LPO Data Security
October 25, 2009
Notwithstanding the hype created over Legal Service Outsourcing (LPO), Value-Notes, a Pune-based consultancy in business intelligence and research recently published a survey of top US-Based law firms that revealed that nearly 50% haven’t heard about LPO; 36% think they do not require the service; 10% had tried and tested the model and did not find it suitable for their needs; while only a minuscule 4% declared they might use in near or distant future.
This despite the fact that cost saving is the still the biggest driver for LPO, as much as 30% to 50%, according to various market sources. Small wonder that the number of LPOs has trebled over the past three years with an equivalent increase in revenue. The LPO segment is poised to cross $6 billion by 2010 and touch $15-$20 billion by 2015, according to another analyst.
Now the hurdles. The biggest is a concern for offshore data security. Nearly 79% respondents to the Value-Notes survey cited it was the top concern on their minds. Another 71% were concerned about the end quality of work; 64% were worried about breach of client confidentiality, which is another threat linked to security breach; and just about 21% were overtly concerned about cultural compatibility with the vendor.
Another interesting finding of this survey was that services that are easier to process-ized are among the easiest to outsource.
Typically, smaller law firms are more opportunistic and quick to outsource their legal support services to a low-cost remote vendor; which larger firms are more driven by economies of scale and the cost factor in their outsourcing decision.
The bitter truth however is that concern over data breaches still outweighs the main drivers, which is why, legal support service accounted for only 30% of the $212 billion legal services market in 2008, according to the Value-Notes survey.
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Companies must do proper due diligence in selecting the LPO vendors before outsourcing their work. They must have proper governance in the outsourcing process. If so then they can succeeded in their LPO projects.