As many of you may have noticed, we have decided to transition our LPO Source blog under the umbrella of our broader Fronterion.com website. You can reach the blog and the blog archives through www.LPOsource.com.
This change reflects our continuing growth in readership and our desire to make the wide range of our LPO resources accessible in one easily location (www.Fronterion.com).
We’re excited about the transition, which includes a complete revamp of our Fronterion.com website. Check out these updates:
• The latest feeds from the LPO Source blog now prominently featured on the Fronterion.com homepage.
• An even more comprehensive listing of resources and reports on LPO topics.
• News features from leading publications from around the world.
• An overall cleaner website that better communicates how our consultative role helps law firms as they respond to clients in meaningful way benefiting both firm and the client.
Thanks for reading and for your support. Upward and onward.
Please continue to follow the LPO Source blog at www.LPOsource.com.
Thursday, May 5, 2011
Tuesday, March 29, 2011
The Strategic Impact of LPO: A New Book to Prove It
"A firm’s client strategy should be under constant review in order to ensure that the emerging needs of the client and the firm’s competitive capabilities remain aligned.”
Andrew Hedley, a widely respected thought-leader, advisor on legal strategy and author recently published a book, Client Strategy in a Changing Legal Market which “provides a route map for the [law firm] leadership team, enabling them to navigate these choppy economic waters and arrive at strategies which are both well founded and resilient.”
Hedley aptly notes the importance of legal outsourcing, onshoring and legal service disaggregation as key emerging areas of client strategy.
We’ve seen from our leading global law firm clients that these decisions have far-reaching strategic implications and should be made with careful consideration (avoiding a reactive, ad hoc approach to work with outside vendors).
Increasingly, firms find themselves asking:
What exactly is the difference in legal ‘process’ outsourcing vs. how we deliver services internally? How does LPO impact our firm? How could/should we integrate LPO capabilities into our practice? Should we pursue a captive vs. traditional third-party vendor model? Or create a hybrid between the two? Finally, how do we manage the risk of these new engagements and offer these services to our clients?
Hedley kindly offered me the opportunity to contribute to the “Expert Commentary” section. I explored the direct strategic implications for legal outsourcing and outside legal service providers.
During my ''expert" commentary I outline the four drivers of the LPO movement:
• Cost savings and efficiencies;
• Capacity management;
• Access to talent and expertise; and
• Strategic and client-driven initiatives.
“The emergence of legal outsourcing as a strategic priority is driven by a number of factors including the client-facing aspect of LPO for law firms, the continuing expansive adoption by law firms and corporates alike and, finally, the innovation spurred by LPOs as they join process and technology into the delivery of legal services. Despite the growing knowledge base for LPO, many senior leaders find themselves coming back to core questions of what exactly is LPO, how can we use it and what are the implications for our firm?”
After outlining the ‘what’s’, ‘why’s’ and ‘how’s’ of LPO, I illustrate the concepts with several real case studies. Two organizations featured are Pinsent Masons (including commentary from Nigel Kissack, head of their disputes team) and ISS (with remarks from Richard Reade UK general counsel.)
Throughout the book, Hedley does a great job of combining both theoretical insights and real case studies with firms such as CMS Cameron McKenna, Carillion and Epoq.
Client Strategy in a Changing Legal Market also highlights a number of client strategic areas such as:
• The frameworks of strategy and client strategy;
• The forces of growing change in the legal profession;
• Client segmentation and selection; and
• The combination of all data points to create a compelling client strategy.
Having just picked up the book last week, I have yet to finish it cover-to-cover, but everything I’ve read so far has been quite insightful and well-written.
After authoring a similar publication on legal outsourcing myself, I certainly appreciate the thought and effort that went into Hedley’s publication. I would highly recommend reading the book to ensure your client strategy does not stagnate in a "changing legal market."
More details on Client Strategy in a Changing Legal Market, you can find the table of contents available here.
Andrew Hedley, a widely respected thought-leader, advisor on legal strategy and author recently published a book, Client Strategy in a Changing Legal Market which “provides a route map for the [law firm] leadership team, enabling them to navigate these choppy economic waters and arrive at strategies which are both well founded and resilient.”
Hedley aptly notes the importance of legal outsourcing, onshoring and legal service disaggregation as key emerging areas of client strategy.
We’ve seen from our leading global law firm clients that these decisions have far-reaching strategic implications and should be made with careful consideration (avoiding a reactive, ad hoc approach to work with outside vendors).
Increasingly, firms find themselves asking:
What exactly is the difference in legal ‘process’ outsourcing vs. how we deliver services internally? How does LPO impact our firm? How could/should we integrate LPO capabilities into our practice? Should we pursue a captive vs. traditional third-party vendor model? Or create a hybrid between the two? Finally, how do we manage the risk of these new engagements and offer these services to our clients?
Hedley kindly offered me the opportunity to contribute to the “Expert Commentary” section. I explored the direct strategic implications for legal outsourcing and outside legal service providers.
During my ''expert" commentary I outline the four drivers of the LPO movement:
• Cost savings and efficiencies;
• Capacity management;
• Access to talent and expertise; and
• Strategic and client-driven initiatives.
“The emergence of legal outsourcing as a strategic priority is driven by a number of factors including the client-facing aspect of LPO for law firms, the continuing expansive adoption by law firms and corporates alike and, finally, the innovation spurred by LPOs as they join process and technology into the delivery of legal services. Despite the growing knowledge base for LPO, many senior leaders find themselves coming back to core questions of what exactly is LPO, how can we use it and what are the implications for our firm?”
After outlining the ‘what’s’, ‘why’s’ and ‘how’s’ of LPO, I illustrate the concepts with several real case studies. Two organizations featured are Pinsent Masons (including commentary from Nigel Kissack, head of their disputes team) and ISS (with remarks from Richard Reade UK general counsel.)
Throughout the book, Hedley does a great job of combining both theoretical insights and real case studies with firms such as CMS Cameron McKenna, Carillion and Epoq.
Client Strategy in a Changing Legal Market also highlights a number of client strategic areas such as:
• The frameworks of strategy and client strategy;
• The forces of growing change in the legal profession;
• Client segmentation and selection; and
• The combination of all data points to create a compelling client strategy.
Having just picked up the book last week, I have yet to finish it cover-to-cover, but everything I’ve read so far has been quite insightful and well-written.
After authoring a similar publication on legal outsourcing myself, I certainly appreciate the thought and effort that went into Hedley’s publication. I would highly recommend reading the book to ensure your client strategy does not stagnate in a "changing legal market."
More details on Client Strategy in a Changing Legal Market, you can find the table of contents available here.
Thursday, March 24, 2011
Howrey: The King is Dead, Long Live the King
The recent dissolution of the major US law firm Howrey has many law firm partners scratching their heads. What happened? Despite the warning signs, how could this unwind so quickly? And most importantly, how can we keep this from happening to [insert law firm name here]?
In an interview with a Wall Street Journal reporter, Howrey, (now former) CEO Robert Ruyak, provided limited insights into what eventually became the demise of the prestigious DC-based firm. He specifically outlined the firm’s challenge to generate consistent revenue due to its precarious reliance on litigation work – particularly litigious matters based on alternative billing and contingency fees.
The final, and most interesting remark made by Ruyak, involved the growing significance of third-party specialists.
“Another challenge was the rise of third-party document-discovery specialists that could provide litigation support services at substantially lower rates, he said. Howrey, a law firm with many offices in big cities, and thus, higher costs and couldn’t compete, he added.”
Without jumping to too many conclusions, domestic and international legal outsourcing (LPO) seems to fit comfortably into this bucket of ‘third-party document-discovery specialists.’ So, how does this impact other similar law firms and what are they doing in response to the growing third-party vendor adoption?
The typical law firm response usually falls into a blend of the following responses:
1) Ignoring and distancing themselves from the matters carried out by outside vendors.
2) Embracing LPO in varying degrees (despite the fact that we haven’t heard any major LPO pronouncements by any major US law firms.)
3) Establishing “value options” through captive delivery centers in low cost jurisdictions domestically.
While LPO vendors based internationally typically bear the brunt of similar frustration expressed by Ruyak, the growing number of domestically-based shops such as Axiom Law seem to be gaining adoption to unprecedented degree.
Often, many law firms attempt to position themselves out of the lower-level “commodity” work performed by third-party vendors. For example, a recent article in Bar & Bench featured comments from, Glenn Gerstel, Managing Partner of the Washington DC office of Milbank, Tweed, Hadley & McCloy.
In the very same city where Howrey failed less than week before in part due to growing pressure from “third-party document-discovery specialists,” Gerstel said,
“I think LPO is certainly very efficient for certain kinds of legal practices. For Milbank, we have not engaged in it mostly because the kind of work we do tends to be very customized and specific, which is highly negotiated projects or cross border litigations where there are relatively few opportunities to cut cost efficiencies associated with outsourcing. There are other practices where it makes sense but for Milbank we have not found the opportunity.”
Granted, for a very high-end law practice such as Milbanks, perhaps this is true. But, the end-all test is whether clients continue buy this line of thinking – and the fee structure behind it. Based on the comments made by Howrey CEO Robert Ruyak, apparently clients weren’t buying this for Howrey. It’s doubtful that we’ve seen the last of major law firms attributing (publically or privately) lost revenues to third-party vendors.
***Disclaimer: There are certainly ways around this dilemma of all or none. We at Fronterion don’t subscribe to the belief that the relationship between law firms and outside vendors as a zero-sum relationship. In fact, from our experiences working with similar firms we see quite the opposite is the case. Firms should not dismiss the impact of new players in the ‘legal supply chain’ to the significant detriment of their practice (as seen by Howrey).
For more information on the growing onshore movement, email forefront@fronterion.com for the most recent copy of our monthly newsletter covering issues related to domestic legal outsourcing trends. A number of these trends are also included in our annual legal outsourcing trending report available here.
In an interview with a Wall Street Journal reporter, Howrey, (now former) CEO Robert Ruyak, provided limited insights into what eventually became the demise of the prestigious DC-based firm. He specifically outlined the firm’s challenge to generate consistent revenue due to its precarious reliance on litigation work – particularly litigious matters based on alternative billing and contingency fees.
The final, and most interesting remark made by Ruyak, involved the growing significance of third-party specialists.
“Another challenge was the rise of third-party document-discovery specialists that could provide litigation support services at substantially lower rates, he said. Howrey, a law firm with many offices in big cities, and thus, higher costs and couldn’t compete, he added.”
Without jumping to too many conclusions, domestic and international legal outsourcing (LPO) seems to fit comfortably into this bucket of ‘third-party document-discovery specialists.’ So, how does this impact other similar law firms and what are they doing in response to the growing third-party vendor adoption?
The typical law firm response usually falls into a blend of the following responses:
1) Ignoring and distancing themselves from the matters carried out by outside vendors.
2) Embracing LPO in varying degrees (despite the fact that we haven’t heard any major LPO pronouncements by any major US law firms.)
3) Establishing “value options” through captive delivery centers in low cost jurisdictions domestically.
While LPO vendors based internationally typically bear the brunt of similar frustration expressed by Ruyak, the growing number of domestically-based shops such as Axiom Law seem to be gaining adoption to unprecedented degree.
Often, many law firms attempt to position themselves out of the lower-level “commodity” work performed by third-party vendors. For example, a recent article in Bar & Bench featured comments from, Glenn Gerstel, Managing Partner of the Washington DC office of Milbank, Tweed, Hadley & McCloy.
In the very same city where Howrey failed less than week before in part due to growing pressure from “third-party document-discovery specialists,” Gerstel said,
“I think LPO is certainly very efficient for certain kinds of legal practices. For Milbank, we have not engaged in it mostly because the kind of work we do tends to be very customized and specific, which is highly negotiated projects or cross border litigations where there are relatively few opportunities to cut cost efficiencies associated with outsourcing. There are other practices where it makes sense but for Milbank we have not found the opportunity.”
Granted, for a very high-end law practice such as Milbanks, perhaps this is true. But, the end-all test is whether clients continue buy this line of thinking – and the fee structure behind it. Based on the comments made by Howrey CEO Robert Ruyak, apparently clients weren’t buying this for Howrey. It’s doubtful that we’ve seen the last of major law firms attributing (publically or privately) lost revenues to third-party vendors.
***Disclaimer: There are certainly ways around this dilemma of all or none. We at Fronterion don’t subscribe to the belief that the relationship between law firms and outside vendors as a zero-sum relationship. In fact, from our experiences working with similar firms we see quite the opposite is the case. Firms should not dismiss the impact of new players in the ‘legal supply chain’ to the significant detriment of their practice (as seen by Howrey).
For more information on the growing onshore movement, email forefront@fronterion.com for the most recent copy of our monthly newsletter covering issues related to domestic legal outsourcing trends. A number of these trends are also included in our annual legal outsourcing trending report available here.
Tuesday, March 22, 2011
Fronterion Newsletter Release: Is onshore the new offshore?
This month the focus of the Fronterion Forefront newsletter includes a number of recent developments in the onshore legal outsourcing segment. This includes third-party vendors expanding their domestic footprint or law firms establishing their own centers.
“When legal process outsourcing (LPO) exploded onto the scene a few years ago, its success was built on the efforts of hard-working attorneys in India, South Africa and the Philippines, who were willing to do the same tasks for less.
But LPO, just like the legal profession it serves, is evolving.
Now, those attorneys could just as well be in Ohio or Belfast, working in so-called ‘onshore’ outsourcing centers, which are low-cost but closer to clients and often run by law firms themselves rather than external providers.”
Given these developments, an interesting question is raised: What is the role of traditional LPOs if a growing segment of law firms adopt the best practices of the LPO industry and, thus, feel they are better positioned to establish their own centers domestically?
The newsletter provides some interesting commentary and quotes on this continuing debate. For more details on the growing onshore debate, email forefront@fronterion.com for the most recent copy.
In response, a number of LPO vendors are ramping up their onshore delivery capabilities. A visible growth trajectory of an onshore third-party LPO was recently released by UnitedLex. UnitexLex plans to triple its personnel ‘on-the-ground’ in the greater Kansas City area from 85 to approximately 250 over the next several years. This represents a growing proportion of domestic legal professionals part of the 650 UnitedLex employees based largely in Gurgaon, India.
A number of the trends on the topic of onshore and growing jurisdictional reach are also included in our annual legal outsourcing trending report available here.
“When legal process outsourcing (LPO) exploded onto the scene a few years ago, its success was built on the efforts of hard-working attorneys in India, South Africa and the Philippines, who were willing to do the same tasks for less.
But LPO, just like the legal profession it serves, is evolving.
Now, those attorneys could just as well be in Ohio or Belfast, working in so-called ‘onshore’ outsourcing centers, which are low-cost but closer to clients and often run by law firms themselves rather than external providers.”
Given these developments, an interesting question is raised: What is the role of traditional LPOs if a growing segment of law firms adopt the best practices of the LPO industry and, thus, feel they are better positioned to establish their own centers domestically?
The newsletter provides some interesting commentary and quotes on this continuing debate. For more details on the growing onshore debate, email forefront@fronterion.com for the most recent copy.
In response, a number of LPO vendors are ramping up their onshore delivery capabilities. A visible growth trajectory of an onshore third-party LPO was recently released by UnitedLex. UnitexLex plans to triple its personnel ‘on-the-ground’ in the greater Kansas City area from 85 to approximately 250 over the next several years. This represents a growing proportion of domestic legal professionals part of the 650 UnitedLex employees based largely in Gurgaon, India.
A number of the trends on the topic of onshore and growing jurisdictional reach are also included in our annual legal outsourcing trending report available here.
Monday, March 21, 2011
The Future of the Legal Profession: Georgetown Ground Zero
This earlier this month I had the pleasure of attending Georgetown’s annual conference. This year’s event, Welcome to the Future: Trends in the Delivery of Corporate Legal Services, was held on March 9th.
In a welcome change of pace, I didn’t have any formal speaking obligations so I was free to take notes and enjoy the range of very impressive speakers from major US law firms, in-house legal teams and innovative legal support vendors.
The conference centered on the trends impacting the future of the legal profession and included lively discussions and debates on key issues such as the relationship between law firms and in-house legal departments, characterizing and defining value, the impact of legal brands and innovation in the legal services supply chain.
The conference’s self-described focus follows: “There is much talk in the air of a revolution in the delivery of corporate legal services – but what’s actually happening on the ground? This intensive one-day conference is designed to provide concrete insights into how corporate legal departments and outside service providers can collaborate to provide valuable and cost-effective legal services.’
Some key takeaways for me included:
Six Sigma and Pixy Dust
Part of the long-standing debate is whether law firms will act more like LPOs or if LPOs will act more like law firms (also recently discussed on an ABA podcast here.
The conference featured a visible example of a law firm acting like LPO. On a very interesting panel, representatives from Seyfarth Shaw and Wolverine Worldwide outlined their approach to a more known productive relationship using enhanced productivity approaches. What is titled ‘Seyfarth Lean’ is the application of Six Sigma lean and Seyfarth “pixy dust.” While there are continuing challenges with adoption internally and issues with compensation systems, the application of Six Sigma is certainly a step toward ‘law firms acting like LPOs’
More details on this arrangement are available in a previous ACC post.
Legal Supply Chain
As firms continue to embrace multi-source, multi-shore legal outsourcing, the mocker “LPO” may take on a new form as the ‘legal supply chain.’ The legal supply chain concept embraces work that is delivered in the most cost effective manner from a variety of sources. (The overall ‘supply chain’ orchestrator is either the law firm or the in-house legal team.) In addition to traditional LPOs, the supply chain also incorporates the likes of Axiom whose founder Mark Harris also spoke on the ‘legal supply chain’ panel at the Georgetown event.
As the closing speaker for the ‘legal supply chain’ panel, Pangea3 Co-CEO David Perla spoke on various LPO topics including:
• The findings from a survey conducted by Thomson Reuters as they were exploring LPOs to acquire. The exercise surveyed why law firms and in-house legal departments worked with LPOs, (Hint: the primary reason was not cost.)
• The three components of quality (people, processes and technology) and how these specifically relate to LPO service delivery.
• How LPOs are not competitors with law firms because the overall pyramid of available legal work is always expanding due to the growing complexity of legal matters and an increasingly regulated business environment.
One of the interesting undertones of the Georgetown event was the dissolution of DC-based Howrey. Partners voted on dissolution Wednesday of Georgetown event. More details and implications on this shortly.
In a welcome change of pace, I didn’t have any formal speaking obligations so I was free to take notes and enjoy the range of very impressive speakers from major US law firms, in-house legal teams and innovative legal support vendors.
The conference centered on the trends impacting the future of the legal profession and included lively discussions and debates on key issues such as the relationship between law firms and in-house legal departments, characterizing and defining value, the impact of legal brands and innovation in the legal services supply chain.
The conference’s self-described focus follows: “There is much talk in the air of a revolution in the delivery of corporate legal services – but what’s actually happening on the ground? This intensive one-day conference is designed to provide concrete insights into how corporate legal departments and outside service providers can collaborate to provide valuable and cost-effective legal services.’
Some key takeaways for me included:
Six Sigma and Pixy Dust
Part of the long-standing debate is whether law firms will act more like LPOs or if LPOs will act more like law firms (also recently discussed on an ABA podcast here.
The conference featured a visible example of a law firm acting like LPO. On a very interesting panel, representatives from Seyfarth Shaw and Wolverine Worldwide outlined their approach to a more known productive relationship using enhanced productivity approaches. What is titled ‘Seyfarth Lean’ is the application of Six Sigma lean and Seyfarth “pixy dust.” While there are continuing challenges with adoption internally and issues with compensation systems, the application of Six Sigma is certainly a step toward ‘law firms acting like LPOs’
More details on this arrangement are available in a previous ACC post.
Legal Supply Chain
As firms continue to embrace multi-source, multi-shore legal outsourcing, the mocker “LPO” may take on a new form as the ‘legal supply chain.’ The legal supply chain concept embraces work that is delivered in the most cost effective manner from a variety of sources. (The overall ‘supply chain’ orchestrator is either the law firm or the in-house legal team.) In addition to traditional LPOs, the supply chain also incorporates the likes of Axiom whose founder Mark Harris also spoke on the ‘legal supply chain’ panel at the Georgetown event.
As the closing speaker for the ‘legal supply chain’ panel, Pangea3 Co-CEO David Perla spoke on various LPO topics including:
• The findings from a survey conducted by Thomson Reuters as they were exploring LPOs to acquire. The exercise surveyed why law firms and in-house legal departments worked with LPOs, (Hint: the primary reason was not cost.)
• The three components of quality (people, processes and technology) and how these specifically relate to LPO service delivery.
• How LPOs are not competitors with law firms because the overall pyramid of available legal work is always expanding due to the growing complexity of legal matters and an increasingly regulated business environment.
One of the interesting undertones of the Georgetown event was the dissolution of DC-based Howrey. Partners voted on dissolution Wednesday of Georgetown event. More details and implications on this shortly.
Monday, March 7, 2011
Australian: Different Flushes, Same Legal Pressures
While the debate over ethical issues arising from the use of domestic and international legal outsourcing continues to mature, recent statements by an Australian justice suggest that a growing number of jurisdictions are taking on LPO ethical issues as adoption increases.
Despite flip-flopped seasons and toilets flushing in opposite directions, it appears Australian legal professionals are subject to some of the same pressures as their US and UK counterparts.
Recently, Chief Justice of New South Wales Jim Spigelman issued some provocative comments. He said, “Those responsible for purchasing legal services in commercial corporations are subject to pressure to reduce costs, in the same way as those responsible for any other cost centre… Outsourcing through the use of Indian-based support services, such as digital dictation transcription and document management for discovery and due diligence, is an available way of containing such costs… However, overseas legal services are not limited to administrative matters of this kind."
The expansion of LPO adoption beyond US and UK clientele is something we projected in our annual trending report – Ten for 2011: Top Ten Trends for Legal Outsourcing.
#4 Expanding Client Geographic/Jurisdictional Reach
In 2011, LPO services will be increasingly adopted in expanded areas domestically within the US and UK, as well as international destinations… Buyers of LPO services are likely to expand into other geographic destinations around the world such as Australia, South Africa and major business hubs in the Asia-Pacific region.
More details on the free report here.
The Australian markets are a growing area of focus lately with lots of movement in the industry. Firms Down Under continue seeking to address the changing needs of their international clients. Major UK firms like Clifford Chance and Norton Rose jockeying for an Australian partner. Advent continues to take strides forward as a leading LPO-integrated law firm. And fallout from the Rio Tinto deal, which seems so long ago, continues. Add the mix the recent comments made by Chief Justice Spigleman, and it’s no surprise perspectives are changing in the world below.
For additional details on the continuing LPO ethics debate and regulatory updates, check out our online resource; www.LPOethics.com
Despite flip-flopped seasons and toilets flushing in opposite directions, it appears Australian legal professionals are subject to some of the same pressures as their US and UK counterparts.
Recently, Chief Justice of New South Wales Jim Spigelman issued some provocative comments. He said, “Those responsible for purchasing legal services in commercial corporations are subject to pressure to reduce costs, in the same way as those responsible for any other cost centre… Outsourcing through the use of Indian-based support services, such as digital dictation transcription and document management for discovery and due diligence, is an available way of containing such costs… However, overseas legal services are not limited to administrative matters of this kind."
The expansion of LPO adoption beyond US and UK clientele is something we projected in our annual trending report – Ten for 2011: Top Ten Trends for Legal Outsourcing.
#4 Expanding Client Geographic/Jurisdictional Reach
In 2011, LPO services will be increasingly adopted in expanded areas domestically within the US and UK, as well as international destinations… Buyers of LPO services are likely to expand into other geographic destinations around the world such as Australia, South Africa and major business hubs in the Asia-Pacific region.
More details on the free report here.
The Australian markets are a growing area of focus lately with lots of movement in the industry. Firms Down Under continue seeking to address the changing needs of their international clients. Major UK firms like Clifford Chance and Norton Rose jockeying for an Australian partner. Advent continues to take strides forward as a leading LPO-integrated law firm. And fallout from the Rio Tinto deal, which seems so long ago, continues. Add the mix the recent comments made by Chief Justice Spigleman, and it’s no surprise perspectives are changing in the world below.
For additional details on the continuing LPO ethics debate and regulatory updates, check out our online resource; www.LPOethics.com
Thursday, February 24, 2011
Legal Outsourcing Summit – In Review…
This month, representatives and LPO enthusiasts gathers for IQPC’s inaugural LPO conference in New York City at the Sentry Club. The speaking faculty included representatives from top AM Law firms and multi-nationals such as Microsoft, Pfizer, Nokia, Milbank Tweed, Hinshaw Culbertson, and Mayer Brown, among others.
I had the privilege of chairing the event which included three days of workshops, speakers and interactive sessions.
Highlights from the event included hearing about personal experiences, presentations of case studies and lively discussions by the sophisticated delegation of conference attendees.
Key takeaways from the conference included:
* The importance of taking an active role as the buyer, including the selection, supervision, and management of an outside vendor.
* Shifting work to an outside LPO vendor does not absolve the firm from responsibility for the work and work product.
* Firms are seeking to address similar issues, but are using differing approaches to LPO. Variations includes onshore vs. offshore delivery, captive vs. third-party vendors, the range of outsourced service areas and divergent management approaches.
* Onshore LPO delivery was a reoccurring theme.
We see this conference emerging as a cornerstone event for the industry. Stay tuned for any details on upcoming events.
For more information on this year’s Legal Outsourcing Summit event click here.
I had the privilege of chairing the event which included three days of workshops, speakers and interactive sessions.
Highlights from the event included hearing about personal experiences, presentations of case studies and lively discussions by the sophisticated delegation of conference attendees.
Key takeaways from the conference included:
* The importance of taking an active role as the buyer, including the selection, supervision, and management of an outside vendor.
* Shifting work to an outside LPO vendor does not absolve the firm from responsibility for the work and work product.
* Firms are seeking to address similar issues, but are using differing approaches to LPO. Variations includes onshore vs. offshore delivery, captive vs. third-party vendors, the range of outsourced service areas and divergent management approaches.
* Onshore LPO delivery was a reoccurring theme.
We see this conference emerging as a cornerstone event for the industry. Stay tuned for any details on upcoming events.
For more information on this year’s Legal Outsourcing Summit event click here.
Friday, February 11, 2011
A&O Transfers Support Roles to Belfast
Allen & Overy (A&O) announced last week that it is transferring 180 support roles to Belfast, Ireland. A&O will initially transfer 18 members of support staff to Belfast to deliver IT, HR, finance, business services and library functions from a single site, The Lawyer reports, and the legal services center will take on some routine legal work. As many as 250 support roles could be based in the city by 2014, with total headcount including fee-earners potentially reaching 300.
The implications of A&O’s onshoring initiative are still being sorted out, particularly in light of Herbert Smith’s announcement of a Belfast-based captive center last year. Due to the growing interest in onshore legal outsourcing, we are planning to feature this topic in our newsletter this month. Be sure to sign up for our newsletter by e-mailing forefront@fronterion.com.
The implications of A&O’s onshoring initiative are still being sorted out, particularly in light of Herbert Smith’s announcement of a Belfast-based captive center last year. Due to the growing interest in onshore legal outsourcing, we are planning to feature this topic in our newsletter this month. Be sure to sign up for our newsletter by e-mailing forefront@fronterion.com.
Wednesday, February 9, 2011
Thomson Reuters-Pangea3 Deal Raises Competitive Pressure
There’s no doubt that legal process outsourcing is changing the delivery of legal services. Thomson Reuter’s acquisition of Pangea3 last November has further fueled the LPO discussion and sparked debate among industry experts about the ethical implications of Thomson delving into competition with its client base, especially since Pangea3 plans to open more offices in the U.S.
In a recent article in the ABA Journal, several industry commentators, including myself, point out that the Thompson-Pangea3 deal has raised the competitive pressure for law firms both large and small. Innovative law firms will adjust their market approach and leverage LPO as a cost-effective way to accomplish repetitive and process-based work.
The full ramifications of Thompson Reuters backing an LPO will become clearer throughout the year. However, as clients grow more reluctant to pay top fees for commoditized, repeatable work, law firms must evaluate whether forming LPO partnerships will help them deliver services more efficiently.
In a recent article in the ABA Journal, several industry commentators, including myself, point out that the Thompson-Pangea3 deal has raised the competitive pressure for law firms both large and small. Innovative law firms will adjust their market approach and leverage LPO as a cost-effective way to accomplish repetitive and process-based work.
The full ramifications of Thompson Reuters backing an LPO will become clearer throughout the year. However, as clients grow more reluctant to pay top fees for commoditized, repeatable work, law firms must evaluate whether forming LPO partnerships will help them deliver services more efficiently.
Monday, February 7, 2011
Stay on Top of LPO Regulation in 2011
After flying under the radar for several years, legal process outsourcing (LPO) has finally caught the attention of regulators around the globe. In the three main LPO markets – the United States, the United Kingdom and India – there is the potential for rule changes which could place outsourcing agreements under increased scrutiny or even have a material impact on the ability of law firms and companies to send legal work to external providers.
For example, Connecticut has introduced a bill designed to prevent law firms and corporations from offshoring the drafting, reviewing and analyzing of legal documents to workers overseas. Under the bill, proposed by Connecticut state representative Patricia Dillon, "unlicensed'' offshore workers who engage in these activities for clients in Connecticut could be charged with unauthorized practice of law. If the bill is passed, there is the risk that other US states may pass similar laws.
Fronterion’s January newsletter focuses on the changing regulatory landscape for legal outsourcing in 2011. To keep up to date on the changing ethical and regulatory environment in the coming year, sign up for our newsletter by emailing forefront@fronterion.com, visit the LPO Ethics Resource Center, and review our most recent press release.
Also, to learn more about legal outsourcing strategies, be sure to register for this new LPO conference scheduled for February 14-16, 2011 at The Sentry Center in New York, NY.
For example, Connecticut has introduced a bill designed to prevent law firms and corporations from offshoring the drafting, reviewing and analyzing of legal documents to workers overseas. Under the bill, proposed by Connecticut state representative Patricia Dillon, "unlicensed'' offshore workers who engage in these activities for clients in Connecticut could be charged with unauthorized practice of law. If the bill is passed, there is the risk that other US states may pass similar laws.
Fronterion’s January newsletter focuses on the changing regulatory landscape for legal outsourcing in 2011. To keep up to date on the changing ethical and regulatory environment in the coming year, sign up for our newsletter by emailing forefront@fronterion.com, visit the LPO Ethics Resource Center, and review our most recent press release.
Also, to learn more about legal outsourcing strategies, be sure to register for this new LPO conference scheduled for February 14-16, 2011 at The Sentry Center in New York, NY.
Monday, January 31, 2011
LPO Predictions for the New... Decade
While many commentators make projections for the coming year (Fronterion included), some are taking a more expansive approach and are forecasting into the next decade.
In a recent post at Law Without Borders, fellow LPO blogger Russell Smith projects a number of ways that legal offshoring will impact (or “shake up”) the legal profession in the next 10 years. His 12 predictions, and my summary of each, are:
1. Meritocracy Beats Aristocracy - Legal service delivery is becoming more value-driven.
2. Change is Happening in the East as Much as in the West - The legal landscape is changing in India.
3. The New Tort Reform - LPO may constitute a more cost-effective defense than settlement.
4. Capital Funding of Litigation - LPO is a good value proposition for third-party investors in litigation funding.
5. The Billable Hour Bites the Dust - Alternative billing models are turning the legal world upside down.
6. Unintended Effects of Regulatory Reform - New regulatory compliance obligations call for LPO solutions.
7. "Legal Trauma Units" Level the Playing Field – Offshoring levels the playing field for small law firms.
8. Offshore Beats Nearshore – Billing rates and operating costs are considerably lower in India.
9. The Death of the "They're Taking our Jobs" Myth – Offshoring actually creates new jobs in the West.
10. More Proliferation Than Consolidation – Offshore legal service providers are growing in number.
11. Western Lawyers Switch to Football – Through LPO, Western lawyers can move up the value chain to act as quarterbacks or team coaches.
12. The Future May Belong to the "Just Crazy Enough" – LPO entrepreneurs pave the way for new innovations.
View "12 Ways Offshore Legal Outsourcing Could Shake Up the Law World in the New Decade" for the full report.
We largely agree with Smith’s predictions, a number of which are already occurring the marketplace. Just think, 10 years ago we were just sorting out the use and ethical implications of e-mail.
In regard to Smith’s 9th prediction, “The Death of the ‘They’re Taking Our Jobs Myth,’” I was quoted with my comments on the job impact of international sourcing initiatives:
Smith makes some insightful forecasts regarding LPO in the next decade. I agree with his statement that this coming decade is one in which the legal world might be turned upside down and that “offshore legal outsourcing is likely to continue to be among the leaders of the law revolution.”
In a recent post at Law Without Borders, fellow LPO blogger Russell Smith projects a number of ways that legal offshoring will impact (or “shake up”) the legal profession in the next 10 years. His 12 predictions, and my summary of each, are:
1. Meritocracy Beats Aristocracy - Legal service delivery is becoming more value-driven.
2. Change is Happening in the East as Much as in the West - The legal landscape is changing in India.
3. The New Tort Reform - LPO may constitute a more cost-effective defense than settlement.
4. Capital Funding of Litigation - LPO is a good value proposition for third-party investors in litigation funding.
5. The Billable Hour Bites the Dust - Alternative billing models are turning the legal world upside down.
6. Unintended Effects of Regulatory Reform - New regulatory compliance obligations call for LPO solutions.
7. "Legal Trauma Units" Level the Playing Field – Offshoring levels the playing field for small law firms.
8. Offshore Beats Nearshore – Billing rates and operating costs are considerably lower in India.
9. The Death of the "They're Taking our Jobs" Myth – Offshoring actually creates new jobs in the West.
10. More Proliferation Than Consolidation – Offshore legal service providers are growing in number.
11. Western Lawyers Switch to Football – Through LPO, Western lawyers can move up the value chain to act as quarterbacks or team coaches.
12. The Future May Belong to the "Just Crazy Enough" – LPO entrepreneurs pave the way for new innovations.
View "12 Ways Offshore Legal Outsourcing Could Shake Up the Law World in the New Decade" for the full report.
We largely agree with Smith’s predictions, a number of which are already occurring the marketplace. Just think, 10 years ago we were just sorting out the use and ethical implications of e-mail.
In regard to Smith’s 9th prediction, “The Death of the ‘They’re Taking Our Jobs Myth,’” I was quoted with my comments on the job impact of international sourcing initiatives:
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.
Smith makes some insightful forecasts regarding LPO in the next decade. I agree with his statement that this coming decade is one in which the legal world might be turned upside down and that “offshore legal outsourcing is likely to continue to be among the leaders of the law revolution.”
Wednesday, January 26, 2011
Radiant Law Illuminates the London Legal Scene
As a follow-up on my earlier post about new and innovative law firm models coming out of the UK, this past week I was able to catch up with Alex Hamilton, formerly of Latham & Watkins, now a founder and principal at Radiant.law.
Alex and a handful of colleagues from several leading law firms and in-house legal teams have banded together to launch a boutique called radiant.law that specialises in outsourcing, technology and commercial work.
The endeavor has created a reasonably large splash in the London legal scene due to the unique nature of the firm which is predicated on fixed pricing, senior-level staffing, and the expansive use of an offshore legal process outsourcing vendor to deliver much of the necessary legal support services.
Alex offered some behind-the-scenes insight into radiant.law as well as some interesting projections for the rapidly changing legal market in London. As far as Radiant’s view for its role in the market, Alex explained, “We’re not interested in changing the legal market, but believe the legal market will become more diverse. Clients simply need more choice for how they purchase their legal services. Throughout our work at our respective firms before coming to Radiant we always thought there had to be smarter ways of doing this."
At Fronterion, we’ve often speculated on whether law firms will end up acting more like LPOs or if LPOs will begin to embrace more law firm-like characteristics. In a strong shift towards the former, Alex outlined a number of strategies that Radiant picked up from their selected LPO provider, Pangea3. “For example, we’re adopting the Pangea3 approach of building playbooks for the more repeatable work. These play books outline the preferred and fall back positions on common issues that are used by Pangea3 staff. Using this more process-driven approach, alongside better checklists for all lawyers working on the matter, allow us to deliver a more consistent and better value product to clients,” Alex said.
On the decision to make LPO a prominent part of Radiant and the significance of LPOs’ unique approach to deliver high-quality work, Alex noted that, “What jumped out of me almost immediately when we started working with our LPO was the quality, structure and process, the entrepreneurial and innovative attitude and how they kept refining their processes.”
“At Radiant we’re all outsourcing lawyers so we know how the outsourcing market has evolved in other industry sectors. Essentially, firms who first went offshore for labor arbitrage are now going to India to get the expertise of process-driven service delivery. We’re really starting to see this in the legal process outsourcing sector. The rigor of the LPO’s approach is very important to delivering better quality products to clients.”
On the role that legal outsourcing will play in their day-to-day work at Radiant, Alex noted, “The primary role of the LPO for larger deals will be keeping all of the transactional documents in good shape – particularly overnight. This not only improves quality, but the deal velocity. We can also offer better value fixed price support for the smaller day-to-day contracts where we can use Pangea3 to do initial reviews and mark-ups under our supervision. Going forward, we’re going to keep looking for ways to increase how we work together with our legal outsourcing vendor.”
On client interfacing: “We take full responsibility for the work product at Radiant so we’re always checking everything. We are also the people who the client deals with and we will be in the negotiations.”
Critics are skeptical about the ability of the Radiant’s exclusively senior-level team to scale up their time to make the practice viable, particularly without the help of junior-level assistants. Certainly much of Radiant’s success is predicated on its ability to leverage lower-level tasks with their LPO provider. Alex noted, “We hope to remain nimble and very open to adjusting our model to what works, but for the time being, I really think that we’re on to something.”
One small step for a boutique technology firm, one giant step for what law firms may look like in the future.
Alex and a handful of colleagues from several leading law firms and in-house legal teams have banded together to launch a boutique called radiant.law that specialises in outsourcing, technology and commercial work.
The endeavor has created a reasonably large splash in the London legal scene due to the unique nature of the firm which is predicated on fixed pricing, senior-level staffing, and the expansive use of an offshore legal process outsourcing vendor to deliver much of the necessary legal support services.
Alex offered some behind-the-scenes insight into radiant.law as well as some interesting projections for the rapidly changing legal market in London. As far as Radiant’s view for its role in the market, Alex explained, “We’re not interested in changing the legal market, but believe the legal market will become more diverse. Clients simply need more choice for how they purchase their legal services. Throughout our work at our respective firms before coming to Radiant we always thought there had to be smarter ways of doing this."
At Fronterion, we’ve often speculated on whether law firms will end up acting more like LPOs or if LPOs will begin to embrace more law firm-like characteristics. In a strong shift towards the former, Alex outlined a number of strategies that Radiant picked up from their selected LPO provider, Pangea3. “For example, we’re adopting the Pangea3 approach of building playbooks for the more repeatable work. These play books outline the preferred and fall back positions on common issues that are used by Pangea3 staff. Using this more process-driven approach, alongside better checklists for all lawyers working on the matter, allow us to deliver a more consistent and better value product to clients,” Alex said.
On the decision to make LPO a prominent part of Radiant and the significance of LPOs’ unique approach to deliver high-quality work, Alex noted that, “What jumped out of me almost immediately when we started working with our LPO was the quality, structure and process, the entrepreneurial and innovative attitude and how they kept refining their processes.”
“At Radiant we’re all outsourcing lawyers so we know how the outsourcing market has evolved in other industry sectors. Essentially, firms who first went offshore for labor arbitrage are now going to India to get the expertise of process-driven service delivery. We’re really starting to see this in the legal process outsourcing sector. The rigor of the LPO’s approach is very important to delivering better quality products to clients.”
On the role that legal outsourcing will play in their day-to-day work at Radiant, Alex noted, “The primary role of the LPO for larger deals will be keeping all of the transactional documents in good shape – particularly overnight. This not only improves quality, but the deal velocity. We can also offer better value fixed price support for the smaller day-to-day contracts where we can use Pangea3 to do initial reviews and mark-ups under our supervision. Going forward, we’re going to keep looking for ways to increase how we work together with our legal outsourcing vendor.”
On client interfacing: “We take full responsibility for the work product at Radiant so we’re always checking everything. We are also the people who the client deals with and we will be in the negotiations.”
Critics are skeptical about the ability of the Radiant’s exclusively senior-level team to scale up their time to make the practice viable, particularly without the help of junior-level assistants. Certainly much of Radiant’s success is predicated on its ability to leverage lower-level tasks with their LPO provider. Alex noted, “We hope to remain nimble and very open to adjusting our model to what works, but for the time being, I really think that we’re on to something.”
One small step for a boutique technology firm, one giant step for what law firms may look like in the future.
Monday, January 24, 2011
LPO Conference Hits New York
Mark your calendars, a new LPO conference titled, “Examining Legal Outsourcing Strategies and Deciding What Fits Best for Your Company,” is scheduled for February 14-16, 2011 at The Sentry Center in New York, NY.
This conference, one of the first major LPO events in the United States in some time, will discuss how legal process outsourcing is fundamentally different from other types of outsourcing and will address the unique considerations inherent in LPO.
I am chairing the event and will host a distinguished line-up of speakers from organizations such as Chrysler Latin America, Integreon, Clifford Chance, Pfizer, Microsoft, Nokia, Milbank Tweed, Wilmer Hale, Shapiro Sher Guinot & Sandler, Hinshaw & Culbertson LLP, Wachtell Lipton Rosen & Katz, Kaye Scholer LLP and Mayer Brown.
The conference will cover a laundry list of LPO issues and will help you:
Understand your obligations as a legal professional when outsourcing;
Assess outsourcing for contract management, a top emerging service area in 2011;
Understand the legal outsourcing options available to your company;
Learn the key factors to consider before making a decision to outsource;
Understand the scope of required conflict checks in an outsourcing arrangement;
Strengthen communications and clarify expectations between your company and the outsourced entity; and
Address the scope and content of required confidentiality agreements and their limitations.
As a pre-conference warm-up, the conference website features several interesting podcasts by conference speakers including interviews with Lucy Bassli of Microsoft, Mark Ross of Integreon, and Cathleen Pedersen of Orrick. The Bassli podcast is of particular interest and outlines Mircosoft’s work outsourcing contracts with Integreon as announced earlier last year.
If you have any interest or involvement in legal outsourcing, you won’t want to miss this event.
This conference, one of the first major LPO events in the United States in some time, will discuss how legal process outsourcing is fundamentally different from other types of outsourcing and will address the unique considerations inherent in LPO.
I am chairing the event and will host a distinguished line-up of speakers from organizations such as Chrysler Latin America, Integreon, Clifford Chance, Pfizer, Microsoft, Nokia, Milbank Tweed, Wilmer Hale, Shapiro Sher Guinot & Sandler, Hinshaw & Culbertson LLP, Wachtell Lipton Rosen & Katz, Kaye Scholer LLP and Mayer Brown.
The conference will cover a laundry list of LPO issues and will help you:
Understand your obligations as a legal professional when outsourcing;
Assess outsourcing for contract management, a top emerging service area in 2011;
Understand the legal outsourcing options available to your company;
Learn the key factors to consider before making a decision to outsource;
Understand the scope of required conflict checks in an outsourcing arrangement;
Strengthen communications and clarify expectations between your company and the outsourced entity; and
Address the scope and content of required confidentiality agreements and their limitations.
As a pre-conference warm-up, the conference website features several interesting podcasts by conference speakers including interviews with Lucy Bassli of Microsoft, Mark Ross of Integreon, and Cathleen Pedersen of Orrick. The Bassli podcast is of particular interest and outlines Mircosoft’s work outsourcing contracts with Integreon as announced earlier last year.
If you have any interest or involvement in legal outsourcing, you won’t want to miss this event.
Monday, January 17, 2011
Trending Report Follow-up
As the LPO industry continues to mature and evolve, we will continue to keep you updated on trends and developments on legal process outsourcing. In case you missed it, last month we released our annual trending report on the top 10 LPO trends for the coming year. This report was featured in the ABA Journal as well as Legal Futures, Integreon’s blog and New Legal Review.
In our December newsletter we examined our LPO trend forecast from last year and, scoring each trend on a scale from one to five, reflected honestly on the accuracy of our predictions. Most of our predictions were on the mark and it will be interesting to see if our forecast for the year ahead will hold true. To subscribe to our newsletter or to review December’s edition, e-mail us at: Forefront@fronterion.com
Now that 2010 is officially in the books, we’re looking forward to keeping you apprised of all of the changes in the LPO industry in the coming year.
Stay tuned.
In our December newsletter we examined our LPO trend forecast from last year and, scoring each trend on a scale from one to five, reflected honestly on the accuracy of our predictions. Most of our predictions were on the mark and it will be interesting to see if our forecast for the year ahead will hold true. To subscribe to our newsletter or to review December’s edition, e-mail us at: Forefront@fronterion.com
Now that 2010 is officially in the books, we’re looking forward to keeping you apprised of all of the changes in the LPO industry in the coming year.
Stay tuned.
Tuesday, January 11, 2011
Launch of Boutique Law Practice is Based on LPO Value Proposition
In a recent ABA podcast, I spoke on the melding of law firms and LPOs:
“Going forward I think it’s always a fair question of, are we going to see law firms acting like LPO’s or are we going to see LPO’s acting like law firms? And one of the trends… in the past 6 to 8 months is that we’ve seen a lot more law firms acting like LPO’s than LPO’s acting like law firms.” In this podcast, I predicted that we will also see some interesting melding between law firms and LPOs in the UK in the coming year with the implementation of Legal Services Act. My comments in the podcast start at 3:29 and 11:50.
In the New Year, we are already seeing signs of new LPO innovations and law firm/LPO melding. An example of such LPO innovation is the new technology, outsourcing and commercial law boutique launched by a group of partners from Barlow Lyde & Gilbert, Latham & Watkins and Morrison & Foerster. This new firm, known as Radiant.law, will work with legal outsourcer Pangea3 on certain transactions yet will be responsible for managing the deal as a whole, according to a report in Legal Week. Instead of charging clients an hourly rate, the firm aims to offer price certainty by charging fixed prices for work in advance.
This endeavor is big news. This new boutique is the first of its kind to offer a value-proposition centered around LPO. As an industry, we are still exploring the relationship dynamics between law firms, corporations, and LPOs and this is big first step for a law firm taking on this much LPO involvement.
We will see more new and innovative enterprises cropping up this year, particularly in the UK. We’ve also seen additional law firm-LPO melding with the recent onshore outsourcing announcement by Herbert Smith.
“Going forward I think it’s always a fair question of, are we going to see law firms acting like LPO’s or are we going to see LPO’s acting like law firms? And one of the trends… in the past 6 to 8 months is that we’ve seen a lot more law firms acting like LPO’s than LPO’s acting like law firms.” In this podcast, I predicted that we will also see some interesting melding between law firms and LPOs in the UK in the coming year with the implementation of Legal Services Act. My comments in the podcast start at 3:29 and 11:50.
In the New Year, we are already seeing signs of new LPO innovations and law firm/LPO melding. An example of such LPO innovation is the new technology, outsourcing and commercial law boutique launched by a group of partners from Barlow Lyde & Gilbert, Latham & Watkins and Morrison & Foerster. This new firm, known as Radiant.law, will work with legal outsourcer Pangea3 on certain transactions yet will be responsible for managing the deal as a whole, according to a report in Legal Week. Instead of charging clients an hourly rate, the firm aims to offer price certainty by charging fixed prices for work in advance.
This endeavor is big news. This new boutique is the first of its kind to offer a value-proposition centered around LPO. As an industry, we are still exploring the relationship dynamics between law firms, corporations, and LPOs and this is big first step for a law firm taking on this much LPO involvement.
We will see more new and innovative enterprises cropping up this year, particularly in the UK. We’ve also seen additional law firm-LPO melding with the recent onshore outsourcing announcement by Herbert Smith.
Friday, January 7, 2011
LPO Gains Momentum
Happy New Year! 2010 brought many changes to the LPO industry including new deals, new markets and onshore expansion. Undoubtedly, 2011 will bring more changes as LPO continues to gain momentum across the globe. In fact, the growth of LPO has garnered much attention in the media lately.
A recent article in the Chicago Tribune analyzes how the recession has spurred the growth of legal process outsourcing and alternatives to traditional legal services. Thomson Reuters’ acquisition of LPO giant Pangea3 and Axiom Global’s purchase of LawyerLink are recent testaments to “how alternatives to the traditional law firm are becoming increasingly attractive to buyers of sophisticated legal services in the post-financial-meltdown era.”
While alternatives to law firms are nothing new, business models that embrace legal process outsourcing have gained momentum in the wake of the recession by introducing innovative ways to reduce the costs of many legal tasks.
A story in The Economist also acknowledges the growth of legal outsourcing, noting that LPO is expanding at perhaps 20-30% a year, “for the simple reason that legal costs are out of control.” Given that large law firms’ hourly rates rose more than 65% between 1998 and 2009, it’s no wonder that firms are embracing outsourcing as a means to lower costs and increase efficiency.
Outsourcing will affect American legal firms the most, because U.S. law firms cost the most, according to The Economist, and the time-intensive process of discovery further drives up legal fees.
What do the lawyers think of the growth of LPO? “Some lawyers think outsourcing will be a blessing, taking away the drudgery and leaving them free to hone their higher skills,” the article reports. “Others are nervous. Machines will never replace the brightest American legal minds, but there is no reason why Indians cannot do some of their work. The sharpest firms will survive. So will mass-market law firms, which will make use of outsourcing. But the profession as a whole could be in for a squeeze.”
Only time will tell if legal process outsourcing will be a blessing or a challenge for U.S. lawyers. But, regardless of the lawyers’ plight, in 2011 we will continue to see unprecedented growth in the industry.
A recent article in the Chicago Tribune analyzes how the recession has spurred the growth of legal process outsourcing and alternatives to traditional legal services. Thomson Reuters’ acquisition of LPO giant Pangea3 and Axiom Global’s purchase of LawyerLink are recent testaments to “how alternatives to the traditional law firm are becoming increasingly attractive to buyers of sophisticated legal services in the post-financial-meltdown era.”
While alternatives to law firms are nothing new, business models that embrace legal process outsourcing have gained momentum in the wake of the recession by introducing innovative ways to reduce the costs of many legal tasks.
A story in The Economist also acknowledges the growth of legal outsourcing, noting that LPO is expanding at perhaps 20-30% a year, “for the simple reason that legal costs are out of control.” Given that large law firms’ hourly rates rose more than 65% between 1998 and 2009, it’s no wonder that firms are embracing outsourcing as a means to lower costs and increase efficiency.
Outsourcing will affect American legal firms the most, because U.S. law firms cost the most, according to The Economist, and the time-intensive process of discovery further drives up legal fees.
What do the lawyers think of the growth of LPO? “Some lawyers think outsourcing will be a blessing, taking away the drudgery and leaving them free to hone their higher skills,” the article reports. “Others are nervous. Machines will never replace the brightest American legal minds, but there is no reason why Indians cannot do some of their work. The sharpest firms will survive. So will mass-market law firms, which will make use of outsourcing. But the profession as a whole could be in for a squeeze.”
Only time will tell if legal process outsourcing will be a blessing or a challenge for U.S. lawyers. But, regardless of the lawyers’ plight, in 2011 we will continue to see unprecedented growth in the industry.
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