Friday, December 18, 2009

Legal Process Outsourcing: 2010 the challenges ahead

With the Countdown for 2010 already ticking, it becomes both necessary and desirable to glance at the major events of the year passing by and to assess our preparedness for the year coming. This year 2009 is testimonial to a phenomenal growth in the offshore outsourcing of legal processes wherein majority of deals were with Indian vendors. Freshfields Bruckhaus Deringer, Linklaters, Slaughter and May, Osborne Clarke, Simmons and Simmons, Rio Tinto, Eversheds, Pinsent Masons are a few of the names in news for outsourcing their legal processes to offshore destinations in this year 2009. Infact as soon as they realized that offshore outsourcing is now the next level of globalization and the company's earlier who faced the question of whether or not to outsource were left with the only option to decide now when to outsource, the situation moved from a may-be to a must-be. The offshore outsourcing today is neither a desire nor an option rather it is the support system of all globalizing companies, of all who wish to grow in this ever integrating competitive world. As I often tell my friends in the industry, "One can't do today's job with yesterday's methods and be in business tomorrow".

Since the legal department of most corporations is not a revenue generating department, it is always under constant pressure to cut upon costs and expenses. After big corporations and large-size law firms, the time is now right for the Solo practitioners, small-size law firms (less than 10 attorneys) and mid-size law firms (less than 50 attorneys) to begin with outsourcing their legal processes to offshore locations like India. Amidst their desire to cut upon the back-office costs, they will face low cost deliverable challenges from their competitors and pressure from their clients to provide similar services for lower charges. There is no alternative but to offshore.

Although Contract services, E-discovery and Paralegal support would dominate the legal outsourcing paradigm, but a new market for Litigation Support is predicted to emerge and flourish in the upcoming year. Interestingly, solo practitioners, small-size and mid-size law firms together as a group constitute 90% of US and UK legal market and is also the group hardly outsourcing to offshore destinations. Year 2010 would observe a new market wherein we would see US debt collection attorneys outsourcing preparation of Consumer Complaints, Briefs, and Motions for FDCPA, FCRA, FCBA and TILA violations, social security attorneys outsourcing preparation of FIT, research on GRIDS, De novo appeal before ALJ, bankruptcy attorneys outsourcing intake form fill up and entering of litigation information in Bankruptcy software's, foreclosure attorneys outsourcing preparation of complaints, motion and briefs to offshore destinations like India.

Legal practice predominantly involves large amount of variety documents to be handled. The tedious and time consuming process of gathering the requisite information, completing the proper forms and preparing the necessary documentation, is something a practicing attorney can gladly outsource. For instance, an average US Bankruptcy attorney with more than 5 years of experience has filled hundreds of annoying yet essential forms and templates. No attorney can honestly claim that he doesn't have a basic form or template to work on. By outsourcing the filling of these templates, attorneys get more time to concentrate on increasing client base. Outsourcing to India gives a time-zone benefit where a 5:00pm (EST) outsourced work gets converted into deliverables and is on your desk by 9:00am (EST) the next morning for review. Starting salaries for untrained American lawyers, who may be straight out of law schools, have climbed up to $160,000 per year. Owing to all these and many more fundamental benefits, the Offshore outsourcing of these legal and paralegal services is going to escalate. It would not be wrong in saying that this growth rate is hedged by the very strong fundamentals of this industry and so the chances of fading the pace of the legal services being off-shored and outsourced to India are minuscule. Through continuous training Indian attorneys are more polished and abreast than ever before to cater to most of the legal needs. Additionally, service solutions are accomplished with savings in salaries and Infrastructure (ranging from 1/10th to 1/50th) as compared with US/UK location.

There cannot be denial of the fact that the Indian LPO industry which was worth $61 m in December 2005, is expected to grow by almost 10 folds, nearly to $610 m by 2010. I expect a loud, clear and strong indication for the end of recession to come by 2nd quarter of 2010. 2010 is set to evidence boom in offshore outsourcing of legal processes, however, the test of time will protect only those LPO's who have a strong team protecting the iron cage of quality and confidentiality. Infact in a blog post way back in August I discussed some of these concerns and predictions, which are at this instant a reality.


7 comments:

Sumita said...

Recently ValueNotes published a report on the LPO Industry, which estimated the revenue of the LPO industry to reach $440 m by 2010. Please check www.sourcingnotes.com/content/view/554/1

vakils to lpo said...

My speculations are that with more and more small and mid-sized law firm coming in The revenue would be around $610 m for 2010.

Padmavathi Shanthamurthy said...

You were right in your prediction as well. The Business Standard, one of India's leading financial newspapers, reports that the legal process outsourcing industry "is growing beyond most analysts’ expectations". Read the blog article "Growth of India's Legal Outsourcing Industry is Exceeding Expert Forecasts" posted by my company - SDD_Global_Solutions in its blog - Law_Without_Borders .


Furthermore, a recent PricewaterhouseCoopers survey indicates that a quarter of the top UK law firms are turning to legal process outsourcing, as income for UK law firms in general has gone into free fall. Read the full article at Law_Without_Borders and the survey at PwC_Annual_Law_Firms_Survey

john said...

LPO services are a nascent but growing practice,Legal Process Outsourcing.

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