Monday, January 31, 2011

LPO Predictions for the New... Decade

While many commentators make projections for the coming year (Fronterion included), some are taking a more expansive approach and are forecasting into the next decade.

In a recent post at Law Without Borders, fellow LPO blogger Russell Smith projects a number of ways that legal offshoring will impact (or “shake up”) the legal profession in the next 10 years. His 12 predictions, and my summary of each, are:

1. Meritocracy Beats Aristocracy - Legal service delivery is becoming more value-driven.
2. Change is Happening in the East as Much as in the West - The legal landscape is changing in India.
3. The New Tort Reform - LPO may constitute a more cost-effective defense than settlement.
4. Capital Funding of Litigation - LPO is a good value proposition for third-party investors in litigation funding.
5. The Billable Hour Bites the Dust - Alternative billing models are turning the legal world upside down.
6. Unintended Effects of Regulatory Reform - New regulatory compliance obligations call for LPO solutions.
7. "Legal Trauma Units" Level the Playing Field – Offshoring levels the playing field for small law firms.
8. Offshore Beats Nearshore – Billing rates and operating costs are considerably lower in India.
9. The Death of the "They're Taking our Jobs" Myth – Offshoring actually creates new jobs in the West.
10. More Proliferation Than Consolidation – Offshore legal service providers are growing in number.
11. Western Lawyers Switch to Football – Through LPO, Western lawyers can move up the value chain to act as quarterbacks or team coaches.
12. The Future May Belong to the "Just Crazy Enough" – LPO entrepreneurs pave the way for new innovations.

View "12 Ways Offshore Legal Outsourcing Could Shake Up the Law World in the New Decade" for the full report.

We largely agree with Smith’s predictions, a number of which are already occurring the marketplace. Just think, 10 years ago we were just sorting out the use and ethical implications of e-mail.

In regard to Smith’s 9th prediction, “The Death of the ‘They’re Taking Our Jobs Myth,’” I was quoted with my comments on the job impact of international sourcing initiatives:

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.”