What are the benefits of legal process outsourcing (LPO)?
I am hearing a lot of legal process outsourcing (LPO) these days? Can the Legal service providers achieve real cost benefits by out sourcing some of their Legal processes? If LPO is for real then what can kind of services can be outsourced? Would the big law firms be willing to set-up their our off-shore centers or out-source it to a service provider, and what about medium and small size leagl service providers? What would be the major issues that would prevent the Legal Service Providers from out-sourcing back office activities? Besides US are there any other economies that can benefit from LPO?
Answers (10)
Dear Nitin,
The legal services providers do achieve real cost benefits by outsourcing some of their legal processes. As to what kind of services can be outsourced, they can be - document review, standard form contracting, due diligence support, legal research, litigation support, patent support services, trade mark services. (For more details you might want to visit the link below). This list is not exhaustive. It depends on the kind of expertise LPO units have. The major issues that would prevent the Legal Service Providers from outsourcing the activities are - breach of client confidentiality. But this concern can be addressed by having the employees of the LPO units sign stringent Non-Disclosure Agreements and by obtaining ISO Certification for Information Security Management Systems (ISO 27000 ISMS) to ensure security measures for data protection. Besides the United States, the United Kingdom can be benefited from legal process outsourcing.
Hope this answers your question.
Regards,
Bhakti Shivarekar
Links:
Bhakti S also suggests this expert on this topic:
I am a U.S. student of law, currently working for a Legal Process Outsourcer (LPO) as an intern for the summer. The firms that I talk to, small, medium, and large, seem to be extremely interested in the idea. However, as we both know, people don’t like change. The innovative law firms, mainly the younger generations, are more interested. The younger generation has observed the benefits LPO’s can provide, and they want in on the action. From my perspective, the main advantage of LPO’s to firms is that the high paid attorney and associate can now spend their time where it is valued. There is no reason why an attorney or associate should be conducting research on a daily basis, or creating form contracts, when this work can be done for a much lower price… in India, or elsewhere. If you speak to most attorneys in the US and UK, I bet they will tell you they wish they had more time to do what they are best at. And this is what LPO’s are providing them. The attorneys can now spend their time, in their expensive office building and with all of their costly employee help, where it is most valued by their clients, and simply outsource the tedious work that anyone with a legal background can perform.
This may all sound too good to be true, but according to firms who are currently doing it, the firms are usually happy with their results. The client confidentiality, and certain ethical issues, as explained thoroughly by Bhakti above, are the main problem. The quality can also be an issue, which makes it imperative to select the right LPO, and to try various LPO’s. There are many articles online on how firms and LPO’s are successfully dealing with these issues. What we say here, is to give us a try, and we will show you the quality of work, and the cost-savings, that we know the outside world expects.
Regards and Good Luck,
Peter Ludwig
Can the Legal service providers achieve real cost benefits by out sourcing some of their Legal processes?
Yes, in some of the legal processes the cost saving could escalate upto 50%. The trends show that the price value gap in LPO industry is on the increase.
If LPO is for real then what kind of services can be outsourced?
Services such as Legal Research, Document review/summary, Legal due diligence (VDR solutions), Litigation support services, prior art search, freedom to operate and similar other legal support services can be routinely outsourced.
Would the big law firms be willing to set-up their own off-shore centers or out-source it to a service provider, and what about medium and small size legal service providers?
Law firms like Clifford Chance, Smith Dornan Dehn LLP have already set up their captive in India. Others are following the trend. Since setting up of captive centre involves huge initial and recurring investments, outsourcing is better option for big as well as medium and small law firms.
What would be the major issues that would prevent the Legal Service Providers from out-sourcing back office activities?
Data security is the major concern; today we have technology which will help prevent data theft.
Besides US are there any other economies that can benefit from LPO?
Countries like US, Canada, Some European countries have either set up captive or they are outsourcing their legal work to India. India is emerging as the most preferred destination for LPO.
Geeta Hegde H also suggests these experts on this topic:
Rich K
Attorney at Law Office of Richard Kuslan LLC
Best Answers in: Corporate Law (1), Intellectual Property (1)
Constant worries:
1) Loss of control over the project -- the work is performed far from those who are supposed to be actively managing it.
2) Difficulty of enforcing outsourcing agreements in countries where legal recourse is unreliable.
3) Client confidential information moved out of house -- what happens to it once it is outsourced?
4) Outsourcing takes needed employment away from American attorneys.
etc.
Jim C
Chair, Intellectual Property Practice & International Business Practice, Cowles & Thompson, PC
Best Answers in: Intellectual Property (1)
One of the key areas I've come across where law firms seek to outsource is in writing patents, particularly to India where there are an abundance of science/tech resources and a common legal heritage.
An point to keep in mind in such arrangements is that certain technologies are subject to US export controls (either by BIS or under ITAR). Unfortunately, many folks, including some attorneys, don't view emails, downloads, and other types of digital communications to be "exports." The US government certainly does. Care needs to be exercised in selecting the types of information sent outside the US and who (individuals, as well as their nationality) will have access to the information. In some cases, an export license is required prior to releasing such information.
Links:
Enrico S
Managing Partner at Traverse Legal, PLC
Best Answers in: Contracts (2), Compensation and Benefits (1), Enterprise Software (1)
We have been using virtual law clerks and paralegals for over 3 years. In combination with our extranet system, the program has worked great. Here are some links for you to review.
Why send the work overseas when there are less expensive virtual workers right here in the USA?
Links:
Legal Process Outsourcing (not to be confused with Legal Process "Offshoring") has been around for over 15 years. The value proposition of the concept of outsourcing has to do with companies wanting to focus on their core competencies while allowing outsourcing vendors to handle back-office functions. In any industry, this fact holds true - whatever the client (bank, law firm, accounting firm, etc.) is comfortable to turning over to another company, that function will be outsourced.
LPO providers exist on every continent, in countries where data and revenue can be securely transferred between the client and the vendor. Law firms are being pushed by their corporate clients to embrace outsourcing/offshoring because they themselves (and their shareholders) are comfortable with the concept and any potential fallout that it brings. There are many risk factors that law firms should and must consider, but this is not the question or the forum to discuss at this time.
Bottom Line - A successful LPO engagement requires these steps:
1. Identify the function to outsource.
2. Map the process.
3. Measure performance and costs.
4. Outsource to best and most cost-effective performer.
5. Repeat.
Many consultants, experts and LPO providers will make it sound more complicated, but it's really as simple as that.
I believe I perform these functions as a contract attorney doing primarily transactional work for two out of state clients. More firms should actually consider practitioners in their home countries, like me, who live in smaller cities or remote areas and who would be happy to have the additional line of revenue and have lower cost structures anyway. I don't think it's really necessary to go offshore, my impression is that it's also loosing some of its cachet.
We have been hearing a lot about LPO these days. New players are emerging in the market to be in the LPO business. The global marketplace is growing increasingly competitive, corporations are being required to streamline operations and cut costs in order to preserve profitability. Legal Process Outsourcing (LPO) is an industry in which in-house legal departments or organizations outsource legal work from areas where it is costly to carry out.
Legal Process Outsourcing has the following services:
• Legal Research, Document Drafting like standard contracts, agreements, letters to the clients
• Intellectual Property research- substantive and administrative
• Paralegal Services
• Administrative and secretarial activities like following up with clients, etc.
• Prior Art Searches
• Patent Landscaping and Mining Services
• Patent Portfolio Analysis
• IP Licensing services
Experienced paralegals and attorneys are employed to do the work. The most important norm for deriving value from such services is the level of maturity of delivery processes of the service provider. So adequate control should be kept on the process to make sure that the work is delivered to the level of expectation of quality of the client and the data is secure.
Outsourcing legal work to India costs up to 80 per cent less than the cost of using the services of American law firms. The advantage of the time zone, availability of English speaking attorneys and familiarity with common law doctrines attract foreign firms. Indian attorneys with US/UK qualifications are sought after. International attorneys are impressed not only by the labour cost differential, but also by the quality and speed of work done. Most LPO outfits in India are reported to be staffed 24/7.
The majority firms and corporations outsource mainly for cost saving measures and this is considered the principal benefit for legal process outsourcing. Whereas an attorney in main legal markets such as the US charge at minimum 250 dollars for work, countries that are offering legal process outsourcing charge just a small part. Several countries, particularly in India, gained importance due to the fact that some of their attorneys with higher degrees work at meager salary. This is the reason major corporations attracted to outsource some of the minute and less sensitive work in their legal departments.
There are several models under which law firms outsourcing services work. These include;
· Foreign law firms form alliance with domestic law firms
· Foreign law firms forming subsidiaries
· Offshore companies are formed which provide services
· Freelancing IP work is another model under which outsourcing work is done
Advantages of outsourcing
The key factor for outsourcing legal services to countries like India is the cost saving factor. The cost of legal services in India is almost one tenth of US and other European countries. India is also having a multidisciplinary professional talent base to cater to diverse legal services.
While considering outsourcing certain considerations have to be kept in mind to achieve the maximum benefit out of the outsourcing process.
· Attorney-client privilege needs to be taken care of.
· Confidentiality of the outsourced work is a major concern for the law firms outsourcing the work to India and like countries.
· Data and personnel security is another area to look into for.
· There are certain export control compliances that needs to be complied with as the outsourced work falls into the export control compliance domain.
· Liabilities questions with respect to malpractice coverage are another area to look in for when outsourcing the work.
Dear Nitin
I am sure you must have got answers of all your questions by now on LPO. I am in LPO space from past 4 years and before that I worked for BPOs again for 4 years. So far in service industry, we have seen the outsourcing of mainly "para" activities (paraplanner, parafinancial, Paralegal) and not the core functions. Of course, cost has always been one of the major drivers for outsourcing or to initiate outsourcing activities. But cost can never be the only reason for this because “para” activities are as important as the core functions especially in service industry. So, sooner or later, sustainability for vendors/providers in service domain depends on the “value” we add to our client’s business. Outsourcing helps any service provider in today’s world to focus on their core business/functions and increasing their client centricity rather than spending their valuable resources in “para” or “support” activities. That is the reason many US companies outsource their work domestically as well. Diversity is the key, Globalization is a necessity or a natural phenomenon, and it brings different types of thoughts, process and procedures together.
Specifically for LPOs, both the buyers and sellers need to understand that there is a fundamental difference in an US attorney and an Indian attorney. It’s not understanding of law but the way it is executed in both countries. This difference was there even when IT and ITES outsourcing started and it is natural. We have the required domain expertise but they need to be trained properly to execute the work. The key to success for both buyers and sellers is to work closely to get long term benefits. And it starts from transition and training. It will be successful, I am sure it will be, once we will start thinking beyond being buyers and sellers or clients and vendors. As service providers, we not only need to provide quality or cost benefits but keep on re-engineering our processes, so that we can add that “value” to the relationship which can help our client’s to make their end customer’s stick to them. Technology, quality tools, work flow tools, insurances and governance to take care of all other threats.
Best Wishes!!!
Vishal Aggarwal
