Legal Process Outsourcing or LPO as it is popularly known is a practice through which law firms seek legal assistance and services from another law firms from either within or outside their own country. The kind of services sought by the firms outsourcing are legal research, writing legal documents, review of documents, drafting of pleadings, contracts management, litigation support, document discovery, Intellectual Property focused services and patents services (patent prior art search, patent portfolio management, patent optimisation and patent/trademark filing processes).
LPO has become a compelling option for most companies in the west. Law firms in the US and the UK have seen the worst economic fallout in the past few years. As a result they have started looking for options to reduce their costs. Legal services are very expensive in the US and the UK with hourly rates for lawyers and consultants touching the roof. This has helped countries like India and Philippines in getting a lot of legal work from abroad. The LPO market was valued at $320 million in the year 2008 by Value Notes research and is likely to touch $640 million by the end of 2010. Pricing has been the key driver for legal firms wanting to outsource.
Though legal work in India and other major outsourcing hubs has grown in the past couple of years, there have been a few challenges as well. Some lawyers in the US and the UK have started compromising on their fees due to the economic meltdown. Some fledgling companies doing legal work in countries like India have not been able to deliver as promised. This has resulted in many companies in the US looking for legal firms within their country to ensure all processes involved are ethically followed. Besides, there are concerns looming large over the confidentiality of clients and the ethical composition of the outsourcing firms.
India has become one of the most popular destinations for companies wanting to outsource legal work. This is so because there are certain very obvious advantages like availability of English speaking, US and UK graduated, qualified attorneys working at less expensive rates. Besides the Indian legal system is much like its counterparts in the west. The other major LPO hubs are in Japan, France, Australia, South Korea and China. Some companies are also looking at setting up their own establishments in these countries to save costs. For example, SDD Global Solutions is the only US law firm that is operating its high-end legal KPO services centre in Mysore, India. They have managed to cut down their setting up costs by nearly 43 times by doing so in India. Companies in Hollywood such as HBO, Sony Pictures, MTV networks, ABC and Twentieth Century Fox have outsourced their legal work to SDD in India as this reduces their costs to just 10% of what they would pay attorneys in the US and the turnaround time is less.
Legal process outsourcing is a major chunk of the outsourcing pie. Though there are limitations and challenges surrounding this, we can expect only growth in this sector. If large and experienced BPO companies manage to work on the ethical and quality aspects of this vertical, we can expect unprecedented growth in the coming years.