“Onshoring” of IP Legal Work on the Upswing? A Combination of Factors or is it all about Security?

There have been an increasing number of reports of U.S. companies bringing manufacturing work back to the United States, here.  There are often a multitude of reasons for doing so, some for example are higher wages in China and India, higher productivity of workers in the United States, labor unions in the United States willing to be flexible, public relations and marketing issues in the United States, tax or other incentives, and security concerns with IP. 

Besides general manufacturing, so-called “onshoring” or some variation has been happening in the United States in the legal services market.  While not technically “onshoring,” some law firms are locating some employees in parts of the United States that have a lower cost of living.  For example, a law firm may place lawyers handling a certain type of work in a city such as Pittsburg, here.  The cost of living is less there compared to say San Francisco or New York, and that makes it easy to justify a much lower salary for their employees.  Another interesting activity that fits the definition of “onshoring” better, is a firm like Black Hills IP.  Black Hills IP started around 2011 and provides a host of IP services to law firms and corporations.  Instead of “offshoring” IP legal work to India, Black Hills IP offers its services in the U.S. from one of its two offices, the main office in Rapid City, South Dakota, and one in Minneapolis, Minnesota.  Apparently, Black Hills IP’s selling points are 1) cost effective, particularly through the use of proprietary software; 2) expertise in IP (notably their President is a former IP law professor); and 3) work is done in the United States.  The latter point is very interesting.  First, there is a practical reason for that point—if you are a firm in the United States then it is easier to reach someone at Black Hills IP during the same hours you are likely operating.  Second, you may not have to deal with export controls.  Finally, the more interesting reason is security concerning IP.  Black Hills IP’s website includes the following information about security:

Your data is kept secure and confidential through use of strong encryption, physical security and comprehensive access controls.

Our facilities are secure

• Our facilities have access control at all points of entry, 24 hours a day / 7 days a week.


• All visitors require pre-approval for access to our facilities. Identification is checked and visitors are escorted.

Our systems are secure and encrypted

• Your data is continuously backed up to a secure datacenter using 448-bit encryption.


• We can work in any IP management system.  We evaluate each system first to ensure it complies with our internal security requirements.


• Our networks are secured by industry-leading firewalls.

Your data is confidential

• Each of our teams has a segregated set of applications and access rights.  Only members of that team have access to that team’s applications and network privileges.   


• All employees undergo confidentiality training and receive semi-annual refresher training.


• We conduct comprehensive background checks on all new employees.


• All employees sign confidentiality agreements.


• All employees are US citizens based in the US.

My guess is that similar firms outside the United States make similar representations concerning security except for the last sentence, “All employees are US citizens based in the US.”  Security has been a huge issue concerning IP lately, particularly with respect to cyber-attacks on U.S. government, universities and corporations (and happening to other countries as well), see an earlier post here.  Also, I have heard reports about firms that have outsourced work and have had problems with losing IP.  But, is it much more likely a U.S. citizen based in the United States will not steal confidential information of a U.S. firm?  Is the representation that “All employees are US citizens based in the US” an effective draw for clients?  If so, why?  Is it because that is essentially the same risk that any U.S. firm takes with its own employees—that a U.S. citizen may “steal” their IP, so the upside is just lower cost?  Is there a cultural explanation?  Is there an economic explanation?  Or, is this really about export controls? 

Are there similar firms in other countries?  If so, do they advertise that a benefit of choosing their company is that their employees are all citizens of France, the U.K., Italy, Norway, China, South Korea, Philippines, Australia, or Germany, respectively?  Black Hills IP has recently announced it has obtained its 100^th customer.  (hat tip to Professor Henderson at the Legal Whiteboard blog).