In the latest legal outsourcing news, Indian LPO lawyers are getting new competition from a surprising location: Northern Ireland. Yes, it's an outrage! Western law firms are shipping LPO jobs, which otherwise might have gone to India, to the Irish!
A flurry of reports indicate that UK mega law firms Allen & Overy and Herbert Smith both are setting up legal support offices in formerly war-torn Belfast in the coming months. The outsourced jobs will include not only hundreds of back-office clerical positions, but also over 75 fee-earning legal jobs.
Despite an old reputation for "their tanks and their bombs, and their bombs and their guns" ("Zombie"), the North of Ireland is a beautiful part of the world, with a youthful, highly educated, English speaking population, eager for knowledge-based jobs. A double-whammy of globalization and open street warfare practically ended the manufacturing sector that was once the heart of Belfast's economy, leaving massive unemployment. But while Belfast, Derry, and the rest of Northern Ireland are among the most economically depressed areas of Europe, payscales and operating costs are still many times higher than those of India. So how did Belfast win the competition?
Well, it didn't hurt that "Invest Northern Ireland," the government's development agency, made an offer the London firms could not refuse. It agreed to pay Allen & Overy 2.5 million Pounds to set up its new "Support and Legal Services Centre," and to pay 208,000 Pounds to Herbert Smith to launch its document review/due diligence operation. Given that these two "magic circle" law firms collectively brought in over 3 billion Pounds last year in fees, the Belfast location incentives make these firms among the wealthiest government aid recipients in the world. The government hand-outs amount to about 8-10,000 Pounds for each job created.
The Indian government, which next month is scheduled to abolish a years-long service tax holiday for legal outsourcing and other IT-enabled services ("ITES") companies, had better take notice. Certainly the Government of India will not be paying bribes to rich Western law firms or companies to set up shop in India. (In India, bribes are paid to the government, not by the government.) But next month does not seem to be an especially smart time to start imposing new taxes on the still nascent but growing legal process outsourcing industry, when it faces competition from not only Northern Ireland, but also the Philippines and South Africa.