When we look at the legal profession, one of the growing trends would have to be Legal Process Outsourcing (LPO). This is the use of outsourcing companies for various legal services. LPO covers anything from the hiring of legal research firms to handling of temporary legal projects by personalities other than the lawyers who were actually hired for the job. What is the impact of outsourcing in the legal industry?
Reshaping the Legal Industry
We see legal professionals strategically positioning themselves to ensure that they survive potentially ailing economies. The emergence of outsourcing in the legal industry is one of the trends that is helping the law firms to become more efficient, competitive, and productive in the context of global markets.
Outsourcing is seen as reshaping the legal industry in terms of the delivery model used for legal services. LPO basically transfers the work that lawyers, paralegals, and similar legal professionals do to external vendors that can exist either locally or overseas.
Onshore and offshore outsourcing impacts law firms because of its ability to minimize the costs, expand its capabilities, and increases flexibility. For busy lawyers or law firms, outsourcing gives them the luxury of handling complex or time-consuming projects without having to spend much of its budget.
Regardless of the size of law firms, it cannot be denied that outsourcing can make them more competitive through the use of subcontracted legal services. Law firms that decide to rely on legal outsourcing can make use of full-time employees for business critical operations without affecting its efficiency.
Legal Outsourcing Trends
Strategic planning is critical in any industry and this holds true even for the legal profession. To be able to do this, it is important to be aware of key industry trends as they unfold. It is therefore important to take note that LPO is one of the growing fields in the legal industry.
A research estimates that the LPO market can reach up to $8.6 billion by 2020. There was a time when LPO would be a virtual unknown in the legal profession. Today, it is influencing not only the path of the legal profession, but also that of legal education. What trends are associated with LPO?
As LPO continues its growth, the stigma that is associated with it will eventually shrinking to nothing. The misconceptions about security and quality are slowly being corrected so much so that the benefits that it presents are being embraced and appreciated by more law firms.
The continued growth is anchored on the ability of LPOs to increase efficiency, open new markets, provide competitive advantage, and reduce costs. The tasks that are traditionally handled by junior associates are being carried out by LPOs from various locations.
The bottom line is effectively delivering the needs and wants of the clients. By working for an LPO, young lawyers will be able to receive valuable experiences that can further their careers. How acceptable is outsourcing in the legal industry? It has reached a point where it is officially supported and acknowledged even by the American Bar Association.
It should be pointed out that outsourcing in no way excuses lawyers from properly performing their responsibilities and ethical obligations. It is necessary for LPOs to understand the expectations and be prepared to meet the growing demand for their services. The expansion of LPO infrastructure and services makes it attractive for legal talents and supports the trend of continued growth.
Streamlined Legal Operations
Outsourcing can help law firms prioritize the creation of robust legal operations. With the scope of legal operations ballooning over the last decade, there is a need to ensure that waste is reduced while efficiency is increased. There are no signs that this demand imposed on the management of legal departments would die out soon.
It is estimated that about a third of general counsels of Fortune 500 companies have employed the services of legal operations managers during the last decade or so. The presence of these legal operations managers have given them significant influence in corporate legal departments. This includes reporting directly to the general counsels as well as being given titles of senior managers inside the company structure.
The vital job that these legal operations managers perform include the deconstruction of legal processes and even the determination of tasks that can be kept in-house. The tasks that will not be retained are those that can be supported better by the deployment of legal outsourcing initiatives.
With the many benefits presented by LPOs, it is not surprising that it is gaining increased popularity; something that is shared even by hybrid onshore and offshore outsourcing providers.
For many, the concept of outsourcing translates to sending of job responsibilities overseas. This concept is not entirely true or accurate. The outsourcing model of today is no longer characterized by simply the reduction of overhead of law firms. Outsourcing has taken the shape of holistic examination of processes in an attempt to find the most efficient way to create workflows and get the job done faster.
In this context, resourcing enters the equation with hybrid outsourcing models effectively combining the elements found in both onshore and offshore providers. One of the key reasons for its popularity is that it can support work to be done around the clock or what is commonly referred to as the follow the sun workflow.
This means that when one delivery center completes its allocated work, it will then be passed on to the next delivery center to ensure continuity. The handing off process can be from one onshore center to an offshore center and back.
The popularity of hybrid outsourcing can also be traced to the fact that onshore centers give clients the option of exporting control regulation or the data privacy requirements of data. This is done to maximize the efficiency and cost saving benefits that LPO firms can deliver. Currently, there are a number of LPO firms that can provide hybrid onshore-offshore models to law firms.
In the 2016 Chief Legal Officers’ (CLOs) survey, over three quarters of CLOs agree that the amount of work that is outsourced can either stay the same or increase over the next few years. If this is to be believed, then outsourcing in the legal industry will definitely continue on.