Growth of Legal Process Outsourcing
February 5, 2009
Legal Process Outsourcing, LPO is a growing trend among US and UK companies for the past couple years, now with the current global recession, business mergers and Bankruptcy filings accelerated the growth of LPO to countries like India, Philippians, South Africa, etc.
The democratic controlled US Congress and President Obama’s White House will put new regulatory policies and legal requirements on the major US corporations which will create more legal work for US companies and this fill further fuel the growth of LPO services. The legal cost for attorney’s fees and paralegal professionals is also playing a vital role in companies seeking help from offshore LPO vendors. Lawyers in US charge from $50 to $1000 for an hour and in offshore locations the legal professionals fee ranges from $10 to $50 for an hour. Of course, the $1000 rate is for lawyers those who have specialized skills and those jobs will stay in US at least for now, but the $50 legal jobs are being outsourced to offshore locations. As you know the hourly rate is not the only cost LPO vendors has to incur, they need to have US trained lawyers manage the work done by the offshore legal professionals. With all the expenses, LPO firms are charging on an average of $30 per hour, which is significantly lower than the US average.
Though LPO firms can offer higher value LPO services at present mostly lower value LPO work has been outsourced due to LPO industry maturity and very few LPO companies are offering the services. Most of the offshore LPO vendors are trying to figure out how to market their services, Is it the labor arbitrage they can offer to their customers or can they offer strategic value to their customers through higher-end Legal services? At present labor arbitrage is the main motivation for customers to seek LPO vendors and marketing it works well for several small LPO vendors like AZB & Partners, Lawwave, etc.
Following are the services most of the LPO vendors are offering:
- Contract Management
- Legal Document Review
- Preparing Deposition Summaries
- Litigation document management
However, like BPO, as the LPO industry matures more offshore vendors will start offering higher value legal services like:
- Legal Research & Analysis
- Patent Drafting
- Legal Auditing
- Contract Drafting
One of the major concerns for the US and UK companies to use offshore LPO vendors is offshore security and confidentiality of their customer’s data in offshore locations. Though several LPO vendors like Quislex, Mindcrest etc, have ISO/IEC 27001:2005, Information Security Management certification (ISM) and ISO 9001:27001 Quality Management System (QMS) certification, still it is one of the major concerns for companies to embrace offshore LPO. Also issues like Satyam scandal will definitively affect LPO growth in US and UK.
While the global recession is hitting hard on several companies including offshore outsource vendors, LPO market is reaping all the benefits as the companies want to cut down cost by outsourcing their legal work to lower wage countries. Recent survey suggests that US companies will spend $2 Billion by 2013 on LPO, LPO vendors who have good marketing team and address customer’s security and confidentiality concerns can gain significant market share for the next several years.