LPO Source

Upwards and Onward

2011-05-05T11:50:00.000-05:00

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.

The Strategic Impact of LPO: A New Book to Prove It

2011-03-29T12:13:00.004-05:00

"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.

Howrey: The King is Dead, Long Live the King

2011-03-24T12:03:00.000-05:00

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.

Fronterion Newsletter Release: Is onshore the new offshore?

2011-03-22T09:07:00.000-05:00

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.

The Future of the Legal Profession: Georgetown Ground Zero

2011-03-21T07:54:00.001-05:00

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.

Australian: Different Flushes, Same Legal Pressures

2011-03-07T08:45:00.001-06:00

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

Legal Outsourcing Summit – In Review…

2011-02-24T09:52:00.000-06:00

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.

A&O Transfers Support Roles to Belfast

2011-02-11T12:02:00.002-06:00

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.

Thomson Reuters-Pangea3 Deal Raises Competitive Pressure

2011-02-09T13:58:00.000-06:00

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.

Stay on Top of LPO Regulation in 2011

2011-02-07T07:50:00.001-06:00

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.

LPO Predictions for the New... Decade

2011-01-31T09:57:00.000-06:00

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

2011-01-26T11:12:00.003-06:00

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

2011-01-24T12:58:00.003-06:00

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

2011-01-17T14:53:00.001-06:00

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

2011-01-11T11:00:00.002-06:00

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

2011-01-07T14:53:00.000-06:00

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.

Tis the Season… For Industry Trending

2010-12-20T15:22:00.001-06:00

While most choose to celebrate the Christmas holiday in more traditional ways, the LPO industry brings an abundance of holiday cheer via industry surveys.

Not to be outdone, last week we released our annual trending report: Ten for 2011: Top 10 Trends in Legal Outsourcing in 2011. Featured by the ABA Journal - Legal Outsourcing Consultant Predicts More Onshoring - the complete report is available here.

Now on to the cornucopia of industry surveys this month…

1. The European Lawyer: Outsourcing Survey
November and December issue of The European Lawyer features a study of general counsel on their use of legal outsourcing. If you can get your hands on a copy, it’s certainly worth a read. Statistics include how many general counsel currently outsource, which services they use and the jurisdictions in which they feel most comfortable using.

2. State of the Indian LPO Sector
As previously noted on the blog, an Indian outsourcing firm set out to conduct a survey of the Indian LPO sector. After collating the responses from 19 outsourcing firms, the results are out. The full report is available by contacting Ravi Shankar at IndianLPOSurvey@gmail.com

3. The LPO Program
The LPO Program, a UK-based information firm released survey findings projecting growth of LPO in the coming year. According to a recently conducted study, “The main users of LPO continue to be Corporate Law Departments, who are forecasted to add $129m of spending in 2011. Law firms are shaking off traditional caution and are fuelling 41% of the projected growth. On these forecasts, it is expected that at least 9 high profile deals will be announced by law firms in the next 12 months.”

4. ValueNotes: 2010 To 2011 – Changes in the LPO Industry
ValueNotes released a broad overview of industry trends and happenings from the past year – including large deals, outsourcing geographies and the events impacting India as a primary destination for outsourced legal services.

Top 10 for 2011 – Annual Trending Release

2010-12-15T10:11:00.001-06:00

Today we’re releasing our annual trending report on the legal outsourcing industry - Ten for 2011: Top 10 Trends in Legal Outsourcing in 2011.

The report was featured by the ABA Journal - Legal Outsourcing Consultant Predicts More Onshoring - which highlighted both the onshore developments as well as greater transparency by major US firms.

Today's Fronterion Forefront newsletter features our assessment on our predictions from last year. To sign up for the newsletter email: forefront@fronterion.com

Ten for 2011 Release Details

Fronterion, the leading international consulting firm for outsourced legal services, today has released its second annual report outlining the prospects for the legal process outsourcing (LPO) industry in the coming year.

Following a breakthrough year for LPO in 2010, the Fronterion Ten for 2011: Top 10 Trends in Legal Outsourcing for 2011 reveals the most important trends in legal outsourcing for the next 12 months.

A significant prediction for 2011 is a rise in the use of onshore LPO providers, those who deliver services from low-cost domestic locations in the United States and Europe. Attracted by significant savings in such locations, combined with the benefits of servicing clients within the same time zone, law firms and LPO vendors will continue to invest in onshore services alongside traditional overseas options.

Next year also looks to be the year that local regulators and trade bodies definitively respond to the way outsourcing is changing legal services across the globe. There are significant ethical and regulatory issues attached to legal outsourcing. For example, how do firms demonstrate adequate supervision when work is performed by an LPO vendor? Who is liable for the work done by LPO lawyers? And, how much should law firms charge their clients for work done by LPO providers on their behalf?

The American Bar Association is currently consulting with its professional members concerning changes to its draft rules, while the United Kingdom’s Solicitor’s Regulation Authority is considering a major of review of LPO in response to the growing number of firms sending legal work to outside providers.

Another key trend is greater transparency. The first major US firm will go public with its LPO arrangements next year, something those in the US legal industry have been unwilling to do until now. The increasing application of technology, which allows LPO providers and law firms to work together more closely, will be another growing trend in 2011.

More consolidation is likely, following the example of Thomson Reuters who acquired Pangea3 last month in the largest deal ever seen in the legal outsourcing market.

Using its unrivalled access to LPO firms and their clients, Fronterion again set out its predictions for 2011. Fronterion managing principal Michael Bell said: “This year, we’ve seen many of our 2010 predictions unfold in the industry. For example, we projected LPO would become an increasingly valid career path for young lawyers. Both in low-cost jurisdictions and in parts of the US and Europe, LPO firms have been ramping up their operations to meet increased demand, and at a time when traditional law firms jobs have been harder to find.”

“We see 2011 as a pivotal year for legal outsourcing as it continues to develop from a niche practice to a truly global industry.”

Fronterion’s Top 10 for 2011 are:

1) A Fundamentally Changing Legal Profession. Continued downward pressure on costs and the globalisation of legal services provide a perfect environment for LPO. Those who refuse to engage with LPO will increasingly become a minority - the industry can no longer be ignored.

2) Enterprise Approach. Many firms already outsource legal work at partner or department levels. However, LPO is more effective and efficient when a firm implements a firm-wide or ‘enterprise’ approach, led by senior management.

3) Onshore Expansion. The growth in onshore and hybrid on-offshore delivery solutions will begin in earnest in 2011. This trend will be equally prevalent in the United States and United Kingdom, with LPO providers and firms already building capacity.

4) Expanding Client Geographic/Jurisdictional Reach. Demand for LPO services will spread to new markets. In the US, law firms in Texas, the Midwest and the Pacific Northwest are potential growth markets for LPO. In the UK, regions outside of London are also emerging growth markets. However, continental Europe will remain a challenging environment for LPO.

5) Progressive Value Proposition. LPO providers will have to offer more services and a more progressive value proposition to remain competitive. Alongside traditional litigation support, LPO vendors may also have to offer contract portfolio servicing, compliance, diligence, human resources, medical and broader legal support functions.

6) Increasing Technology Applications. As a result of the growing importance of technology, LPO vendors will use technology as a key selling point. Technology platforms will be used to offer diversified services and as a means for vendors to further embed themselves in client organizations.

7) Dynamic Vendor Landscape. The unprecedented growth and industry consolidation initiated in the fourth quarter of 2010 will continue to shape the dynamic LPO vendor landscape in the coming year. Overall, these consolidation trends are positive for the industry as vendors emerge stronger, more capitalized and, most likely, considerably larger.

8) Public Acknowledgement. The growing acceptance and adoption of onshore and offshore LPO will become more visible in the coming year. This will become increasing prevalent in the US, where in past five to six years, corporations and law firms have remained virtually silent on all LPO related matters.

9) Divergent Vendor Approach. Competition means that LPO vendors will have to differentiate themselves from each other in terms of services offered and delivery models. No dominant model exists (yet) and a range of different approaches will emerge next year.

10) Ethical Guidance. Regulatory bodies start to address the changing legal landscape. In the US, ethical commentary is expected from the ABA’s Commission on Ethics 2020. In the UK, announcements are expected from the SRA and the Law Society. Other jurisdictions that have been silent so far may follow suit, such as Australia, Canada, and South Africa.

For the full Fronterion Top 10 for 2011 report visit www.fronterion.com/tenfor2011/

Fronterion Forefront Newsletter

2010-11-30T07:44:00.000-06:00

I wanted to thank everyone for your interest in the launch of our Fronterion Forefront monthly e-newsletter. Our inaugural launch this past month received quite a positive response.

The second edition of our monthly newsletter is coming out this week covering the wave of M&A activity in the LPO market, announcements by the ABA as well as the Global LPO Conference just held in Delhi. It’s shaping up to be an interesting month for LPO, to say the least.

If you have trouble viewing or receiving the newsletter feel free to drop us a line at forefront@fronterion.com. Likewise, if you have any thoughts, comments or contributions, we would love to hear from you.

ABA Draft Ethical Amendments Release

2010-11-29T09:49:00.001-06:00

Perhaps the most influential announcement on the topic of LPO made by the ABA following the 08-451 Formal Opinion publication in August 2008, the Commission recently proposed minor changes to existing ethical guidance.

The ABA 20/20 Commission recommends modifications to the commentary of the Model Rules 1.1, 5.3 and 5.5.

Basically, this is what we expected, but it does provide some additional clarity about the Commission’s outlook going forward.

These proposed amendments are to be debated over the next 6 to 8 months with a possible final presentation to the ABA House of Delegates during the annual meetings in August 2011.

More details on the announcement are available here

For more background information on the announcement and the ABA 20/20 Commission check out Fronterion’s LPO Ethics Resource Center.

Reducing Legal Costs

2010-11-26T03:37:00.005-06:00

While it may not help you reduce your additional girth from that extra large serving of Thanksgiving turkey covered with mashed potatoes and gravy, this conference will help you trim your legal spend.

ALM is hosting their second annual Controlling Legal Costs conference in New York this December 8th-9th.

I will be moderating a panel on LPO featuring prominent legal counsel from Abbott and CA. Some of the discussion points for the panel include:

1) What are the value-adds and considerations for general counsel when outsourcing and offshoring? Many legal professionals assume that all “outsourcing” is performed offshore and that the only value provided by LPO vendors is low cost labor. What is the value of a “managed review process,” technology integration and expanded capabilities. What is the purchasing decision process of general counsel on the panel. How did they make their decision to outsource on or offshore? What value were they seeking from their LPO engagement and what were they seeking to avoid?

2) What are the trends for LPO and the specific approaches by GC’s in the coming year? Where do the panelists see their work with outsourcing trending in the coming year? What are the panelists' thoughts on industry trends, GC’s LPO strategies and ethics/regulatory changes.

I believe there is still some room at the conference. Contact the organizers if you’re in the area and interested in attending. Additional details available here.

Industry Survey

2010-11-26T03:35:00.001-06:00

I just wanted to make a quick post about an industry survey currently being conducted by Ravi Shankar, a law student at Harvard University.

The survey looks quite thorough and the findings should be interesting.

Ravi asked me to circulate the news that he is currently seeking respondents from LPO vendor firms. He has graciously agreed to share his findings with all participants when survey data is released in December.

To request a survey, contact Ravi at: rshankar@jd10.law.harvard.edu

News and More News Round Up

2010-11-25T02:59:00.004-06:00

This has been quite a week for LPO, from the Pange3-Thompson Reuters deal to the ABA’s release of draft commentary for the Model Rules. Now the Brits want a place in the LPO limelight.

What better way to recapture the world’s attention than to have two UK top firms – CMS Cameron McKenna and Herbert Smith – to make back-to-back announcements?

On Tuesday, CMS Cameron McKenna partners voted in favor of perhaps the most transformational outsourcing initiative by any major law firm. Ever. Hats off to the Camerons team who were in charge of the internal partner (aka cat herding) after some initial skepticism.

Not to be outdone, Herbert Smith “nailed the news agenda in the face” by announcing the launch of a captive document review center in Northern Ireland. The center is set to open with approximately 20 personnel, but Herbert Smith seems to have ambitious plans to expansively scale their Northern Ireland capacity.

The Lawyer reports, “Given that surveys of clients regularly find that they prefer a) paying less for work, as opposed to b) paying more for work, the venture should be a success.”

The importance of an onshore option is something we’ve recognized for quite some time. It’s great to see firms validating the onshore model both Stateside and now in the UK with Herbert Smith.

Apparently after all of the hard work during the last couple of months, firms are ready to get things off their drawing boards to have something to celebrate this holiday season. Who knows what else will happen in the LPO industry before the start of the New Year...

Industry Consolidation: Part Deux

2010-11-21T23:18:00.002-06:00

As I am writing from India, we are riding high on the wave of industry consolidation that continues with the announcement of the acquisition of prominent LPO vendor Pangea3 by Thompson Reuters. No figures on the transaction were released, but speculation pegs the deal around $35-40 million. Not only is it a great step forward for Pangea3, it also signals a weighty validation for the entire legal process outsourcing industry.

This Thompson Reuters-Pangea3 deal follows the recent acquisition of LawScribe by UnitedLex.

The wave of consolidation can be seen as a result of recent trends in the industry: the need for scalability, global delivery capabilities and strong financial backing for requisite investments to drive growth. Pangea3 is reportedly already seeking expanded global delivery opportunities in the US through Thompson Reuters. Additional details here.

Consolidation and growth in onshore delivery is a pattern we’ve been predicting since our annual trending report nearly a year ago. The movement toward larger, more capitalized and truly global LPO vendors reflects the continuing maturation in the industry.

Sanjay , Co-CEO of Pangea3 provides some additional perspective on the transaction in an exclusive Legally India report. Details here.

On a personal note, by coincidence I was visiting the Mumbai Pangea3 headquarters the day of the announcement. Needless to say, it was a lighthearted day in the office.

Global LPO Conference II

2010-11-17T14:50:00.001-06:00

Day Two: Sunday November 14, 2010
Day two of the Global LPO Conference kicked off with a much anticipated panel featuring Lalit Bhasin and Mark Ross of Integreon (the only LPO named in the Writ Petition).

Bhasin started his address by acknowledging that the liberalization of the Indian legal profession was, “critical and controversial.” The primary thrust of his address was that domestic Indian law firms need to be offered a “level playing field” by liberalizing the legal profession (such as lifting restrictions on law firm adverting) in order to effectively compete with large, sophisticated international clients. Until these restrictions are lifted, foreign lawyers have no right to practice,“from the soil of this country.” International law firms need to ensure they are, “staying on the right side of the law.”

As optimistic as one may be about the resolution of the Writ, one should keep in mind that a similar case filed in Mumbai in 1997 was not effectively resolved until 2009.

Ross provided a presentation on the ethics of legal outsourcing. Mark Wyatt, founder of The Lawyer, LegalWeek and the European Lawyer provided an entertaining perspective on the importance of media plays in the creation of transparency in the legal profession.

The most interesting part of the panel session was the question and answer session which followed. Bhasin defended his views on the closed state of the Indian legal profession. Further discussion ensued. One standout comment was made by Ganesh Natarajan, industry veteran CEO of Mindcrest, He said, we [LPO industry] are like “Moses parting the Red Sea” meaning that everyone in the industry is pulling in the same direction, but it takes time to accomplish the goals.

A number of additional speakers addressed a many different issues concerning the LPO industry, more than I possibly have room for, at this point.

More details in the upcoming November issue of our Fronterion Forefront newsletter. To sign-up for the newsletter, email forefront@fronterion.com

Global LPO Conference

2010-11-15T09:28:00.001-06:00

This weekend I had the pleasure of attending and speaking at the second Global LPO Conference in Delhi, India. The conference was a unique experience with a diverse collection of LPO industry participants and speakers.

Day One: Saturday November 13, 2010
The conference kicked off with a panel of LPO executives from Pangea3, Bhodi Global, Mindcrest and Integreon. Highlights included Mark Ross, representing Integreon,stating that the conversation with law firms has changed from “why LPO to how.” Sanjay Kamlani, representing Pangea3, noted that since clients have now seen LPO work and have proven it’s an effective concept, new adaptors are more likely to start working with LPOs in a much bigger way. Kamlani went on to state that he was “seeing growth that is different than in the past years.”

Another panel featured Abhi Shah of Clutch, and Nigel Kissack of Pinsent Masons. Abhi extolled the need for LPO vendors with global reach to use a global delivery platform. Kissack shared his experiences establishing a captive document review service in South Africa. Kissack jokingly acknowledged that he, “invented the LPO, but had no idea that the industry had already existed.”

Following lunch, the highlight of the entire two-day event was a panel discussion featuring Alison Hook of the Law Society, Sakth Venkataraman of Cobra and me.

Hook started off by providing an update on the professional bodies who are shaping the ethical and regulatory guidelines regarding LPO. Hook urged delegates to engage with governments and bar counsels about LPO to create better understanding of the LPO industry by those who are regulating the legal profession.

I followed with a session discussion of how selling LPO services to law firms is, “one of the most unique things you have even done.”

The day concluded with a final session lead by Richard Reade of ISS and Antony Alex of Pangea3. Reade provided insightful and entertaining commentary about his work with an Indian-based LPO provider. Reade concluded by urging LPOs to deliver on quality and deadlines so he would not be “spanked” by the members of his board.

Such ended the first day of the conference which was followed by a gala dinner for delegates. More details on day two of the conference to follow…

News Round-Up

2010-11-14T13:37:00.002-06:00

Check out these interesting bits of LPO news from this past week.

Obama
Following Obama’s visit to India, the debate about India’s stance on opening its legal system to international law firms continues to simmer. Opponents and supporters from both sides of the ocean are making their opinions known. One person speaking out was Lalit Bhasin, the President of Society of Indian Law Firms, who is seen as a leading supporter of the legal action against 31 international law firms (and one LPO) known as the Madras High Court Writ Petition.

At the Global LPO Conference held on the 14th, Bhasin raised some excellent points about the current stringent regulatory requirements. Indian law firms are not permitted to market their services and don’t even have the ability to even set up a basic website, he said. Indian law firms would be crippled if faced with sophisticated international competition.

Many Westerners, including ABA president Stephen Zak, find the lack of reciprocity frustrating, particularly for a country built on a platform of servicing international clients. Additional details here.

I had the pleasure of visiting with Bhasin this weekend at the Global LPO conference in Delhi. More details to come.

UnitedLex Acquisition
Perhaps the first in a trend of consolidations, UnitedLex announced their acquisition of fellow Gurgaon-based LPO vendor, LawScribe.

I spoke with former LawScribe CEO, Kanoor Chopra, recently following the announcement. Chopra was very positive about the acquisition and is looking forward to being part of the UnitedLex team. Additional details here.

Lawyers Demise?
Another alarmist article appeared this week in the Guardian about lawyers and LPO. As previously stated in an earlier post, the legal profession is in not in any danger of disappearing due to the adoption of alternative delivery methods – including, but not limited to LPO. That said, the ABA Journal reported this week that AmLaw firms cut approximately 1400 positions in this past year. Challenges still lie ahead as many major law firms struggle to address the new normal – a sluggish economy, lower levels of legal spend and increasing competitive pressure. But often pruning makes an organization, and profession, stronger.

A Collaborative Model of LPO: An Academic Perspective
I haven’t had a chance to read through the entire paper, but this does look interesting. Cassandra also scores points with us by referencing Fronterion research in the paper.

Make Vs. Buy: Allocation of work in-house
An ancillary trend to the LPO industry is the divergence in strategies by general counsels’ allocation of work. Some in-house legal teams are seeking to pull the majority of work internally, while others are seeking to use outside legal counsel exclusively. An interesting analysis of legal work allocation was covered in a recent piece featuring Robin Saphra at Colt. Read the full article here.

Conference Here, Conference There

2010-11-01T09:25:00.002-05:00

Get out your passports, cash in your frequent flier miles and join some of the leading figures in LPO from law firms and corporates.

The Conference There:
I have the pleasure of speaking at the inaugural Global LPO Conference in Nodia, India November 13th-14th.

I will be speaking on how vendors can tailor their approach to law firms whereby engaging firms’ expectations and developing compelling differentiators. As a sneak preview, the points I’ll be hitting include:
• How selling to law firms is different than anything that you’ve ever done before
• The top 5 barriers and misconceptions to overcome
• The 6 primary areas law firm clients really key on
• How the dynamic changes in the LPO market impact how you sell and what you can do going forward

The Conference Here:
I will also have the privilege to speak on a panel at the upcoming Controlling Legal Costs conference in New York City December 8th-9th.

The panel will feature several prominent general counsel detailing their work with LPO, either directly or through their respective law firms. More information is available here. Additional details are coming shortly.

Both conferences look to be very engaging – and both have my recommendation. Conferences are typically a great way to keep your finger on the pulse of the industry. Hope to see you out and about, either here or there…

Essential Newsletter for Breaking LPO News

2010-10-29T15:34:00.003-05:00

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

Alarmist Intelligencer

2010-10-29T15:11:00.001-05:00

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.

ABA Favors Less Invasive Approach to LPO

2010-10-18T14:56:00.006-05:00

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.

Industry Projections Gone Rogue… Part Deux

2010-10-18T09:04:00.001-05:00

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.

Industry Projections Gone Rogue…

2010-10-11T07:57:00.000-05:00

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.

Work It Out: Tri-party Line

2010-09-17T09:48:00.000-05:00

Conversations between general counsel and their law firm counsel regarding LPO are increasingly important. These discussions should include when and if to utilize an outside LPO vendor. That topic is the central theme of my recent article in Berwin Leighton Paisner’s “Work It Out” journal.

The article is entitled, Tri-party Line: The integration of outside vendors into the delivery of legal and support services is one of the most significant developments affecting the legal profession...

The piece highlights issues that in-house legal teams should address and pitfalls to avoid when working within the tri-party relationship. As noted in the article, “The two primary challenges are managing the tri-party relationship – between in- house team, the law firm and the legal outsourcing vendor – and ensuring ethical compliance and adherence to professional standards by all parties.”

Attorneys in law firms and in-house counsels need to anticipate and prepare for these types of relationships which will be increasing in number in the future at LPO becomes a more common practice.

LPO and Outcomes-Focused Regulation

2010-09-10T03:37:00.000-05:00

As part of the Law Society’s continuing exploration of the ethical issues surrounding LPO ethics, this week I was invited to speak on LPO ethics and implications for the forthcoming regulatory changes for UK law firms. As a result of the Legal Services Act and allowance for alternative business structures (ABS), the UK regulatory regime is taking a new tack.

The new regulatory approach seeks to provide greater flexibility by basing regulatory obligations on broad “outcomes” giving this regulatory approach the name outcomes-focused regulation (OFR).

It will be some time before this approach is implemented, but it does pose some interesting implications for the ethics of legal outsourcing, including work done by outside legal vendors.

OFR is another thing for UK-based firms exploring or expanding their LPO options to keep an eye on.

Imminent Ethics?

2010-09-07T10:54:00.000-05:00

As the regulatory focus on the ethics of LPO heats up in the US and UK, a growing body of knowledge about LPO ethics is emerging.

Most recently, an article featured in the UK-focused publication Outsource, Mark Ross of Integreon provides a summary of ethical guidance on legal outsourcing currently available and a glimpse of what we may expect in the future.

In the article Ross said, “I expect there will be more to report on the ethics of legal outsourcing over the coming months from both sides of the Atlantic as the relevant bodies continue to study this rapidly growing industry. Whether in the form of amendments to the model rules of professional conduct (in the U.S.), or to the Solicitor’s Code of Conduct (UK), lawyers will welcome more detailed guidance. Watch this space!”

I will be speaking on LPO ethics this week at an event hosted by The Law Society. More on that shortly.

Ante Up: Law firms and the “Fortunate Few”

2010-09-04T11:23:00.002-05:00

One of the concerns of law firms that we see at Fronterion involving the integration of legal process outsourcing vendors into their practice is the real or perceived disruption of partner-track associates. The work which first and second year law firm associates previously “cut their teeth on” (read document review) is slowly diminishing with the increased use of outside legal vendors based domestically in the US and UK, as well as abroad.

The comments in several recent publications highlight the growing focus, and also acceptance, of the changing nature of the legal profession with the use of outside legal vendors to perform “routine, repetitious work.”

William Michael Treanor, newly appointed dean of the Georgetown University Law Center, made several interesting comments on the topic of recent law graduate career opportunities in the Washington Post’s Capital Business.

As reported by the ABA Journal, Treanor said, “Grads who opt for law firm jobs are likely to see the nature of their work change as clients refuse to pay associates for routine, repetitious work... As a result, ‘we'll see more outsourcing and contract employment. So associates will be doing more work that is truly lawyerly work.’”

We’ve seen Georgetown take some very positive, pro-active stances as the legal profession changes, for which we applaud them.

In a related article featured in AM Law Daily, Steven Harper echoes Treanor’s remarks regarding the advancement of the “fortunate few”, those law firm associates who will work on more substantive legal matters as a result of legal outsourcing.

“Instead of the mind-numbing tasks that are the bane of so many young lawyers' lives, associates will find themselves doing work that more closely resembles what they thought being a lawyer meant when they first decided to attend law school.”

More succinctly stated in my book, a senior litigation partner at a large UK-based law firm said this about routine tasks increasingly delegated to outside legal vendors, “Our attorneys didn’t go to law school for that.”

The caveat for this potential advancement for associates to perform more interesting and engaging projects is that law firms may require fewer associates to work through their large, document-heavy matters. Reading between the lines, it looks like law students, with the help of law schools, will have to be more entrepreneurial and seek to develop niche skill sets to make themselves more valuable in the changing legal profession.

Good News Growth

2010-08-17T11:37:00.001-05:00

The ABA Journal reports law firm summer associates are being retained at a high rate this year. That is great news for lawyers and clients.

While many practice groups are beefing up their staffing, legal outsourcing is also a way for firms and general counsel to expand legal capacity without becoming over-extended. Everyone hopes the economy is on the upswing for good, but no one knows at what the pace of expansion will be or how long it will last. LPO has a unique value-add in comparison to contract attorneys and it provides variability to an otherwise, very fixed cost business model of law firms.

Great Expectations: Follow the money

2010-08-16T11:07:00.002-05:00

Where private equity funding is going is a good indicator of where change is happening. The Law Society Gazette and The Lawyer report that private equity firms are increasingly interested in investing in the LPO industry.

Despite the great expectations for the industry, profitability is may be a quest for a number of LPOs and some financial models are currently under scrutiny. Withstanding these challenges legal outsourcing is here to stay. These growth dynamics represent a broader industry change of the integration of outside vendors into the practice of law.

India-focus in NY Times

2010-08-10T17:10:00.002-05:00

According to the New York Times and several following articles on the links below, legal outsourcing vendors are upping their recruitment of talent on and offshore. Specifically, Indian firms are recruiting in the US and UK. According to the article, eager and adventurous legal professionals are making the move.

Theses findings clearly reflect our trending projections in the report Ten for 2010: Top 10 Trends for Legal Outsourcing in 2010.

“Client confidence in the outsourcing legal services market is translating into a rising talent pool, both on and offshore. Positions at outsourcing vendors will increasingly become an attractive alternative career path for entrepreneurial and global-minded legal professionals as pay, positions and prestige increase.”

Combined with the increased trending of onshore legal outsourcing, these developments exemplify increasingly global nature of the legal profession. It will be interesting the watch and see how the trend accelerates and expands. To read more, to go:

New York Times: Outsourcing to India Draws Western Lawyers
Wall Street Journal: Go East, Young Lawyer . . . Way East
Above the Law: Outsourcing: Here Come the Expats
Bar and Bench: Re-upped Round up: August 5

Friday, August 6, 2010 ABA Commission on Ethics: Day 2 and Public Hearing

2010-08-06T21:52:00.001-05:00

Today has been the second day of meetings for ABA Commission on Ethics 20/20.

The event of most interest to me was the public hearing concerning the legal outsourcing industry. Michael Ford of UnitedLex and Mark Ross of Integreon, two thought leaders in the legal outsourcing industry, spoke.

I commend the Commission for soliciting outside perspectives as they shape their recommendations for their members concerning the ethical implications of outsourcing. The Commission made an important distinction between outsourcing and offshoring, which is key in all discussions about LPO.

The extent to which law can be practiced reciprocally between international jurisdictions drew quite a bit of discussion. India was the main focus. The issue is examined further in a recent Economist article.

I was glad I attended this year’s meeting. It was encouraging that the ABA, and more legal firms and educational institutions as well, are recognizing and discussing seriously the role of legal outsourcing as part of the ever-changing legal profession.

Thursday, August 5, 2010 ABA Commission on Ethics: Day 1

2010-08-05T22:16:00.000-05:00

The ABA annual meetings are being held at the Palace Hotel in downtown San Francisco today and tomorrow. (And, yes, I have escaped hot, humid Chicago for a cooler climate for a few days.)

Today’s proceedings commenced at 9:00 am with introductory remarks given by the Commission chairs, followed by updates from the heads of various working groups. Short speeches were also given by outgoing president Carolyn Lamm and incoming president Stephen Zack.

When reports touched on outsourcing, the Commission leadership recognized that it is a “complex topic” – something we’ve understood since Fronterion was founded.

Discussions included the ethical obligations law firms face when they work with outside vendors, especially, the relationship dynamics in a tri-party engagement when law firms, their clients and outside vendors collaborate.

Relating to legal process outsourcing, the Commission discussed different approaches to the current rules model and the implications of each of those various approaches.

A list of the prominent members of the he ABA Commission on Ethics 20/20 in available here. I anticipate that this week’s – and future – dialogs on LPO by the Commission will be fruitful because capable people are working hard to create more understanding of ethical challenges of outsourced legal services domestically and abroad.

More on the meetings tomorrow.

ABA Annual Meetings: LPO Ethics

2010-08-02T09:13:00.001-05:00

The American Bar Association (ABA) is holding its annual meeting this week in San Fransciso. The main focus for my visit will be the ABA’s Commission on Ethics 20/20 with sessions that will include public hearings on several topics of interest, specifically ethical considerations of legal outsourcing.

I am looking forward to attending the meetings to survey the lay of the land, according to the Commission and its members.

The more we at Fronterion are aware of the concerns of the ABA, the 20/20 Commission, it’s lawyers and their clients, the better off we will be as we advise our clients on all outsourcing ethical issues.

An added plus – I will be able to get away from the hot and humid weather that engulfs Chicago in August!

Advancing Innovation and Ronald Coase

2010-07-26T15:40:00.000-05:00

Bruce MacEwen at Adam Smith, Esq. provides a unique perspective on the changes happening in the broader legal profession as a result of “low cost rivals” due to ~onshore and offshore legal outsourcing.

MacEwen ties together some interesting themes including low cost rivals, stages of innovation and The Nature of the Firm as they all relate to legal outsourcing. MacEwen also scores big points with me by citing my favorite economist, Ronald Coase.

As one of the named vendors in the post, Ron Friedmann of Integreon provides further commentary on MacEwen’s post, Both are worth a read. Friedmann says pushing work down the value chain as the true paterfamilias of the LPO industry.

MacEwen's Innovators at the Barricades post is available here.

Blog Post: Identifying and Mitigating Gaps

2010-07-19T14:07:00.001-05:00

The conference website also features a blog post, LPO ~ Identifying and Mitigating Gaps: The General Counsel Perspective, which references Fronterion’s trending release on the LPO industry. The blog post provides interesting commentary on the potential “gaps” in supply and demand in the LPO industry.

Fronterion is cited for our quote regarding the importance of the adoption rate in the LPO sector this year.

Fronterion LLC’s Top Ten Trends for Legal Outsourcing in 2010 report predicts “2010 will be the proving year for legal outsourcing. Law firms and corporate legal teams will learn from their peers, resulting in make‐or‐break peer referrals, which will be strong indicators of the success and maturity of the outsourced legal services segment.Supporting – not supplanting – firm operations with an outside legal services vendor has emerged as a successful strategy and will gain momentum in 2010.”

More details on the post are available at the following.

Forthcoming Global LPO Conference

2010-07-18T08:59:00.000-05:00

One of the first global-focused conferences on outsourced legal services has been announced by KPO Consultants.

It’s an honor for me to be invited to speak at this inaugural conference. Other prominent industry leaders scheduled to speak include:

• Sanjay Kamlani, Co-CEO, Pangea3

• Rahul Shah, AVP & Head – LPO Practice, Infosys

• Abhi Shah, CEO, Clutch Group

• Anand Sharma, CFO and Head – Management Services, CPA Global

• Patrick Burke, Senior Director and Assistant General Counsel, Guidance Software, Inc

• Richard Reade, UK General Counsel, ISS World

The conference will be held just outside of Delhi, India in Nodia on November 13th and 14th.

The Global Conference website states that the conference, “aims to bring together key executives with extensive interests in the legal outsourcing industry. The attending buyer segment includes Law Firm Partners, General Counsels and other senior In-house Counsels from leading US, UK and Canada based companies; while the vendor community is represented by senior most executives from leading LPO vendors from countries like India, Bangladesh, Philippines, Sri Lanka, Israel, Kenya, Mauritius, and South Africa.

Thus, it is our endeavor to bring the most significant executives from both the buyer and vendor communities together on a common platform to enable them to engage in meaningful and strategic dialogues to further their business interests.”

Further details are available at the conference website (www.globallpoconference.com) and will be updated on the LPO Source blog, as well.

Fronterion “Wall of Silence” Survey Round-up

2010-07-16T14:28:00.000-05:00

Our survey findings released this past week have captured the attention of a number of online publications and blogs. The survey results seem to have number of people hypothesizing why US firms are so hesitant to acknowledge or deny their use of LPO vendors, even on a confidential basis. Based on our experiences, we would purport that uncertainty with ethical guidelines is one of the key drivers to this silence. Worries of negative press may be another.

Below is a short news round-up.

ABA Journal

Above the Law

About.com

India Writ Petition: Update

2010-07-14T09:42:00.001-05:00

As earlier reported on the blog, a petition was filed in the Madras High Court by the Association of Indian Lawyers against an array of international law firms and one LPO vendor, Integreon. The bases for the petition being that the named firms were practicing law in Indian jurisdictions.

Because of what many consider a notoriously slow legal system, is comes with little surprise that the next hearing on the issue has been pushed back to August 4th, as reported by Bloomberg.

The wider implication for the LPO market is yet to be seen. Many industry participants don’t feel that the position taken by the Association of Indian Lawyers is merited nor will influence the use LPOs, but it may raise more concerns for potential clients.

As aptly stated by a partner at the US-based Fulbright & Jaworski, “That’s not what a globalizing country and corporate sector needs.”

Additional commentary was also released by Legally India.

SRA Public Announcement

2010-07-08T10:12:00.001-05:00

The Solicitors Regulation Authority (SRA) has released their first public statement on the application of outsourced legal services for solicitors practicing in England and Wales.

As originally reported by our LPO Ethics Resource Center (www.LPOethics.com), the SRA release states, “Where law firms are outsourcing some of their legal or administrative work to other law firms or non law firms, the SRA's guidance is that this is allowed on the basis that all relevant rules are complied with (Solicitors’ Code of Conduct 2007) and that the arrangement is made transparent and is agreed with the client.”

The statement continues with the SRA citing existing ethical guidelines deeming them applicable to outsourced legal services.

In conclusion, the SRA notes, “In accepting work from a client, the firm must always consider whether the work should be outsourced at all as they should have the necessary resources and competency to undertake the task. In summary a firm must act in the best interests of their client and comply with their core duties.”

It’s been reported the Law Society is currently exploring these issues, but has yet to formally comment on the topic of LPO.

The recent announcement to UK solicitors by the SRA stands in contrast to lawyers in US jurisdictions who have been able to rely on ethical guidance provided as early as 2006 in some jurisdictions. The most notable guidance in the United States is Opinion 08-451 issued by the American Bar Association Standing Committee on Ethics and Professional Responsibility in 2008.

Additional details on the complete SRA legal outsourcing statement are available on our recently launched LPO Ethics Resource Center (www.LPOethics.com).

The LPO Ethics Resource Center is a free resource that allows legal professionals to keep abreast on up-to-date information on the ethical policies and opinions relevant to outsourced legal services. This site compiles all of the latest information and breaking news regarding legal process outsourcing into one convenient resource.

Fronterion Announcements: Study findings and LPOethics.com launch

2010-07-07T08:10:00.001-05:00

We are proud to announce two very exciting developments at Fronterion this week.

The first is the 2010 Global Sourcing Study: AM Law 50, which polled 30 of the top 50 US law firms concerning their positions on legal outsourcing. The findings were reported on in today's ABA Journal, Are Top US Law Firms Outsourcing Some Legal Work? 83% Won’t Say.

Complete findings and analyses are available in the 2010 Global Sourcing Study: AM Law 50 report. Contact GlobalSourcing@fronterion.com for additional details. The press release - WALL OF SILENCE SURROUNDS NASCENT LEGAL OUTSOURCING INDUSTRY – highlights the findings from the study. As reported in the press release, “while many US law firms are using outsourcing providers for the first time, few are willing to admit it in public, leading to a culture of secrecy around an increasingly important development within the legal services industry.”

Our second announcement is the launch of the LPO Ethics Resource Center at www.LPOethics.com. As reported on the website, “The LPO Ethics Resource Center is a free resource that allows legal professionals to keep abreast with up-to-date information on the ethical policies and opinions relevant to outsourced legal services. This site compiles all of the latest information and breaking news regarding legal process outsourcing into one convenient resource.”

The resource is targeted for legal professionals in both the US and the UK.

We are very excited about making Resource Center available due to the expected number of developments in legal outsourcing ethics in the forthcoming 12 months.

More details on both announcements will be provided later this week.

C5 Conference Wrap-up

2010-07-06T09:49:00.000-05:00

While a bit thinly attended in comparison to previous events in London, the C5 Legal Process Outsourcing conference was certainly a success in terms of discussion and speaker caliber.

One high point was the discussion on captive delivery centers led by three very knowledgeable men who are involved in the field of outsourcing. These included Evangelos Apostolou (BT Vice President and Chief Counsel APAC who established and managed the BT legal outsourcing captive in Delhi – including the recent transfer to UnitedLex), Mark Ford (director of the Clifford Chance Knowledge Centre), and Paul Rawlinson (Global Chair of Baker & McKenzie’s IP Practice who oversees Baker & McKenzie’s global delivery of IP services).

A key theme arising from the discussions was the perspective that LPO is one of a suite of cost saving measures available to general counsel. Of the conferences that I have attended, the C5 conference provided the most insight into the in-house legal teams’ outsourcing perspective (both to LPO’s and their outside counsel). Prominent general counsel speaking at the event included Richard Reade of ISS, Richard Tapp of Carillion, David Symonds of Tyco, Stephan Regius of Borealis AG, Pavel Klimov of Unisys, and previously mentioned Apostolou of BT.

The smaller event size allowed for some highly interactive and insightful discussions on issues ranging from pricing, oversight responsibilities, day-to-day challenges of managing global service delivery and ethical issues surrounding outsourced legal services.

My thanks go out to all of the speakers at the event for sharing their insights, to C5 for the privilege of chairing the conference proceedings, and to all participated who made the event a fruitful one.

Economic Recipricality

2010-06-29T09:12:00.000-05:00

In an increasingly globalized economy and legal profession, many continue to express concerns on domestic job loss as a result of “foreigners.” While the debate continues to be ongoing, we have always been adamant about the reciprocally of economic opportunities. Work performed in one destination creates a market for services in another. That is basic Adam Smith economics of competitive and comparative advantages. This principle is most clearly visible in practice in the unencumbered inter-state trade in the United States.

A recent report, “How America Benefits from Economic Engagement with India,” confirms these principles. “Although India has become synonymous with outsourcing, Indian companies created nearly 60,000 jobs in the US between 2004-09 through nearly 500 investment and acquisition deals worth $26.5 billion.”

The 60,000 jobs noted in the report are the direct number of job created by overseas countries. If calculated, the number of domestic jobs created to service the rapidly growing emerging market economies would be a significant source of domestic job growth.

Further, he types of jobs performed by overseas workers should also be considered, particularly as it relates to outsourced legal services. As aptly stated by the outsourcing figurehead at Pinsent Masons Nigel Kissack, "Opening e-mails does not train anyone to be a good lawyer. Our attorneys didn’t go to law school for that.”

Additional details on the report are available here.

LPO Conference: London

2010-06-28T06:07:00.000-05:00

This week the London-based event organizer C5 is hosting one of the few, if not only, two-day events on legal outsourcing. The conference – C5 Legal Process Outsourcing – is to be held in London at the St. James Sofitel Hotel.

In addition to presenting on legal outsourcing oversight and the outlook for legal outsourcing ethics, I am also invited to chair the two-day conference. Of that, I am quite honored (or rather “honoured” per the jurisdictional locale of the event).

The conference agenda includes quite an assembly of prominent and familiar faces in the field of legal outsourcing including:

Mark Ross, Integreon
Richard Reade, ISS
Neil Mirchandani, Hogan Lovells
Mark Ford, Clifford Chance
Nigel Kissack, Pinsent Masons
Peter Brudenall, Hunton & Williams
Professor Mari Sako, University of Oxford
Vince Neicho, Allen & Overy
Richard Tapp, Carillion
And a number of others…

More details on the proceedings will be posted later this week.

Law Society Exploration

2010-06-24T14:53:00.000-05:00

Recently, The Lawyer broke the story highlighting the first public reporting of the Law Society’s activity to address the changing legal profession, with a specific aim on outsourced legal services.

As reported, the Law Society expert panel appears to mirror a similar initiative launched by the ABA named the “ABA Commission on Ethics 20/20”.

More details on the LPO ethical developments in the UK as reported by The Lawyer are available here.

LPO Encore

2010-06-17T10:50:00.000-05:00

Law 21 author Jordan Furlong outlined some good thoughts on the legal outsourcing industry in his recent post, The Evolution of Outsourcing. In particular, I appreciated his points about what he described as the LPO “encore” – innovation. More details are available on Law 21.

The post was met with the predictable Above the Law blog snub – complete with apocalyptic tidal wave picture in the event the ominous commentary was not entirely clear. For a more complete perspective on the Furlong piece, the Above the Law commentary is an interesting read.

Growth of Onshore Legal In-Sourcing? You Decide.

2010-06-15T15:46:00.001-05:00

The announcement by Taylor Wessing to establish a commoditized service delivery center in Cambridge reflects similar recent onshoring moves by American firms Orrick and WilmerHale, as well as Bristol-based Osborne Clarke.

The unique aspect of the announcement, making it the first of its kind in contrast to its American counter-parts, is that Taylor Wessing is actively marketing these services to clients.

Does this mark the start of the growth of onshore legal insouricng?
Should LPO’s be concerned if law firms become more efficient on their own?

Lone Star Sourcing

2010-06-10T13:47:00.002-05:00

In addition to the number of other ethical organizations looking into the implications of legal outsourcing, it appears that Texans are studying these issues, as well. As reported by the Fort Worth Business Press, the State Bar of Texas’ 2010 annual meeting being held this week in Fort Worth will address legal outsourcing, among other issues impacting legal professionals.

More information is available through the Fort Worth Business Press.

Help Wanted

2010-06-08T10:27:00.000-05:00

Another sign of expanding career opportunities for legal professions is exemplified by Pinsent Masons’ decision to create a new enterprise outsourcing role as they expand their outsourcing presence.

As noted in the 2010 Global Sourcing Study and the Fronterion 2010 trending report, the roles of legal professionals and opportunities are expanding considerably as a result of increased integration of outside vendors, both domestically and abroad.

More on the article is available through The Lawyer.

Leveraging Outside Vendors

2010-05-31T09:21:00.000-05:00

Featured in the Spring 2010 International In-house Counsel Journal is an article titled “Leveraging Outside Vendors in a Changing Legal Landscape” authored by Richard Reade, UK General Council of ISS and me. The ten page article covers many key topics regarding the current state of the LPO industry. It’s a good read for those just getting familiar with the LPO industry or those who are already involved and need to gather more information.

The article covers these topics:
• Setting the stage (background information)
• Cost pressures
• Risk management
• Outsourcing profiles
• A structured approach to LPO
• Sourcing opportunities
• Offshoring opportunities and challenges
• ISS UK sourcing innovations
• Tips and best practices

It was my pleasure to work with Richard Reade on this article. He has been involved in legal outsourcing since early 2008 when he established an innovative outsourcing solution with a team based in India and London. Richard is also a frequent speaker on the topic and nominee for in-house legal innovation awards.

The article will be published in it’s entirety in the June addition of the International In-house Counsel Journal.

Legal Futures: A Shore Thing

2010-05-27T10:08:00.001-05:00

I had the pleasure of contributing a piece for Legal Futures website. The site focuses on the leading news and trends impacting the UK legal landscape.

My piece, A Shore Thing, comments on the impact of the onshore legal outsourcing trend and how it will potentially impact the roles of legal professionals both within and outside of the traditional legal model.

The ascent of the onshore legal outsourcing industry may change the shape and structure of traditional law firms from High Street to major City firms. The onshore component also raises questions regarding the relationship dynamics between general counsel, their respective law firm(s) and outsourcing vendors.

I also noted the changing roles of legal professionals: The 2010 Global Sourcing Study also revealed that legal outsourcing has changed the roles and dynamics of domestic lawyers and legal professionals. General counsel and lawyers who remain within the traditional legal structure of law firms and corporations will increasingly find themselves acting as aggregators, aggregating and integrating legal matters delivered from sources within and outside of their organisations. Services sourced outside of the organisation can be delivered both on and offshore. This shift to the aggregation of legal services is a sharp departure from the traditional legal services model in which attorneys offer bespoke legal advice within a discrete function area.

The recent deal announcements by WilmerHale and CMS Cameron McKenna exhibit prime examples of how these trends are being integrated in landmark deals and the legal landscape.

More information is available on the Legal Futures website.

Tempered Outlook Turns Into Upswing?

2010-05-26T10:54:00.003-05:00

In the Business Standard, the article Legal Process Outsourcing on Firm Footing highlights some of the increased activity in the Indian legal outsourcing sector. After several years of chimera-like growth in Indian LPO markets, work capacity never truly lived up to expectations. Recently tempered, the market is now poised for growth and the current outlook appears to be more closely aligned with the state of the industry.

Further, the multi-shore and onshore components of legal outsourcing noted in the article directly parallel the observations made in the Fronterion 2010 Global Sourcing Study. As reported in the Global Sourcing Study, approximately 8% of delivery personnel for the top 17 LPO firms are based in the UK and 10%, on average, are based in the US.

According to the study: Some 75 per cent of outsourcing vendor executives surveyed by Fronterion said at least some of their clients had expressed an interest in onshore delivery, while 24 per cent of vendor respondents reported a significant number of their clients were interested in onshore delivery. A further 82 per cent of outsourcers said their clients were interested in hybrid solutions – a combination of onshore and offshore outsourcing – with over 41 per cent of outsourcers reporting a significant interest in the hybrid-shore delivery model.

For more information, Legal process outsourcing on firm footing is available online.

More on Minter

2010-05-25T10:15:00.002-05:00

The Lawyer also reported additional details on the Minter Ellison outsourcing offering. It’s been announced Lewis Silken is a prominent client.

The interesting aspect to note is the high-level nature of the services performed – including the reported hands-on approach by Minter’s senior litigation partners. Perhaps it may be better to classify this as a “delegation,” such as the delegation to a regional firm opposed to a proper LPO engagement. Law firm delegation is very common for major City firms and popularized by the Lovells “Mexican Wave” approach.

LPOs work, act and perform services in a fundamentally different way than traditional law firms and thus legal outsourcing vendors create a unique value proposition.

CMS Camerons: Act II

2010-05-25T09:49:00.001-05:00

The Lawyer reported additional details on the CMS Cameron McKenna outsourcing arrangement with Integreon. The piece reported on some of the internal issues that are arising with such a massive outsourcing initiative that will potentially touch all aspects of Cameron’s support functions.

The article highlights the importance of change management, which is a critical component of a successful legal outsourcing engagement. While most LPO deals do not constitute such a monolithic decision and to date all LPO deals have been supporting legal professionals and rather than transferring law firm staff to an LPO vendor, proper change management functions are a must.

Key issues include engaging an appropriate number of stakeholders both within and outside of the organization as well as designating a champion role in the initiative. We do applaud Camerons, and more specifically Tony Wright, for positioning himself as a senior, respected figure within the firm to champion the engagement.

We will continue to watch this deal with interest as it goes forward through the due diligence phase. The ability to discern core from the non-core and strategic from the non-strategic issues is at the heart of every outsourcing engagement. As noted in the article, Osborne Clarke found certain functions to be better retained internally. More details are available in my book Implementing a Successful Legal Outsourcing Engagement where Osborne Clarke is featured as a case study. The core vs. non-core decisions will be unique for every organization and, undoubtedly, Camerons will come to their own conclusions.

One thing is certain, you can’t outsource change management and you can’t outsource effective governance.

Minter Ellison's Kiwi Offering

2010-05-17T17:12:00.002-05:00

Another significant LPO story broken by The Lawyer this week is the front-page coverage of the new offering of outsourced legal services by the Australian Minter Ellison from their New Zealand offices.

It will be interesting to follow this announcement and the uptake by UK law firms. According to people familiar with the matter, Minter has several prominent UK law firms signed up for their services.

I was also quoted in the piece about the advantages and disadvantages of law firms offering LPO services.

Michael Bell, managing principal at outsourcing consultancy Fronterion, said the firm might experience issues around the “scaleability of resources”, adding: “The unique thing about LPO specialists is that they’re process-based. Private practice has the advantage that it understands how firms work and can recruit better talent.”

More details are available at The Lawyer.

Orrick and the Death of PPP?

2010-05-17T14:11:00.000-05:00

The firm Orrick Herrington & Sutcliffe recently announced that they are no longer publically providing their annual profit per partner numbers used in industry rankings such as those performed by the American Lawyer.

While firms’ reporting mechanisms are not major differentiators, we do applaud firms that are now starting to take a longer-term perspective of their organization than the annual profit per partner rankings. A longer-term perspective allows for more strategic planning and market innovation (which may include, but is not limited to, further investment in longer-term investments like outsourced legal services initiatives).

More details are available in an article featured in ABA Journal.

CMS Camerons News Round-up

2010-05-17T10:31:00.001-05:00

This past Friday, The Lawyer broke the story of the largest outsourcing deal for legal support services to date with UK 20 firm CMS Camerons. While the Camerons deal is more focused on the legal support services than traditional LPO services, the deal is significant for two reasons.

The first notable aspect is the sheer size and duration of the arrangement. The details reported by The Lawyer state the contract size to be £600 million for the duration of 10 years. The scope of the outsourcing arrangement includes nearly all legal support services for the firm including “IT, HR, finance, business development, communications, knowledge management, facilities management and administration services.” It’s also reported that close to 200 current Camerons personnel will be transferred to Integreon. While Osborne Clarke made headlines with a similar deal with Integreon in early 2009, the Camerons deal is a “whole other kettle of fish” according to persons knowledgeable of the matter.

The second significant aspect of the Camerons deal is that it illustrates that when an onshore arrangement helps to clarify the outsourcing decision. When orgaizations remove the offshore component (including ethical and jurisdictional issues), firms are able to see more clearly what they are proficient in performing and what, in fact, is better performed by a third-party. Once these determinations are made, the on/offshore component is simply another step in the solution development process.

For more details on the release please see the following news round-up:

The Lawyer

LegalWeek

Bar & Bench

Recession sends onshoring up the agenda

2010-05-13T09:48:00.001-05:00

Fronterion was also noted recently by Managing Partner magazine regarding the implications of our 2010 Global Sourcing Study. The article highlights a number of issues including the alternative career path available to UK lawyers at onshore legal outsourcing centers as well as the piqued interest in UK firms for onshore and on/offshore hybrid legal outsourcing engagements.

I was also quoted in the piece regarding the average savings differential between on and offshore legal outsourcing solutions. Here is the quote from the article:

Fronterion managing principal Michael Bell said that onshoring could reduce legal spend by up to a fifth (21 per cent) per outsourced head, compared to an average of 50 per cent in destinations such as India. However, onshoring as an alternative could effectively sidestep “many of the problems associated with sending legal week overseas”, including different regulations and negotiating time zones, he explained.

Novak Druce Centre Newsletter

2010-05-12T16:46:00.005-05:00

Serveral articles in the Novak Druce Centre Spring 2010 newsletter are worth reading. Christopher McKenna, the director for the center, commented on strategies firms should consider as they become part of the global market. This article addresses the broad view of globalization rather than detailed “how-to” strategies. Determining a personal and firm philosophy about “professional service firms” (legal outsourcing providers, in particular) comes before designing working relationships with them. One thing is clear, though, as we’ve been saying at Fronterion all along, status quo is not satisfactory in a global marketplace any longer.

Another article titled “Run With The Gazelles But Eat With The Lions” by a leading academic expert on the topic of legal outsourcing, Mari Sako predicts the upcoming influences on international law firms. Here are several key quotes:

“Innovation in legal services is also about discontinuous changes. What the economist Joseph Schumpeter wrote a century ago is still relevant today: discontinuous change happens as a result of five things: the introduction of a new product or process, the opening of a new market or source of supply of intermediate goods, or a new organization design. For law firms, discontinuous change is happening as a result of his last two factors - new sources of supply and new organizational design.”

“But remember the old adage: ‘Run with the gazelles but eat with the lions’. That combination of the abilities to move fast and at the same time to identify where the value chain will be protein-richest will be key. Law firms take note.”

Revised, Albeit Tempered Outlook

2010-05-08T13:25:00.001-05:00

A recent article published in IP Frontline authored by Evalueserve co-CEO Alok Aggarwal details a revised, albeit tempered market outlook for the burgeoning LPO industry.

Due to mixed service lines, varied geographical delivery, lack of official reporting and general transparency the legal outsourcing market; it is hard for many people to get their arms around the LPO market. Compounded by the challenges of projecting market growth for a previously non-exist marketplace understanding legal outsourcing can be daunting.

I believe that hesitant adoption (relative to the early fantastic growth projections) onshoring and offshoring does not reflect the lack of potential in the industry for corporate legal teams and law firms alike. Rather, there are many legal, ethical and firm-integration issues that make LPO adoption slower than comparable forms of outsourced services. Furthermore, the legal profession and related industries were often the hardest hit in the recent economic volatility.

However, forward-thinking firms are now taking a serious look at legal outsourcing as they recognize the value-add (read profitable for law firms) aspect of outsourced legal services.

It is Fronterion’s goal to educate, inform and guide law firms and general counsel so they can take told of the many advantages of legal process outsourcing, while still maintaining a tempered view of the marketplace as reflected by the recent market outlook published by IP Marketline.

WilmerHale: Washington Post

2010-05-03T15:57:00.001-05:00

Firms are leveraging new ways of working to be more efficient. So, it’s no surprise WilmerHale's plan to move organizational support services to a less expensive location was further reported by the Washington Post today. WilmerHale plans to open a “business services center” in Dayton, Ohio. Initially, the center will handle technical support services, but the article states on-site document review capabilities are expected to be offered in the near future. Will other large law firms choose onshoring over offshoring their lower level legal and legal support services? We’ll have to watch and see.

Note that I was quoted in the Washington Post article which is now available online.

Possible New Entrant?

2010-04-30T16:02:00.003-05:00

We recently saw a possible new entrant into the legal outsourcing sector. Thompson Reuters announced what appears to be a quasi-legal outsourcing center in Taguig City, Philippines. It’s not clear if this is for internal purposes only or if they will be directly competing in the LPO space. As an information service organization, Thompson Reuters potentially comes into the LPO market with a unique angle and vast connections with legal professionals around the world.

It will be interesting to see how this will make an impact in several of areas. How will this change the relationship between Reuters and their clients? Will firms coming into the market find it more attractive to pick up a company rather than grow their own? Will this continue to blur the lines in the legal outsourcing industry, in this case, library sciences?

More discussion is also available at 3 Geeks and a Law Blog.

WilmerHale Insourcing

2010-04-28T10:56:00.002-05:00

Some interesting new insourcing developments occurred this week with the D.C.-based law firm WilmerHale. The firm is launching an onshore delivery center in Dayton, Ohio which will provide a host of support services.

According to the official press release posted on the WilmerHale website, services to be performed include traditional back office services such as “finance, human resources, information technology services, [and] operations.” Additional services to be performed also include traditional legal outsourcing services such as document review and management.

The stated goal of the initiative is to “provide improved efficiencies for administrative teams and the firm, and reduce significant operational expenses.”

This announcement directly affirms the findings and projections of our 2010 Global Sourcing Study, which is currently available online at: www.fronterion.com/globalsourcing2010/

As noted in the Global Sourcing Study, legal outsourcing vendors will face increased indirect competition if law firms do indeed become more efficient on their own. It will be interesting to see if similarly positioned firms in high-cost jurisdictions seek to improve the competitiveness of their firm through consolidation and domestic cost arbitrage.

Two’s Company, Three’s a Crowd

2010-04-19T10:22:00.001-05:00

The last several weeks, we’ve seen a number of press releases regarding the vendor relationships with the software giant Microsoft.

The announcement-spree was kicked off with a release by CPA Global reporting that Microsoft is currently employing a “team of between three and five qualified lawyers at CPA [that] are handling multi-jurisdictional legal support work, including legal research… in CPA's offices in Gurgaon.” This was the second major public release by CPA after the Rio Tinto engagement in June 2009.

Coming quickly on the heels of the CPA release was a separate release from Integreon. The details of the release reported Integreon to be the “exclusive provider of offshore managed document review” on behalf of Microsoft. This was one of the first major corporate engagements publically announced by Integreon.

The contract management portion of the Integreon-Microsoft engagement is reported to be handled primarily by Intgreon’s onshore delivery facilities in Fargo, North Dakota with “eight full-time contract specialists.” This is reflective of the importance of onshore-offshore engagement structures for legal outsourcing engagements as reported in the recently released Fronterion 2010 Global Sourcing Study and also featured in The Lawyer.

While not a legal service engagement, the third and most recent vendor announcement came from Infosys. It is reported that Infosys is servicing Microsoft to “manage internal IT services for Microsoft worldwide” including “IT help desk, desk-side services, and infrastructure and application support from multiple global centers.”

Who knows who will be next in the Microsoft vendor release bonanza?

Chicago Entrepreneurship Conference

2010-04-12T12:18:00.000-05:00

This coming week I have the pleasure of speaking at the Chicago Entrepreneurship Conference hosted by Minogi and iFoundry. I will be speaking on global business and entrepreneurship through my experiences at Fronterion. Other prominent speakers and event details include:

In a globalizing and challenging economy, the next generation of creative entrepreneurs will be reinventing the business world. Join featured speaker Laura Hollis of the Univeristy of Illinois, Carl Nordgren of Minogi, Zach Kaplan of Inventables, Phil Tadros of Doejo, Loran Nordgren of Kellogg, James Interlandi of Virtual General Counsel, Michael Bell of Fronterion, Nate Kontny of Inkling Markets, Vishu Ramanathan of ThinkLink, Jonathan Naber of the Illini Prosthetics Team, Darren Marshall of Doejo, and Jason Tillery of ThinkLink at the Creative Entrepreneurship Workshop that will guide you through the creative processes of founding your startup, avoiding startup pitfalls, and connecting with creative entrepreneurs in the midwest and abroad.

The event will be held at the University of Illinois Chicago campus Saturday April 17th. More information is available online.

EMRG Conference Overview

2010-03-30T07:33:00.000-05:00

This past week I had the pleasure of speaking at the EMRG conference at the United Oxford and Cambridge University Club in London.

The event featured a number of prominent speakers in the legal outsourcing community including several experts written about in the case studies of our Implementing a Successful Legal Outsourcing Engagement book, Richard Reade, general counsel of ISS, and Nigel Kissack of Pinsent Masons, both pioneers in their respective outsourcing endeavours, gave informative and engaging presentations.

The conference was both well-attended and well-received. I spoke on the topics of engagement structures, vendor selection and cultural considerations.

The overall disposition of the conference was that legal outsourcing is not an exclusive solution, but is rather one of many effective approaches available to law firms and general counsel as they seek to provide increased value for their legal services.

UK Expansion

2010-03-29T10:29:00.001-05:00

This past week saw another noteworthy advance in the UK legal outsourcing market. UnitedLex officially launched their first public UK engagement with the UK-based telecom BT. UnitedLex will effectively take over the BT Indian-based captive legal team. According to the release, 15 UnitedLex lawyers will, “handle commercial contracting and antitrust regulation work for BT's offices in the UK, the US, India, Singapore and Hong Kong. The team will be based in Gurgaon, India.”

I had the pleasure of speaking along side Ajay Agrawal, UnitedLex Chief Solutions Officer, this week at the ERMG conference.

This announcement of UnitedLex’s official launch in the UK reflects the accuracy of our findings in the 2010 Global Sourcing Study that 88% of legal outsourcing vendors plan to increase their focus on the UK in the coming year(www.fronterion.com/globalsourcing2010). “Aggressive” expansion plans were also noted in the Law Gazette this week in an article about headcount projections from several major legal outsourcing vendors.

Indian Writ Compliant Filed

2010-03-27T18:23:00.002-05:00

Something that was simmering below the surface for the past week finally erupted into the mainstream legal press on Friday in a feature by LegalWeek.

It was first reported by in The Hindu and then Bar & Bench, that the Association of Indian Lawyers filed a writ petition with in the Madras High Court alleging that international law firms were “using visitor visa(s) thereby violating immigration norms,” which India laws ban foreign-based law legal firms from entering and operating in India. To date this has not included legal outsourcing operations by international law firms such that legal outsourcing engagements are structured as only providing “legal support” services.

The only LPO vendor cited in the writ petition was Integreon, who swiftly offered their official statement, stating the allegations were “without merit.” No official statements from any of the other major law firm respondents have been released to date.

It does seem a bit peculiar that India, with an economy which is driven largely by it’s attractiveness as a professional services outsourcing destination, would seek to enforce blatantly protectionist measures. Ironically, similar protectionist measures debated in the US have been largely criticised by the Indian government and business community.

I have delayed comment on the petition because I am not sure about the ancillary implications on the legal outsourcing industry. Off the record, most major law firms cited as respondents seem to think the writ petition will not be a major issue such that allegations are not reflective of the work being performed in India. For the time being, however, all respondents seem to be taking the proceedings seriously. Further, per my personal interactions, most firms cited in the petition have not been deterred from advancing their outsourcing initiative plans. Lines have also been drawn linking the writ petition to the Newman McIntosh & Hennessey case* which was readily withdraw shortly after filing in 2008.

In addition to the protectionist notions of the writ petition, Indian law firms may also be partially reacting to increased competition from LPO’s who are recruiting more of India’s qualified lawyers.

More to follow as the petition proceeds.

*Newman McIntosh & Hennessey vs. Bush, filed in the United States District Court for the District of Columbia in May 2008 (Civ. No. 08-00787 [CKK] [D.D.C]). The lawsuit alleged that offshoring legal work constituted a waiver of the attorney-client privilege and Fourth Amendment protection, since data sent overseas may be subject to eavesdropping by the US government such as that permitted by the USA Patriot Act. In particular, the complaint alleged that, “This waiver of rights would nullify the reasonable expectation of privacy that American citizens — litigating purely domestic disputes in U.S. Courts — would have in the documents that they produce in the course of civil litigation.” The lawsuit was withdrawn by the plaintiff firm only days after the ABA issued its outsourcing opinion, endorsing the practice of outsourcing. To date, no further litigation has been forthcoming in the US challenging the legality of legal outsourcing. – Implementing a Successful Legal Outsourcing Engagement (fronterion.com/book/)

Law Firm Evolution

2010-03-24T15:01:00.003-05:00

This week I had the pleasure of attending one of the most forward-thinking conferences on the legal outsourcing industry - Law Firm Evolution: Brave New World or Business as Usual?

The conference was hosted by the Georgetown Law School in Washington, DC. The conference provided a very unique mix of academic and practitioner perspectives on a host of hot-button issues impacting the legal profession.

The general consensus shared among the conference attendees and presenters alike was that the legal industry is changing significantly. What remained up for discussion, with often spirited debate, were the implications of these changes and methods to address a changing legal landscape. Two reoccurring themes throughout the conference that stood out to me personally were the surprising levels and swiftness of globalization of the legal profession and the far-reaching implications of the forthcoming implementation of the Legal Services Act in the UK.

Presenters included major international and Magic Circle senior leadership, general counsel from large international corporations, legal outsourcing vendors and prominent academics. One of the most notable speakers on the agenda was Richard Susskind.

Conference proceedings included coverage by the National Law Journal and the Posse List

Philippines Contending

2010-03-24T09:36:00.003-05:00

While the Philippines has not exhibited quite the level of growth of legal outsourcing as geographies such as India and South Africa, the Philippines remain a strong contender for offshore legal talent. An interesting release by the Outsourcing Portfolio outlined some of the advantages of the Philippines, which for some areas directly translated into competitive advantages for outsourced legal service delivery.

Global Sourcing Study: The Lawyer Feature

2010-03-23T11:55:00.001-05:00

The previously announced 2010 Global Sourcing Study was featured as the lead story of The Lawyer. Recognizing legal outsourcing opportunities from around the world – both on and offshore – is clearly of interest to a broad number of legal professionals.

We are very excited about the informed approach taken by The Lawyer article.

2010 Global Sourcing Release

2010-03-23T10:25:00.001-05:00

Fronterion is proud to announce the release of the 2010 Global Sourcing Study: A Globalised Profession and Multi-Shore Delivery of Legal Services Study. The complete study is available by contacting the following: GlobalSourcing@fronterion.com

In summary, findings clearly show significant growth in the onshore legal outsourcing delivery market as well as increased interest from law firms and clients.

In undertaking this study we sought to answer two fundamental, but compelling questions regarding onshore legal outsourcing delivery:
1. Is there a new career path available for today’s law graduates outside of pursuing jobs at traditional law firms?
2. What is the viability of the onshore legal outsourcing market?

What we discovered about this small, but fast-growing onshore outsourcing industry – in which law firms and in-house legal departments send work to specialised delivery centers in the United Kingdom or United States, rather than India, South Africa, etc. – is the importance of a compete and thorough review of all legal resources available to law firms today.

For a number of reasons, the study includes a strong focus on onshore UK legal markets. As such, the survey polled executives from 17 of the largest global outsourcing providers, as well as ten of the 20 largest UK law firms.

The results of the 2010 Global Sourcing Study revealed that approximately 300 full-time lawyers and legal professionals are currently at work in delivery centres in Scotland, Wales and the Southwest of England. Of the top 17 global vendors, 10% of their legal delivery staff is based in the UK.

The onshore industry remains a small part of a larger trend toward offshore outsourcing, but it is certainly something that we expect to grow significantly as legal outsourcing continues to attract attention from law firms and large corporations. Consequently, this change will lead to new opportunities for legal professionals in the UK and the US.

Some 75% of outsourcing vendor executives surveyed by Fronterion said at least some of their clients had expressed an interest in onshore delivery, while 24% of vendor respondents reported a significant number of their clients were interested in onshore delivery. A further 82% of outsourcers said their clients were interested in hybrid solutions – a combination of onshore and offshore outsourcing – with over 41% of outsourcers reporting a significant interest in the hybrid-shore delivery model.

More information is available on the Fronterion website at www.Fronterion.com/2010GlobalSourcing

Magic Circle… [Poof] Gone?

2010-03-20T14:54:00.002-05:00

Eversheds recently released study findings that found “over half of all clients think that the magic circle designation is redundant, with 94 per cent of them arguing that the profession should reclassify its peer groups.”

We certainly agree that significant pressure exists on law firms regardless of their designation as “Magic” or not*. As a result, clients are often more prone to “value-shop” law firms, but venerable designations such as the Magic Circle die hard and bet-the-house legal work from large corporates will still typically flow to these major law firms. Are all bets off with the forthcoming implementation of the Legal Services Act? No one knows.

These issues of reputation of law firms are addressed by Larry Ribstien, author of the controversial yet thought-provoking Death of Big Law. Ribstien notes in his recent publication that the only thread of stability binding major law firms together is by their “reputational capital.” Law firms cannot maintain intellectual property, it is no competitive advantage to hold hard assets and human capital can quite literally walk out the door at any time. He purports that the only assets held by large law firms is their reputation or reputational capital.

*Magic Circle law firms in the UK include: Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters, and
Slaughter & May

Conference Round Up

2010-03-16T09:15:00.002-05:00

Legal and legal outsourcing conferences seem to be abounding both in the UK and Stateside.

Georgetown Law School’s Law Firm Evolution: Brave New World or Business as Usual?: Occurring March 21st through March 23rd. The conference features a unique amalgamation of academics, law firm leadership, general counsel and legal industry thought-leaders.

EMRG LPO Masterclass: Hosted in London on March 25th. I will be speaking on a panel dealing with a number of topics including engagement structures, vendor selection and cultural issues as they relate to ensuring successful legal outsourcing engagements. Fellow panelists include Mark Lewis of BLP and Mark Ford of Clifford Chance.

The Lawyer Conference: In a yet to be confirmed location in London on June 17th. The Lawyer Conference always draws strong interest, particularly amoungst the major city firms.

C5’s Conference Legal Process Outsourcing – The Latest Drivers, Issues and Solutions Considering LPO as Part of Your Wider Legal Costs Management: Hosted June 29th and 30th at the Sofitel St. James Hotel in London.

I have also been invited to present on a host of issues that relate to legal outsourcing at the C5 conference which include but are not limited to managing legal outsourcing vendor relationships, recognizing legal outsourcing opportunities, and ensuring quality of the legal deliverable. The conference has quite an impressive cadre of speakers (myself excluded) from both major City firms and UK corporates.

Aussie’s Outsourced Outback

2010-02-12T08:20:00.000-06:00

A recent article in The Times outlines the future growth prospects of the Australian legal market as demonstrated by A&O expansion as well as the Norton Rose merger with Deacons.

One interesting bit about the article includes the inference of Australia as a “ rival” to India as a “cost effective location for outsourcing international legal work”

While to date there has not been a significant push for outsourced legal services from Australia, it does appear to be geography of growing interest for UK and US firms facing downward pressure on their pricing structures.

At the very least, it remains just another sign of the increasingly globalised nature of legal services.

The “Process” in Legal Process

2010-02-11T10:17:00.000-06:00

A recent blog post by general counsel legal consultant Rees Morrison outlines an insightful definition of “process” in legal process outsourcing.

The original reference was a quote by the general counsel of GenPact featured in the European Lawyer Issue 92, Jan. 2010. Per Morrison’s post and the European Lawyer regarding the definition of process when delivering legal services, “[t]here needs to be a process, it should be routine and people should be able to use a set of rules and guidelines in dealing with the work.”

We certainly agree that outsourcing legal services should not be delivered in the same manner as legal work performed by domestically qualified legal professionals.

Ensuring appropriate amount of structure or “process” surrounding a legal outsourcing engagement allows the firm to leverage economies of scale as well as ensure adherence to appropriate ethical standards when sourcing to non-domestically qualified personnel.

Furthermore, only leveraging labor arbitrage without the help of a supporting process is often unsustainable and leaves a significant amount of value on the table for the contracting law firm or general counsel.

Legal Outsourcing Conference

2010-02-09T12:43:00.002-06:00

Fronterion Managing Principal Michael Bell has been invited to participate on a panel for an upcoming legal outsourcing conference in the UK this March.

The panel will also include Mark Lewis (Partner at Berwin Leighton Paisner) and Mark Ford (Director of the Clifford Chance Knowledge Centre). Both are also recognized thought-leaders in the legal outsourcing community.

Topics to be addressed in the panel discussion:
• How to communicate with clients (of the law firm) about outsourcing initiatives.
• What are the insurance exposure issues that must be addressed?
• Specific points to review during the vendor selection process.
• Building in cultural nuances of the onshore client when offshoring.
• Different types of engagement structures when working with outside vendors.
• Core vs non core outsource/captive/offshore?
• Lessons learnt to date: People/Process/Technology/Knowledge Transfer issues

The UK, which has seen a number of significant announcements regarding legal outsourcing initiatives recently, is a geography of growing interest for alternative delivery of legal services.

More details about the upcoming conference are available through EMRG.

Vendor News Round-up

2010-02-01T09:35:00.002-06:00

Here is the round-up of several of this week’s vendor announcements. These announcements reflect a number of the trends anticipated by Fronterion in the Ten for 2010 trending release in December 2009.

CPA
CPA Global announced a 47% equity management buy-out by the London-based Intermediate Capital Group. The deal was led by DLA Piper and was priced out at $709 million for the near majority stake.

It will be interesting how the buyout will affect the management and direction of CPA Global. Results are yet to be seen. At the very least, it does appear to be a good indicator in regard to the unfreezing of global capital markets.

As predicted in Ten for 2010, Fronterion noted that, “As capital markets improve in 2010, these larger players will access outside capital investment to drive further growth and acquisitions.”

Integreon
A joint announcement revealed Integreon will be one of the vendors involved in an innovative e-discovery initiative by International law firm Pillsbury Winthrop Shaw Pittman. The offering known as PEARL (Pillsbury’s E-Discovery Alliance of Resource Leaders) is an alliance of undetermined formality to link together an end-to-end e-discovery solution for Pillsbury clients.

In addition to Integreon, other vendors in the alliance include ACT Litigation Services, Discovery Services, Protiviti and TransPerfect Legal Solutions.

This is a major step forward to have an American Global 100 law firm publically announce they are outsourcing significant aspects of their legal services. We can be fairly certain that this will not be the last.

Another interesting component of the alliance is it’s pricing structure. It is one of the first formal offering of an e-discovery solution by a law firm with per gigabyte pricing.

This also reflects trending predicted by Fronterion, “As organizations continue to publicly broadcast their outsourcing initiatives and leverage their outsourcing engagements as a competitive differentiator, vendors who are part of high-profile deals will be in a position to build substantial brand awareness.”

Legal process outsourcing facing a ‘watershed’ year

2010-01-19T14:34:00.000-06:00

Fronterion’s trending release Ten For 2010 gained further recognition this week in a piece in the Law Society Gazette, Legal process outsourcing facing a ‘watershed’ year. While India remains the unequivocal leader in outsourced legal services industry, the article notes the growing interest in South Africa, particularly by firms in the UK.

Technology Applications

2010-01-10T08:16:00.000-06:00

Outsourced legal services is not the only innovation in the legal profession helping legal firms and corporate councils manage the cost of legal services. A recent article featured in the Wall Street Journal notes that, technology and software platforms are being adopted at increasing rates to help lower costs, as well.

As noted in the foreword of the book Implementing a Successful Legal Outsourcing Engagement, Bruce MacEwen writes in regard to the adoption outsourced legal services, “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.”

The same is true of the adoption of innovative technology applications, as noted in the article. Innovative outsourcing solutions will happen in concert with technology developments. Often changes begin slowly at first, but expand into a number of exciting possibilities as they mature.

Links between these innovative technology platforms and outsourcing include improved monitoring and collaboration with remotely based outside vendors. With increasing transparency, general counsel will have greater capacity to monitor the productivity of their outside counsel and thus, their outside legal spend.

Challenges in 2010 for UK firms and others

2010-01-04T14:51:00.003-06:00

For many, the new year means a new start. But that is not the case for some major law firms who are still slogging through flagging legal markets. As noted in a recent article featured in The Lawyer, many lawyers still seem to be holding their breath watching uncertain markets in the coming year. The article does point to the impact on outsourced legal services, particularly in the UK legal segment, which is expected to change fairly significantly in the coming year in anticipation of the implementation of the Legal Services Act.

Developments likely to have an impact on the market over the next 12 months include the expansion of the legal process outsourcing (LPO) market, changes in fee models and the impact of the Legal Services Act.

Efficiency has quickly become the watchword for those with their hands on the purse strings at major firms. Whether this means changes to outsourcing policy, client charging or further rounds of redundancies remains to be seen.

Despite the concerns expressed in this piece, many of the firms that we have talked with remain positive on the new year.

Holiday Wishes

2009-12-24T09:10:00.000-06:00

We would like to wish all of our readers a happy holiday season and a prosperous new year. Thank you for your contributions to this blog and the support you’ve given lposouce.com in the past year.

Temerity in the Face of Turbulence

2009-12-23T16:04:00.001-06:00

In a recent newsletter Andrew Hedley, founder of the UK legal strategy consultancy Hedley Consulting, discusses changes set to impact the legal market in the UK (US legal firms are also facing similar pressures). One of the core changes, emanating from the cost pressure on law firms, will be in the law firm structure with the most apposite change being the “significant acceleration in the use of legal process outsourcing for increasingly complex work.”

Hedley’ piece is posted in full below.

"The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic."
-Peter Drucker

The legal sector faces a number of unprecedented challenges in the year ahead. The one with potential to disrupt most widely and deeply is a wholesale move to fixed-fee pricing. Surveys of in-house counsel show that they are resolute in demanding fundamental change over the next twelve months.

Delivering profit from fixed-fee work requires wholesale changes to historic operating models and has far reaching implications.

One inevitable consequence will be the demise of associate lockstep, the process by which salary (and hourly rate) increases are pegged to years of qualification rather than any objective measure of increased ability to add value for the client. Another will be a significant acceleration in the use of legal process outsourcing for increasingly complex work.

An emphasis on better management skills will also be necessary as firms disaggregate the legal process, undertake individual work components at the lowest price point and then reassemble the “legal product” at its point of delivery to the client.

The effect on firm culture, talent management and the psychological contract between partner and associate will be hugely significant. However, these are nettles which must be grasped to emerge from the recession with businesses that are viable in the longer term.

Simply hoping that one can hold out long enough for better times to return is not a strategy. Temerity in the face of turbulence is unlikely to deliver the desired result!

More Than Labor

2009-12-17T09:54:00.001-06:00

Outsourcing is more than a cost play or exploiting labor arbitrage. Other very important sources of value to law firms and corporate legal teams are scalability and more on-demand services models.

These strategies allow firms to better allocate firm resources, particularly in volatile times such as today when workloads are highly variable and litigation pipelines are uncertain. What this means is that not all work has to be performed offshore or even very far out of the office to achieve significant savings and strategic advantages.

As these implications are coming together, firms are seeking to explore onshore shared service delivery models that reflect these growing needs for on-demand service offerings. Shared service delivery models include common resources and services that are shared with 2 or more firms. Thus avoiding duplication of non-core, non-differentiating services at a number of separate firms.

In the UK, the shared service model is picking up steam with announcements this past week by several large law firms that they are outsourcing their library services using a shared delivery model.

Cyclical Nature of the Economy

2009-12-15T10:51:00.001-06:00

We have also been proponents of the cyclical nature of our increasingly globalized economy. This week, Crain’s Chicago Business featured an article on the growing number of US immigrants “energizing” the US economy.

Ten For 2010: Trending Projections Recognition by the American Bar Association

2009-12-14T08:30:00.002-06:00

The Ten For 2010: Top Ten Trends in Legal Outsourcing released last week was recently picked up by the ABA Journal and was one of the top 10 most read articles for the week.

What seems to have caught the interest of many US legal professionals is the idea of the increasingly attractive career path for outsourced legal services. Global-minded and entrepreneurial legal professionals are finding the legal outsourcing sector an attractive alternative to the big law lifestyle. This is not a major portion of the legal workforce, but it is an emerging demographic that we see growing further in the coming year.

An interesting dialogue was also started on the message board below the article. While we do not find that all issues raised in the discussion are of merit, they are still issues and opinions that need to be addressed when engaging in outsourced legal solutions. Some posts to check out include: 21, 22, 27, 36 and 37.

New Year, New Trends: Fronterion Ten for 2010

2009-12-10T14:23:00.003-06:00

Since the new year is nearly upon us, we are proud to announce the release of Ten For 2010: Top Ten Trends in Legal Outsourcing – an insider’s perspective of changing industry dynamics for the coming year.

The Ten For 2010 trends report highlights a number of changes set to occur in the industry this year. The most notable of these include:

+ India will remain the dominant destination for outsourced legal services, but increasing interest in South Africa will make it India’s leading competitor for legal outsourcing in 2010.

+ The rise of LPO as an attractive alternative career path for legal professionals as pay and prestige increase.

+ Increased transparency around the LPO industry including the possibility of additional ethical guidance from industry bodies such as the American Bar Association.

+ A shift in the role of the lawyer from providing pure legal advice to managing the procuring of a number of different legal functions both within and outside the traditional law firm structure.

As noted in the release, we feel, “The year 2010 will be an exciting and watershed year for outsourced legal services. The economic volatility over the past year has caused legal professionals to step back and genuinely assess how they are providing and procuring legal services for their organizations. In 2010, legal outsourcing will be an increasingly important factor in these decisions.”

More information is available on our website and at www.fronterion.com/TenFor2010

South African Seminar

2009-12-09T09:17:00.001-06:00

As noted in some of our previous blog posts, the recent release of our publication entitled Implementing a Successful Legal Outsourcing Engagement has been well received.

This week, I (Michael Bell, managing partner of Fronterion) presented the increasingly recognized book to the High Commissioner of South Africa during a legal outsourcing seminar hosted at the South Africa House on Trafalgar Square in London.

The event was well attended and included presentations by the High Commissioner as well as other leaders in legal outsourcing organizations based in South Africa. Speakers included representatives of several organizations that were featured in the book such as Exigent and Underwood Solicitors.

Talent Shifts

2009-11-25T07:01:00.002-06:00

One trend that we have often noted is how talent continues to migrate from traditional legal and litigation support firms to legal outsourcing vendors.

Globally-minded, entrepreneurial legal professionals have increasingly taken on roles in business development and operations, in both on and offshore capacities for legal outsourcing vendors. The growth in compensation, prestige and expanded career opportunities make positions at outside vendors an increasingly attractive option for legal professionals. The result is a greater depth of skill sets and legitimacy for legal outsourcing vendors. While not a major constituent, it is a growing demographic.

In marked contrast to this paradigm, Clifford Chance recently announced the promotion for two of the most promising lawyers from their offshore knowledge center in Gurgaon, India to associate positions in London and Abu Dhabi.

As noted by Legally India: The starting salary at Clifford Chance's offshoring centre is understood to be around Rs 5.5 lakhs (£7,700) per annum. Starting salaries for a newly qualified lawyer at Clifford Chance in London are currently £59,000 (Rs 45 lakhs) per year.

While currently this is an anomaly, I suspect that it will not be the last occurrence. It is also a good indicator of the blurring lines between “us” and “them” – vendor and client. Regardless, as clearly demonstrated by the increase in salary, this is quite an opportunity for the two new associates.

Ethical Considerations in Legal Service Solicitation

2009-11-23T11:32:00.001-06:00

Total Attorneys, a Chicago-based legal service and support company that offers web-based software solutions for small law practices and sole practitioners, has meet with tremendous success. This year, they have been named “Number 2” in the Cranes Fast 50, the fastest growing businesses in Chicago.

The firm is currently facing a lawsuit regarding the ethical considerations of soliciting clients on behalf of lawyers over the internet. While not directly pertaining to outsourcing legal services, is an important debate regarding the ethical provisions and the roles of outside vendors who perform the business development function for lawyers.

More information on the case is available in the Forbes article,“Click or Crime?” as well as in the in-depth blog post at Total Attorneys.

A Dynamic UK Legal Segement

2009-11-20T09:50:00.002-06:00

It has been another exciting week in the world of outsourcing for the UK legal market.

First, Allen & Overy announced their new outsourcing initiative. The engagement is for litigation support services and structured as a “suite of options [for clients] including offshore outsourcing,” according to litigation support specialist at Allen & Overy, Vince Neicho.

The Allen & Overy engagement is a great example of the growing number of firms who are starting to formally offer outsourcing as a part of their “suite of options” available to clients upon their request.

The second big piece of news out of the UK is word that Lyceum Capital is investing £25 million to fund a new on/offshore legal services vendor Laureate Legal Services (LLS).

This is one of the first big PE deals to come together in the UK as a result of the changing legal landscape and upcoming implementation of the Legal Services Act.

Lyceum managing partner Jeremy Hand provided insight to Lyceum’s investment strategy in the changing legal landscape for our recent book Implementing a Successful Legal Outsourcing Engagement. He is quoted in the book as saying, “In line with our core investment strategy, the legal services sector is large and fragmented, but maintains very high margins. Furthermore, this is an industry where the majority of clients are not happy and partners at law firms typically would not consider their organizations as ‘well-run.’ ” Hand emphasized the importance of firms proactively preparing for the implementation of the Legal Services Act stating, "In this market, the first-mover advantage will be key."+

As capital markets recover, investment opportunities will increase for alternative legal service vendors who provide new and innovative solutions for the delivery of legal services. As these firms seek to leverage first-mover advantage, we may see several similar deals coming together shortly.

+Bell, Michael D. Implementing a Successful Legal Outsourcing Engagement. The Ark Group and Managing Partner, 2009.