Ganesh Srinivasan’s Blog

There are two things which keep increasing, first-year associate salaries and size of LPO companies!

First-year associate salaries in the US have hit $150,000 - $160,000, in the UK the situation is no different with salaries touching £66,000 - £69,000.
Such an increase taking place at the time when Legal Process
Outsourcing is gaining a greater acceptance has one obvious effect:
growth in the size of LPO companies and their offerings. Mindcrest, one of the earliest LPO companies in India announced
the launch of a new 400-seat facility in the western Indian city of
Pune. Pune, by the way, has a large population of law schools and is
already a favored IT and manufacturing destination.

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The Los Angeles Daily Journal announced in their
March 19 issue that pay scales for first-year attorneys rose yet again,
with a number of firms hitting a staggering $160,000 starting salary.
In the UK, the situation is much the same. The Lawyer.com reported that
Linklaters is expected to heat up the pay war with an increase in its
associate salaries of around 16 percent, to £69,000. The expected hike
would push Linklaters ahead of Clifford Chance in the battle to win
over top-flight graduates with lucrative starting salaries.
Unsurprisingly, the remaining “magic circle” firms are currently
“reviewing their salaries”.

Is it just me or does anyone else
have a sense of “keeping up with the Joneses” going on here? Why do
firms feel such enormous pressure to match each other in junior
associate pay? The reason is because they are all trying to compete for
the same pool of top talent. The competition for available talent is
only going to become even more intense as 75 million baby boomers will
soon give way to around 30 million generation X-ers. Although its seems
incredulous right now given the preponderance of law school graduates,
various studies indicate that there will be a shortage of around 14
million skilled workers in the US by 2020.

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Even as, law college graduates opt for corporate
jobs, rather than face the struggle of murky politics of a corruption
riddled judiciary, the future seems bright for those in the legal
profession, as a quite different kind of job opportunity opens up for
them in the sunrise ITeS sector of legal service outsourcing segment
(LPO), a part of the global outsourcing trend.

A
recently released research report states, the niche market of legal
outsourcing services grew 50% between 2005-06, and stands poised for
bigger growth. Today, while India has garnered only a small portion of
the global LPO market ($146-million), end-2010 will change that as it
grow into a $640-million sector, also simultaneously seeing jobs shift
north. With currently 7,500-people employed in the LPO sector, the next
three years will see that miniscule number swell to 32,000.

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Can a country outsource innovation? And
do multinationals need to spread their research and development across
international borders? China may provide an answer to both these
questions.

The country
needs to move up the technological ladder as its economy gets richer
and changes from being driven by low-cost manufactured exports. It
needs ideas and entrepreneurs to do that.

At
the same time, commercial R&D in high-tech industries is becoming
an increasingly global undertaking, with still unfolding economic and
security implications. Whereas China accounts for barely 2% of the
capital spending by U.S. and U.S.-affiliated companies outside the
U.S., in the computer and electronics industries the figure is more
than 10%.

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