Emerging Outsourcing Areas: Legal Process Outsourcing
Stan Lepeak, Managing Director, EquaTerra Global Research
Lowell Williams, EquaTerra General Counsel and Executive Director, Global Human Resources Services
Various EquaTerra research studies, such as the quarterly global Pulse survey, have routinely identified legal process outsourcing (LPO) – along with document services, pharmaceutical research and development, and real estate and facilities management – as emerging growth areas in the outsourcing market. LPO has initially been focused on law firms or in-house legal counsel outsourcing routine tasks and processes (e.g., library services, records management, basic research and contract work), as well as more strategic services that have a significant labor element such as the discovery process, litigation support and patent claims drafting and filing.
The drivers behind LPO’s growth are similar to those in other functional and process outsourcing areas: expensive labor, difficult economic times, the desire to increase the automation of manual tasks (e.g., contract creation and management), and the growth in the breadth and quality of third-party service provider options, including those with lower cost offshore resources. What differentiates or minimally complicates LPO is the complexity and sensitivity of the data and information involved in the efforts, particularly if offshore captive shared services centers or outsourcers are utilized.
There are many service providers targeting the LPO space. They range from specialized providers like Evalueserve to India-based BPO and ITO service providers such as Infosys and WNS to legacy western and multinational service providers such as ACS/Xerox. While some specialized providers have a background in legal services, more often they have skills in more generic areas like knowledge process outsourcing (Evalueserve) or document services (ACS/Xerox), or are able to leverage skilled offshore labor.
Organizations considering LPO can approach it from several angles. Internal corporate law departments can leverage LPO to reduce costs and enable greater automation of administrative services, enabling the retained organization to focus on more strategic legal issues and potentially reducing the spend and reliance on local, expensive, third-party counsel. Law firms can do the same for their own work, but also engage third parties to reduce the cost of the services they provide to corporate clients.
While LPO is different from other forms of BPO in terms of focus, it is not that different in terms of process. However, EquaTerra has found that some LPO buyers forget to leverage their experience and lessons learned from other outsourcing efforts. Buyers must pay close attention to defining a realistic business case and addressing other key points such as definition and scope of services, pricing models, transition and governance approaches, processes and needs.
Coming soon: Exploring e-Discovery
However different one might consider LPOs to be, it should be forgotten that it is at the end an outsourcing industry, which has more than 60% of the same problems to solve.