Legal Process Outsourcing’s Point of Inflection
July 22, 2010
Author: Sanket Purani –
Depending on what you are reading and who you are talking to it can be unclear whether or not legal process outsourcing is making true headway in the legal industry. A report on some sites surfaced this week which discuss apparent reluctance to sending even simpler legal tasks offshore. The Lawyer reported how Integreon’s operations both in Fargo and in Bristol was cost prohibitive to the firm’s operations since clients do not prefer the LPO to send any work overseas. It’s quite interesting that the LPO’s clients, who give their business to Integreon, want the provider to perform work onshore rather than reap benefits of the lower cost offshore model which they signed on to profit from in the first place. Is this a trend in legal process outsourcing which has been largely synonymous with transmitting work overseas to the lower cost centers in India, Philippines and beyond? Or rather, does this story reflect the eve of an inflection point that will breed LPO differentiation to new service delivery models moving forward?
The reason for the differentiation question lies in the case seen in the Integreon story. Providers will adjust and offer service as dictated by their clients – when it makes sense. It’s a fact of doing business. Otherwise turning your back on clients doesn’t bode well for your future business, and in turn helps your competitors who adjust and offer accordingly. But does this story actually make sense – to essentially abandon the offshore model which is the foundation for the cost savings and is at the heart of the law firm attraction to LPO?
Onshore arms do make sense to the LPO model if the delivery model finds a way for it to make it economically viable. Paying up to 90% of revenues to onshore salaries does not, but it could if fees could be raised to justify the overall service being provided. Or perhaps volumes will allow them to achieve economies of scale thus pushing them into the black. But this does call for another look at the overall legal outsourcing value proposition.
Cost savings, increased productivity, access to back office capacity – and the list could go on – but these are some of the driving forces behind the value of legal process outsourcing. However we’re witnessing a transformative period for the industry if the offshore reluctance holds true. It will, if it hasn’t already, cause legal process outsourcing providers to ask themselves how they continue driving their operations and maintain the value to the client. The answer will lie based on their internal capabilities, their ability to react, and most importantly their innovative view of the service model. The ‘winning’ model will achieve greater inroads in improving the central word of the industry name; Process. The industry as a whole must improve the process in which it interacts with clients and delivers their work products.
No matter the industry, business process exists in one way or another, and it in fact is almost always enhanced through the implementation o f technological solutions that make life easier for all those involved. It requires studying the end-to-end process between client and provider, and determining the areas of pain and opportunity to marry up with new tools, perhaps not yet envisioned. The fact is that technology has undoubtedly facilitated the LPO industry, but this inflection point is calling for a push to the boundaries of what technology will do for LPO’s maturity in the face of client demands for onshore support. More mature, cutting edge platforms coupled with some level of onshore support must contribute to the value proposition and offer a complementary service to the overall offering of the provider.
If pieced together properly, the suite of services that the LPO provides may in fact dictate higher fees through the realization of increased service value. Or it may just at least maintain legal process outsourcing’s cost competitive edge. Either way it will create a factor of differentiation between pure play LPO providers who compete solely on cost, and those providers who seek to stand apart from the pack and offer an innovative approach to legal outsourcing.