Legal Process Outsourcing (often abbreviated as LPO), is a section of the outsourcing industry that is gaining great attention. In Legal Process Outsourcing, legal documents required by an outsourcer (law firms), such as preparation of wills and deeds, contracts, business agreements, business transaction details, are handled by an independent outsourcing service provider located in a different country. This type of outsourcing is mostly put to use by Western companies, in order to cut down on their legal costs.
Something everyone across the Legal Process Outsourcing world has known for some time – the majority of those who choose to procure legal process outsourcing services hope to do it without anyone else really knowing about it. Kind of a not-so-well kept secret it seems given Fronterion’s recent study released yesterday. The results do not surprise me really. It’s analogous to a dirty secret people like to keep in the closet, in the safety of their home, or in this case their office. And of course the secret’s obediently kept within the office of the dedicated LPO provider.
There is a problem with a secret like this – it tends to leak out eventually if it hasn’t already. And in this case it looks as if it will remain to be silently acknowledged by the industry until the economic conditions turn around enough for the Am Law 50 to publicly acknowledge LPO. The backlash they already have and would surely continue to receive in the blogs and press would be too daunting to endure in the public eye. The situation is already delicate given the distaste recent law grads have for the budding LPO industry. But until then the best acknowledgement the LPO industry can ask for is with the Am Law’s checkbook.
Yet despite this covert LPO adoption underway, we’re reminded as to why LPO is becoming so pertinent in a story that surfaced on this same day as the Fronterion study. Vidya Devaiah, through Law Without Borders, reported that Denis Field the former CEO of BDO Seidman, LLP, decided to secure SDD Global Solutions to assist his legal team in his cases being fought with the U.S. government as well as against BDO.
Vidya ends the Law Without Borders piece on the story with a succinct summation of the underpinnings of Field’s decision to secure SDD Global in the first place:“But doesn’t high-end legal outsourcing to India mean a loss of jobs for lawyers in the U.S.? Field does not believe so. For him and his attorneys at the New York law firm of Kostelanetz & Fink, LLP, the most meaningful use of Field’s scarce resources is what matters. It is not an example of shipping jobs overseas, but of assisting in making U.S. litigation financially more feasible. SDD Global will help Field’s attorneys mount a defense that might not otherwise be possible because of the high costs of U.S. litigation and the client’s limited resources.”
That pretty much sums it up doesn’t it? Legal Process Outsourcing’s reason for being. LPO didn’t popup overnight to steal jobs. LPO exists because the market desires a more cost effective alternative. And guess what? That’s something the Am Law 50 is already aware of as well.
Heard a great interview earlier this morning on the Legal Talk Network, which was nice to hear someone other than myself speaking about the benefits realized through legal process outsourcing. Especially since it came directly from Attorney Channing Migner who has had experience working with LPO for the past few years. It was almost as if they took my own notes and repeated them. But besides all of the positive talk there were a few cautious statements and takeaways which help bolster the fact that securing the right LPO relationship is a bit more than just a turn-key endeavor.
You should listen to the entire podcast, but the points that resonated with me bolstered a lot of what the value proposition mantra has been for all in the LPO arena:
- Saved time from routine tasks to perform more technical, billable tasks in house.
The Big takeaway – pay close attention to the resource(s) being utilized in the LPO. Mr Migner’s comment that it takes work to get them to truly work out for your benefit is important. This cannot be overlooked and treated lightly. Small or large, any legal practice’s best asset starts with its people, and working with an LPO is quite like investing in inhouse staff with the training and cultivation it takes to grow that to be a selling asset.
Technology's Role within the LPO
In the growing world of Legal Process Outsourcing providers, many firms look for ways to differentiate themselves based on their core competencies. I recently had an insightful discussion on the subject with Shobha Srinivas, Chief Executive Officer of Cerebra LPO India Ltd., a division of Cerebra Total IT Solutions based in Bengaluru (Bangalore), India. Cerebra has been in existence since 1992 and has deep roots in Information Technology outsourcing since that time.
Shobha discussed with me her thoughts on the role of IT in the budding world of legal process outsourcing and how her LPO division of the company uses its IT legacy to its advantage. Our discussion also covered how to focus IT efforts on client deliverables, some advice for technologists looking to enter the LPO industry, as well as a challenge to Shobha's LPO peers.
See the full interview HERE.
Everyone has their opinions and they are entitled to them. Funny thing is when you or I broadcast an opinion it doesn’t quite garner the attention as it does for politicians. And at times political opinions gather steam, and if the public’s opinion is also behind it, it could affect the law of the land. One of these movements which strike close to our LPO hearts was brought to the public’s attention last week by New York State Senator Chuck Schumer (D). Senator Schumer’s announcement to propose an excise tax on outsourced call center activity kicked off a debate that may have ramifications for the entire outsourcing industry, including legal process outsourcing. However, contrary to the obvious, my sense is that his proposal is something of a blessing in disguise, for outsourcing in general and LPO could remain unscathed in the long term.
There’s been considerable discussion since his announcement of his proposed $.25 tax on phone calls transferred to offshore call center operations. It would not be a stretch to think that similar proposals could evolve affecting law firms and legal departments who use offshore legal process support. Already critics have chimed in on just how infeasible such a protectionist measure can be. It remains to be seen whether or not his proposal will gather enough steam to make an impact on legislation. Even if it does, it may take further time to evolve into a law affecting legal process outsourcing. But nonetheless, yet another force we have to be cognizant of in participating in LPO.
At one time such a proposal would have really grabbed a lot more headlines than it has so far. And you would think given the “Great Recession” we find ourselves in that it would also be the case now. Besides, it arguably helped Obama on his campaign trail. It helped him with certain sectors of voters. But at the end of the day, economic forces and the need to continue to drive profits in the corporate world wins out. I’d have to think that there are some corporate opinions (and some fat wallets) which may ultimately drown out the Senator’s proposal.
Also, we may look back two or three years from now and thank the Senator for proposing such legislation. Why? Well, because it sparked a familiar debate that in the end may very well confirm what we’ve already learned from the past. When one looks at protectionist movements, they look and feel and sound like a great idea at the time. Our lessons tend to tell a different story. The inevitable at times cannot be forced.
Oh yes, by the way, when is the veteran Senator is up for re-election? Funny how opportunity presents itself doesn’t it?