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:

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.”

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.

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.

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.

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.

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.