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.”

Trending Report Follow-up

As the LPO industry continues to mature and evolve, we will continue to keep you updated on trends and developments on legal process outsourcing. In case you missed it, last month we released our annual trending report on the top 10 LPO trends for the coming year. This report was featured in the ABA Journal as well as Legal Futures, Integreon’s blog and New Legal Review.

In our December newsletter we examined our LPO trend forecast from last year and, scoring each trend on a scale from one to five, reflected honestly on the accuracy of our predictions. Most of our predictions were on the mark and it will be interesting to see if our forecast for the year ahead will hold true. To subscribe to our newsletter or to review December’s edition, e-mail us at: Forefront@fronterion.com

Now that 2010 is officially in the books, we’re looking forward to keeping you apprised of all of the changes in the LPO industry in the coming year.

Stay tuned.

Tis the Season… For Industry Trending

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

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/