Despite the significantly growing adoption of outsourced legal services, many legal professionals still find themselves struggling to get their arms around LPO and what it means for their firm.
Time and time again, we see that the most common pitfall of outsourcing legal services is the fundamental lack of understanding and awareness by legal professionals. In such a dynamic market, having current knowledge of breaking industry deals, ethical and regulatory changes, and best practices is a key factor to success.
As part of our continued dedication to leadership the industry, I am excited about the launch of our essential e-newsletter covering all things LPO.
The Fronterion Forefront newsletter is a must-read. To sign-up, go to our website (www.fronterion.com) or email forefront@fronterion.com for your free copy of the online newsletter.
For more details, please see the press release below:
Fronterion Forefront Newsletter Provides Much Needed LPO Insight
Newsletter provides leading insight for legal professionals struggling to make sense of the growing adoption of legal process outsourcing.
Despite the growing adoption of legal process outsourcing (LPO), legal professionals continue to struggle to make sense of the industry and understand all the implications for their firms.
From LPO veterans to its fiercest critics, it has become vital for legal professionals to have a working knowledge of how, and why people send legal work to outsourcing firms at home and abroad.
With this in mind, Fronterion has launched a new monthly e-newsletter featuring unique insights and commentary on the biggest LPO talking points of our day.
The Fronterion Forefront newsletter will keep readers up-to-date with the biggest deals, current industry events and regulatory changes for all things LPO.
From new LPO agreements, like the one recently revealed by elite UK firm Slaughter and May, to announcements by industry bodies, like the American Bar Association’s recent decision on the Model Rules governing outsourcing, Fronterion Forefront is essential reading for anyone with even a passing interest in the subject.
And it is available free every month. To sign up, visit www.fronterion.com or send an email request to forefront@fronterion.com.
“Firms that don’t fully understand or actively address the issue of LPO increasingly place themselves at a competitive disadvantage – not to mention, through lack of a coherent approach, unknowingly open themselves up to risk and ethical exposures.”
“The Fronterion Forefront newsletter is a great way for firms to start getting their arms around the legal outsourcing industry in order to better understand trends that without exception impact their firm,” said Fronterion Managing Principal Michael Bell.
Fronterion, as the leading consultancy specializing in LPO, is in a unique position to monitor the market.
As legal outsourcing continues to generate debate and attract supporters, this newsletter will help readers stay at the forefront of an industry that is changing the way legal services are provided across the globe.
° ° °
For more information about Fronterion contact mediarelations@fronterion.com, +1 (312) 473 – 4887. Additional resources are available at www.fronterion.com
Friday, October 29, 2010
Alarmist Intelligencer
This week’s Legal Intelligencer features an interesting and insightful, albeit alarmist, article on the changing competitive pressure created by the rise of LPOs. Much of the piece is well-written and I fully subscribe to the statements about the bolstering prevalence of LPO vendors, the permanence of LPOs’ value proposition, and the increasing disaggregation of legal services, among others.
That said, I may raise a wry eyebrow about these things:
Alarmist projections: We’ve been around long enough to see a number of these pronouncements come and go. True, LPO is a very significant and growing trend. It has profound implications for the relationships between law firms and their clients, but I don’t project the “end of lawyers” or apocalyptical demise of the legal profession. The global legal market is estimated to be approximately $400 billion (roughly 60% of it is located in the US). While projections may vary, the global LPO market is currently pegged at $440 million. Total market penetration of LPO: ~0.1% of the entire global legal sector. These numbers may not fully reflect the impact of legal outsourcing and the shifts in client buying preferences, but it does provide some perspective.
Dramatic schisms between law firms and clients: We certainly don’t view LPO as a wedge between with law firms and clients any more than contract attorneys or e-discovery vendors harm those relationships. While some firms will poo-poo LPO, the majority of top US law firms are working with LPOs in various capacities, even if not stating their involvement publically (see study findings here).
Tidy market position statements: Does profiling the market approach of a single LPO vendor illustrate what’s going on in the entire market? Does the stance of a single law firm say everything about LPO relationships? Personally, I’ve never found neat and tidy statements accurately reflect the reality and complexity of market forces. Not all LPOs are created equal and there is not a homogenous approach to the market, as implied by the article. We have seen vendors evolve to different strategies and services as they support different corporations, and law firms. For a contrasting view of the strategic approach published in the article, see a counter-post by Ron Friedmann of Integreon. Friedmann raises an interesting point that LPOs create diversity in the legal sector and that, “diversity is a key element of a healthy ecosystem.”
Ironically, as Bruce MacEwen (fellow Adam Smith Esq. partner to Janet Stanton quoted in the Intelligencer article) noted in the foreword of my book, “I may disappoint you to report that what I believe is far more parochial: the adoption of outsourcing will be firm by firm, activity by activity, year by year. Like much of the march of progress, change will be less drastic in the short run than many imagine, and more revolutionary in the long run than most can foresee.”
In closing, LPO is an option that law firms can offer to their clients or an alternative resource available to corporate legal departments. In the short run, the legal profession isn’t “falling apart,” but in the long run is the rise of LPO domestically and around the global more revolutionary that most can foresee? I would say yes, but don’t take my word for it.
That said, I may raise a wry eyebrow about these things:
Alarmist projections: We’ve been around long enough to see a number of these pronouncements come and go. True, LPO is a very significant and growing trend. It has profound implications for the relationships between law firms and their clients, but I don’t project the “end of lawyers” or apocalyptical demise of the legal profession. The global legal market is estimated to be approximately $400 billion (roughly 60% of it is located in the US). While projections may vary, the global LPO market is currently pegged at $440 million. Total market penetration of LPO: ~0.1% of the entire global legal sector. These numbers may not fully reflect the impact of legal outsourcing and the shifts in client buying preferences, but it does provide some perspective.
Dramatic schisms between law firms and clients: We certainly don’t view LPO as a wedge between with law firms and clients any more than contract attorneys or e-discovery vendors harm those relationships. While some firms will poo-poo LPO, the majority of top US law firms are working with LPOs in various capacities, even if not stating their involvement publically (see study findings here).
Tidy market position statements: Does profiling the market approach of a single LPO vendor illustrate what’s going on in the entire market? Does the stance of a single law firm say everything about LPO relationships? Personally, I’ve never found neat and tidy statements accurately reflect the reality and complexity of market forces. Not all LPOs are created equal and there is not a homogenous approach to the market, as implied by the article. We have seen vendors evolve to different strategies and services as they support different corporations, and law firms. For a contrasting view of the strategic approach published in the article, see a counter-post by Ron Friedmann of Integreon. Friedmann raises an interesting point that LPOs create diversity in the legal sector and that, “diversity is a key element of a healthy ecosystem.”
Ironically, as Bruce MacEwen (fellow Adam Smith Esq. partner to Janet Stanton quoted in the Intelligencer article) noted in the foreword of my book, “I may disappoint you to report that what I believe is far more parochial: the adoption of outsourcing will be firm by firm, activity by activity, year by year. Like much of the march of progress, change will be less drastic in the short run than many imagine, and more revolutionary in the long run than most can foresee.”
In closing, LPO is an option that law firms can offer to their clients or an alternative resource available to corporate legal departments. In the short run, the legal profession isn’t “falling apart,” but in the long run is the rise of LPO domestically and around the global more revolutionary that most can foresee? I would say yes, but don’t take my word for it.
Monday, October 18, 2010
ABA Favors Less Invasive Approach to LPO
This past week I had the opportunity to address the ABA Commission on Ethics 20/20 during their October 15th meetings. We see the decision to abandon significant rule changes regarding LPO as a very positive development.
More details about the Commission and the meetings are available on our LPOethics.com website. The article, ABA Abandons Significant Rule Changes, includes an insightful summary of the proceedings.
More details about the Commission and the meetings are available on our LPOethics.com website. The article, ABA Abandons Significant Rule Changes, includes an insightful summary of the proceedings.
Industry Projections Gone Rogue… Part Deux
A brief follow-up on my previous post about the misconception of job “shifts” purported in a recent legal industry blog post.
This past week, the Wall Street Journal featured a piece on the topic of protectionist sentiments concerning offshoring. The article included a reference to a study that tracked job creation by 2500 multi-national corporations. The findings are eye-opening. Here is a excerpt of that article:
Most people treat outsourcing as a zero-sum game—one foreign worker replaces one American worker. But this is not how the dynamic global economy works. In 2007, Matthew Slaughter, an economist at Dartmouth's Tuck School of Business, published a comprehensive study of the hiring practices of 2,500 U.S.-based multinational companies.
He found that when U.S. firms hired lower-cost labor at foreign subsidiaries overseas, their parent companies hired even more people in the U.S. to support expanded operations. Between 1991 and 2001, employment at foreign subsidiaries of U.S. multinationals rose by 2.8 million jobs; during that same period, employment at their parent firms in the U.S. rose by 5.5 million jobs. For every job "outsourced" to India and other foreign countries, nearly two new jobs were generated here in the U.S.
Those new U.S. jobs were higher-skilled and better-paying—filled by scientists, engineers, marketing professionals and others hired to meet the new demand created by their foreign subsidiaries.
The article turns on its head the notion of outsourcing as a job drain. Contrarily, it’s actually a demand generator for domestic-based personnel.
While I would venture to say that the study referenced in the article is far from being entirely conclusive (I’m sure there are a number of factors impacting the recruitment practices of the respective firms), it is a very interesting to have a documented account of this phenomena.
Just one more thing to think about in the increasingly globalized legal profession.
This past week, the Wall Street Journal featured a piece on the topic of protectionist sentiments concerning offshoring. The article included a reference to a study that tracked job creation by 2500 multi-national corporations. The findings are eye-opening. Here is a excerpt of that article:
Most people treat outsourcing as a zero-sum game—one foreign worker replaces one American worker. But this is not how the dynamic global economy works. In 2007, Matthew Slaughter, an economist at Dartmouth's Tuck School of Business, published a comprehensive study of the hiring practices of 2,500 U.S.-based multinational companies.
He found that when U.S. firms hired lower-cost labor at foreign subsidiaries overseas, their parent companies hired even more people in the U.S. to support expanded operations. Between 1991 and 2001, employment at foreign subsidiaries of U.S. multinationals rose by 2.8 million jobs; during that same period, employment at their parent firms in the U.S. rose by 5.5 million jobs. For every job "outsourced" to India and other foreign countries, nearly two new jobs were generated here in the U.S.
Those new U.S. jobs were higher-skilled and better-paying—filled by scientists, engineers, marketing professionals and others hired to meet the new demand created by their foreign subsidiaries.
The article turns on its head the notion of outsourcing as a job drain. Contrarily, it’s actually a demand generator for domestic-based personnel.
While I would venture to say that the study referenced in the article is far from being entirely conclusive (I’m sure there are a number of factors impacting the recruitment practices of the respective firms), it is a very interesting to have a documented account of this phenomena.
Just one more thing to think about in the increasingly globalized legal profession.
Monday, October 11, 2010
Industry Projections Gone Rogue…
A consultant to the legal industry posted a slightly abrasive, but seemingly unexceptional blog post about the various industry trends “chipping away” at the traditional law firm staffing model. The post cites legal outsourcing as a one of several triggers for massive job losses at the top 200 US law firms:
“Legal process outsourcers are gaining traction, especially with clients. For sake of argument let’s say there are currently the equivalent of 1,000 outsourced lawyers (there are probably more than that just at Pangea3, Integreon and CPA Global right now). If this number increases five-fold, which is slower than the growth rate over the last few years, that will result in a shift of 5,000 lawyer jobs.”
The seemingly unexceptional blog post took some heat for the validity and rigor of the employment projections including criticism by industry blog Above the Law as reported by the ABA Journal. For an industry as dynamic as LPO, estimates are notoriously difficult to peg without highly detailed knowledge of the industry. I take less issue with the projections suggested as I do with the misconceptions of the projected job “shift.”
Are the projected 5000 new jobs in the LPO industry directly correlated to a 5000 job “shift” (read lost, redundant, right-sized, etc.) at top US law firms? Is it economically sound reasoning to assume that economic interactions are tit-for-tat? In short, no.
Does the increase of LPO mean that there may be marginally less demand for legal support staff for certain low-value service areas? Perhaps. Alternatively, doesn’t allowing firms to offer new services so clients can economically litigate and conduct transactions also increase the demand for the services of law firms, and thus the demand for lawyers? Absolutely.
The blog comment also contains underlying connotations that all LPO is performed offshore, but onshore LPO is positioned to be one of the most significant developments in the legal profession during the suggested 5-7 year timeframe.
In short, we recognize that industry projections can be challenging, but underlying economics of competitive commerce in any industry should never be seen as tit-for-tat.
“Legal process outsourcers are gaining traction, especially with clients. For sake of argument let’s say there are currently the equivalent of 1,000 outsourced lawyers (there are probably more than that just at Pangea3, Integreon and CPA Global right now). If this number increases five-fold, which is slower than the growth rate over the last few years, that will result in a shift of 5,000 lawyer jobs.”
The seemingly unexceptional blog post took some heat for the validity and rigor of the employment projections including criticism by industry blog Above the Law as reported by the ABA Journal. For an industry as dynamic as LPO, estimates are notoriously difficult to peg without highly detailed knowledge of the industry. I take less issue with the projections suggested as I do with the misconceptions of the projected job “shift.”
Are the projected 5000 new jobs in the LPO industry directly correlated to a 5000 job “shift” (read lost, redundant, right-sized, etc.) at top US law firms? Is it economically sound reasoning to assume that economic interactions are tit-for-tat? In short, no.
Does the increase of LPO mean that there may be marginally less demand for legal support staff for certain low-value service areas? Perhaps. Alternatively, doesn’t allowing firms to offer new services so clients can economically litigate and conduct transactions also increase the demand for the services of law firms, and thus the demand for lawyers? Absolutely.
The blog comment also contains underlying connotations that all LPO is performed offshore, but onshore LPO is positioned to be one of the most significant developments in the legal profession during the suggested 5-7 year timeframe.
In short, we recognize that industry projections can be challenging, but underlying economics of competitive commerce in any industry should never be seen as tit-for-tat.
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