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Will associate layoffs reduce the use of offshore legal service providers?

P.J. Thomas of Corplo Legal Outsourcing wrote me with an interesting point about layoffs of associates as a possible threat to the legal offshoring industry.

“There is a school of thought in the offshore industry in India which believes that the law firms would ultimately turn to the laid off associates as contract lawyers at cheaper rates and would indirectly affect the offshore industry. I beg to differ. I see this as a window of opportunity for legal departments to push their outside law firms to engage the services of offshore legal support service providers to achieve a balanced value proposition.”

I side with Thomas, and for two other reasons in addition. One is that a reduction in demand for legal services, caused by the economic plunge, will lower the prices offshore servicers charge. The other is that as cost constraints tighten on general counsel, more of them will explore whether some law-related services can be done well and cost-efficiently offshore.