Legal outsourcing

Presentation group #1

Alex Merket Sena Sevencan Kan Mihail Lissette Plaza

The world economy is becoming more global . Therefore, the nature of international business is changing in response to it.

Globalization.Shift toward a more

integrated and interdependent world

economy.

Globalization of production.

Sourcing of good and services from locations around the globe to take

advantage of national

differences in the cost and quality of

Factor of production

Globalization of markets.

Merging of distinct and separate

national markets into one huge market place

Emergence of Global Institutions.

GATT (General Agreement on Tarrifs and Trade)

WTO IMF (International

Monetary Fund) World Bank United Nations

• International Justice

• Alien Tort Claims Act (ATCA)

• Universal Jurisdiction

• US, UN and International Law

Why Is Law Globalized?

It allows companies to focus on: Core Competence Build Expertise Control Expenses Eliminate Waste Directly Provide Value To Clients Or Customers.

What is driving Globalization?

Declining barriers to the free flow of goods, services, and capital average tariffs are now at just 4% more favorable environment for FDI

global stock of FDI was $15.5 trillion in 2009 facilitates global production

Technological change microprocessors and telecommunications the Internet and World Wide Web transportation technology

What does Globalization mean for firms?

Lower barriers to trade and investment mean firms can view the world, rather than a single country, as their

market base production in the optimal location for that

activity But, firms may also find their home markets under

attack by foreign firms

Declining trade and investment barriersAverage Tariff Rates on Manufactured Products as Percent of

Value

What does globalization mean for firms?

Technological change means lower transportation costs

help create global markets and allow firms to disperse production to economical, geographically separate locations

low cost information processing and communication

firms can create and manage globally dispersed production low cost global communications

networks help create an electronic global marketplace

global communication networks and global media

create a worldwide culture and a global consumer product market

The changing Demographics of The Global Economy

Four trends are important: 1. The changing world output and world trade

picture2. The changing foreign direct investment picture3. The changing nature of the multinational

enterprise4. The changing world order

How has World Output and World Trade changed?

In 1960, the U.S. accounted for over 40% of world economic activity, but by 2009, the U.S. accounted for just 24% a similar trend occurred in other developed countries

In contrast, the share of world output accounted for by developing nations is rising expected to account for more than 60% of world

economic activity by 2020

The Changing Demographics of World GDP and Trade

How has World Output and World Trade changed?

How has Foreign Direct Investment changed over time?

In the 1960s, U.S. firms accounted for about two-thirds of worldwide FDI flows Today, the United States accounts for less than one-

fifth of worldwide FDI flows Other developed countries have followed a similar

pattern In contrast, the share of FDI accounted for by

developing countries has risen Developing countries, especially China, have also

become popular destinations for FDI


Percentage Share of Total FDI Stock 1980-2009


FDI Inflows 1988-2008

What is a Multinational Enterprise?

Multinational enterprise (MNE) - any business that has productive activities in two or more countries

Since the 1960s the number of non-U.S. multinationals has risen the number of mini-multinationals has risen

The Changing World Order Many former Communist nations in Europe and Asia are now

committed to democratic politics and free market economies creates new opportunities for international businesses but, there are signs of growing unrest and totalitarian tendencies

in some countries

China and Latin America are also moving toward greater free market reforms between 1983 and 2010, FDI in China increased from less than $2

billion to $100 billion annually but, China also has many new strong companies that could

threaten Western firms

How will The Global Economy of the 21st Century look?

The world is moving toward a more global economic system…

But globalization is not inevitable there are signs of a retreat from liberal economic

ideology in Russia Globalization brings risks

the financial crisis that swept through South East Asia in the late 1990s

the recent financial crisis that started in the U.S. in 2007-2008, and moved around the world

Is the shift toward a more integrated and interdependent global economy a good thing?

Globalization Debate

Many experts believes

Increased trade and cross-border investment mean,-Lower prices for goods and services-Greater economic growth -higher consumer income -more jobs

Critics worry that will cause

-job losses-Environmental degradation-Cultural imperialism of global media

?

What is the concerns of globalization ?

Anti globalization protesters nowturn up at almost every major meeting of global institution•40,000 anti-globalization protesters took to the street at the WTO meeting in Seattle in 1999

•Protesters fear that globalization isforever changing the world in a negative way

Anti-globalization Protests

Job loses in industries Under attack from foreign competitors Cultural imperialism of global media Downward pressure on the wage rates of unskilled workers Environmental degradation Multinational enterprises

Wide range of protests issues

Globalization critics argue that falling barriers to trade are destroying manufacturing jobs in advanced countries

USA, Western Europe Allow firms to move manufacturing activities to

countries wage rates are much lower China,India

Globalization, Jobs, and Income

Globalization critics argue

Moving production to countries

regulations do not existDo not enforced

Environmental and labor standards are associated with economic progress

Globalization, Labor Policies,

and the Environment

Economic power away from national governments toward supranational organizations

-WTO, the EU, and the UN

Supporters of globalization contend

-Power of these organizations is limited to what nation-states agree to grant, and that the power of the organizations lies in their ability to get countries to agree to follow certain actions

Globalization and National Sovereignty

The gap between rich and poor has gotten wider Benefits of globalization have not been shared equally Limited economic improvement in many countries

Many of the world’s poorest nations are under totalitarian regimes

-suffer from endemic corruption,-have few property rights, are involved in war,-and are burdened by high debt

globalization raises stakes of addressing weaknesses ofcapitalist free market system and of individual societies

Globalization and the World’s Poor

Access to new markets Access to new products Access to new technology Better standard of living Good quality products Keeps a check on inflation More employment

opportunities Increased welfare &

prosperity Inflow of foreign capital

Exploitation of domestic labor Misuse of host nation’s natural

resources Loss of cultural values Non-remittance of funds broad Increase in imports Drainage of foreign currency Competition from MNC’s (Infant

Industry) Rising Inequality

Disadvantages

AdvantagesGlobalization

Summary

Managing in the Global Marketplace

• An international business is any firm that engages in international trade or investment An international business is any firm that engages in international trade or investment

Managing an international business differs from managing a domestic business because:

• countries differ • managers face a greater and more complex range of problems • international companies must work within the limits imposed by

governmental intervention and the global trading system • international transactions require converting funds and being susceptible

to exchange rate changes

Legal Process Outsourcing

(LPO)

What is Legal Process Outsourcing?

When in-country legal organizations outsource legal work from areas which are expensive to operate in, to those areas where it is more cost-effective to operate.

Biggest destination right now is India:- India has many legal workers proficient in Common Law

- India also has the largest amount of low-cost English-speaking lawyers

- Industry has been growing in recent years as India economy continues to grow rapidly

Benefits of Legal Outsourcing

Cheaper Labor - Other countries have lower

labor costs ($100-$500 in U.S. vs $20-$60 in India)

- Allows for the ability to hire more people

- Minimizes costs, maximizes profits

Greater efficiency- Tasks can be outsourced to people

who can do the specific jobs with greater efficiency

- Mass concentration

Superior Expertise- People are specialized within certain

departments- Specialized individuals are much more

accurate- Less mistakes means less costs

Concentration on Core Processes- Host business can concentrate on the

main process of the business- With legal services they can focus on

creating a sound legal case vs. spending time and energy on exhaustive parts (consolidating info, etc.)

- Can work overnight - 24/7 work environment with no

downtime

Costs of Legal Outsourcing

Exposing confidential data- With outsourcing comes trusting confidential data with 3rd party vendors or businesses- This can be especially risky in legal cases where information leak scan completely change the outcome of a case

Giving up quality control- Can’t have oversight as easily on the business,- Outsourced employees might do things wrong without host company noticing- 3rd party may have incorrect info

Less understanding - Outsourced employees may have

less understanding of the industry - May not understand theintricacies of the host country’s laws- Language barriers, cultural barriers

Blurring of strategic vision- May not be as passionate/focused on

the strategy of the firm,- May not comprehend what exactly

they are trying to achieve (if law is confusing or messy)

Types of Outsourced Activities

Proof Reading- Checking for spelling mistakes, grammar, etc.

Document Review- General review and checking of routine legal documents- Fact checking papers - Assuring there aren’t legal loopholes within the writing.

Document Drafting- Writing documents such as legal agreements- Creating contracts with clients or vendors- Sending out letters/emails

Case Research - Researching items for the legal case itself (time-exhaustive)

Litigation Support- Calculating economic damages in an accounting manner. Computing the monetary costs of physical damages or emotional distress to client

Misc.- Patent drafting- Legal filings- Secretarial work- Administrative work

Who Gains, Who LosesFirms GAIN- Decrease in costs- Increase in efficiency- Increase in accuracy

Employees/ Clients LOSE- Jobs get shipped

away- Deflates wages- Clients information

at higher risk

Legal Outsourcing: Good or Bad?

I believe legal outsourcing to be a good thing Allows firms to decrease costs and increase output Legal cases can be solved in a more timely manner Allows those with less capital to face those who are

extremely wealthy It is arguable that it ships jobs overseas however…

Why India?- Largest source of low-cost lawyers

- Almost all proficient in Common Law

- High English literacy

- Indian economy very strong (avg. growth of 7%)

- One of the fastest growing service sectors in the world

- Sheer number of people

- Perfect time zone (9-12 hrs. ahead)

- Friendly relations

Thank you!

Legal outsourcing

Business