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Estimated Trends in Legal Process Outsourcing (LPO) for 2010 and Beyond

By Jack Lesley Jr

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Published: 30Jul2009
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Legal process outsourcing is a hot new trend in the legal field that allows law firms and corporations to obtain legal support and services from law firms and services in other countries. This process has grown substantially in the past few years within the United States and the UK, and offers a great way for companies to get the services that they need, including document review, legal research, patent services, and drafting of pleadings and legal briefs. Countries like India and the Philippines have proven to be very successful in this area, offering their services to anyone who needs them. The purpose of legal process outsourcing is to cut costs and have the same quality of work done for less money. So far, it has been a successful endeavor.

What is the future like for LPO? While some of the largest firms and corporations in the world are using these services to handle their legal needs, will it hold up? The services offered are very effective and affordable, but what will happen in the years to come? Specifically speaking, the trends for 2010 and beyond in the legal process outsourcing industry are of a key interest. Attorneys and law firms within the U.S. and other major markets often charge $150 -$350 an hour for services like the ones offered by outsourcing entities, which can do the same work at a fraction of the cost. As such, it is estimated that the field will continue to grow and thrive, but there is never a certainty in this market.

The work done by outsourcing services in the legal field is mostly work that is time-consuming and chore-like for the U.S. and UK based firms that seek out these overseas services. Legal process outsourcing providers have the advantage of providing a broad spectrum of services and being exposed to new theories, the best practices, and the latest laws and defenses available because of the work that they do. Some of the services offered by LPO companies include:

1. Case management, which includes the collection and review of documents, along with providing answers to client questions
2. Legal research, which is time-consuming and laborious for U.S. firms to handle on their own
3. Medical records reviews
4. Billing management
5. Patent services
6. Contract management
7. Expert witness services, including those who serve as witnesses and consultants in various matters and who can provide reports and expert testimony in Federal and State court trials and legal proceedings

Many other tasks that are time consuming and expensive to have done at home are also assigned to these LPO services on a firm-by-firm basis. There is very little limit to what these companies can and will do for law firms and corporations, if only they inquire about what services can be given.

Legal process outsourcing is not without its flaws and critics. One of the biggest points of concern for many is the potential confidentiality breaches that can take place. People who are performing these services overseas may or may not be bound to the same ethical standards and code that U.S. and UK based lawyers are subject to, which can cause conflicts of interest. The American Bar Association recently offered its own ethics opinions that laid down a framework that would allow for ethical LPO services across the country and around the world.

While confidentiality is a major concern, it’s going to be a matter of choosing the lesser of two evils in many cases. This might be taking valuable work away from the country’s own lawyers and legal advisors, and it could potentially cause a conflict of interest within the ethics and confidentiality area. However, legal process outsourcing provides many law firms a way to get the services that they need at rates that they can afford, which is often a critical issue in these tumultuous economic times.

The work is cheap, which is why many firms choose this method for their legal needs. The steadily decreasing rates of LPO services in India are a large area of concern, because the quality and value of the services might be in jeopardy if the rates become too low. When the world revolves around getting what is paid for, how can anyone expect quality services when they’re paying next to nothing? Many people claim that they know quality when they see it, but others feel that talents should reach farther than legal skills and provide U.S. specific and client/service/project specific training.

This service gained its popularity because it was affordable. When clients can get rates of $20 to $50 per hour for various legal services, rather than paying five times that with U.S.-based services, what is there to lose? In the future, the legal process outsourcing field is projected to grow significantly, allowing for people to find everything that they need outside of their own country.

The legal process outsourcing industry has driven a revenue growth of 495% in 2009 alone. In response to increasing legal demands such as foreclosures and bankruptcies, the industry has been a popular choice for many in recent times. Forrester Research, which is an independent market research and technology company, forecasts that the LPO industry will create more than 79,000 jobs by 2015, all around the world. A small number of U.S. Census Bureaus also estimated that more than $184 billion in revenue generated by the legal services industry in the U.S. would generate more growth and job creation for legal process outsourcing services and providers.

Another independent market research firm, ValueNotes, estimates that LPO revenues will grow from a projected $640 million in 2010 to more than $4 billion by 2015, which is a big jump in revenues for this fairly new industry. Like many other types of outsourcing that have been practiced by U.S. companies for decades, the LPO industry simply works by taking the ‘chore work’ that legal firms and services have and sending it to providers that can do it for a much more affordable rate, and still provide the same high quality service and confidentiality that is needed in handling legal paperwork and proceedings.

It seems, due to the current research and projected forecasts, that the estimated trends for legal process outsourcing are quite good. The industry has grown nearly 500% in revenues in 2009 alone, and is projected to be an industry worth well over $4 billion by the year 2015. In a time when everything needs to be affordable, many law firms are looking to hand these various services off to someone who can do them properly, but for much less than professional services offered in the U.S. or the UK.

It is a race to see who can do things smarter, faster, and more effectively in order to see the most growth in their own businesses. Law firms are essentially handing off the tedious, chore-like work to services that can perform the work properly and affordably, while maintaining their own abilities to focus on their clients and other more important aspects of their legal firm or corporation. Considering all the new services being developed and the increased popularity of this type of service acquisition, it appears that legal process outsourcing has a very promising outlook for the next five years at least.

Jack Lesley is currently CEO of Houston-based Secure-Firm, an IT consulting firm with a focus on Legal IT. He has over 22 years experience in the information technology industry.

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