim they were defamed. Others claim the script was copied from something they wrote. You name it. People find ways to sue.

What does ‘non-litigation matters’ imply?

A lot of what we do is oriented toward preventing litigation, rather than responding to it. For example, one of our clients, Sony, needed massive legal research and a lengthy opinion letter in order to get insurance for a proposed movie. The job would have cost as much as $2,50,000 had one of their usual big US law firms done the work. Instead, SDD Global did the job for $43,000. Our draft of the 45-page opinion letter, complete with 242 footnotes, helped okay a major film. Otherwise, the movie might never have been made. We also draft and review business contracts, which are other examples of non-litigation matters. Or we process immigration visa applications, getting talented people into the US. We do just about any non-litigation research or drafting that any law firm in the US does, and most of the litigation work as well.

How has been the growth of legal outsourcing, in India?

Four years ago, you could count the number of Indian legal outsourcing providers on one hand. Now there are over 100, with another 200 reportedly in the works. Revenues recently have more than doubled, to $146 million in 2006. The number of employees has tripled since 2005. Research analysts predict that legal outsourcing revenues and employee numbers will reach $640 million and 32,000 respectively by 2010. Those predictions are conservative. The actual potential is higher.

What were the hurdles you overcame in your quest for a footing (before rooting) in India?

Although foreign direct investment is officially favoured, the actual practice of a Western company setting up a subsidiary in India can be a nightmare.

We were lucky to find outstanding and reputable local lawyers, accountants, contractors and vendors, but that was not until after months of dealing with more than a few con men, shake-down artists, sharks, and incompetents. We had shady lawyers in Bangalore proposing to charge us 10 times what it would cost to incorporate in New York, a building contractor who backed out on the day before construction, saying he would go ahead only if we increased his fee, and any number of charlatans posing as respectable vendors. To any Western law firm or corporation wanting to set up a legal outsourcing unit in India, I would say, ‘‘Forget it! Hire us instead! We can save you a world of pain.’’

http://InterviewsInsights.blogspot.com