- The Washington Times - Monday, December 8, 2008

Above the Law column:

While the number of dead and injured was still being counted after the Mumbai terror attacks, the Indian legal outsourcing firm Pangea3 e-mailed clients to tell them their employees were safe and returning to work.

In other words, the legal documents they were awaiting would come in on time.

“We were lucky not to have any employees caught in the attacks,” said Kim Culpepper, Pangea3 marketing manager. “It was close to one of our offices.”

As global recession forces law firms to seek cheaper ways of doing business, outsourcing companies in India have been prospering as they prepare routine legal documents for American clients.

Then came 10 Muslim terrorists with machine guns and rumors of another war between India and Pakistan.

“This will have a deep financial impact in the short-term,” said Ajay Raju, a partner at the law firm of Reed Smith who handles Indian business issues.

For law firms that outsource overseas, backing up the computer files they share with the Indian firms was the most immediate concern, he said.

If the Indian firms lose documents in a terrorist raid, the American lawyers must answer for it to their clients and judges.

The Indian government reacted to the assaults by interspersing military strike teams throughout the country for quicker responses to terrorist attacks.

A longer-term concern for American law firms and anyone else who does business with India is whether growing political tensions will curtail the country’s thriving outsourcing industry, Mr. Raju said.

Outsourcing firms in India can prepare contracts, patent applications, wills and other legal documents for about one-third the cost of American law firms.

From a $52 million a year industry in 2005, it is projected to grow to $970 million by 2015, according to Evalueserve, a business and legal research firm with offices in India.

In the past six months, about 70 legal outsourcing firms have opened offices in India.

Mr. Raju said that two years ago he would get notice of a new legal outsourcing firm based in India opening about once a month.

“Now, on a regular basis, I get two or three every week,” he said.

However, the Indian government suddenly has made security a higher concern. Indian government officials are putting their country in a heightened alert status similar to preparations for war.

If the scenario sounds familiar to Americans, it should.

Much like the way business became a secondary consideration in the United States after the Sept. 11, 2001 terrorist attacks, India is focusing its resources on security.

“All that will happen, just like it happened after 9/11,” Mr. Raju said.

Eventually, any loss of legal outsourcing business will come back to India as law firms try to attract clients with affordable rates, he said.

“I don’t think this will have a major impact on the strategic planning process,” Mr. Raju said. “They’re going to look for the cheapest rates.”

Officials at the Embassy of India did not return phone calls regarding the impact of the terrorist attack on the nation’s business and industry.

Above the Law runs on Mondays. Call Tom Ramstack 202/636-3180 or e-mail Tom Ramstack.

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