Legal outsourcing, also known as legal process outsourcing (LPO), refers to the practice of a law firm or corporation obtaining legal support services from an outside law firm or legal support services company (LPO provider). When the LPO provider is based in another country, the practice is called offshoring and involves the practice of outsourcing any activity except those where personal presence or contact is required, e.g. appearances in court and face-to-face negotiations. When the LPO provider is based in the same country, the practice of outsourcing includes agency work and other services requiring a physical presence, such as court appearances. This process is one of the incidents of the larger movement towards outsourcing. The most commonly offered services have been agency work, document review, legal research and writing,drafting of pleadings and briefs, and patent services.
Benefits of Legal Outsourcing
Legal outsourcing may be a great way for a busy attorney or law firm to handle complex or time-consuming projects on a more affordable budget. Solo practitioners, small firms, and boutique law practices can take on cases that would otherwise be too large for them to handle. Midsize and large law firms can make their billing rates more competitive by obtaining subcontracted legal services at a dramatically reduced rate. Firms that use legal outsourcing find that it provides all the benefits of having associates and paralegals who perform research and document review but at a fraction of the cost and without full-time employees.
News Spreads Quickly
The downside to this trend for law firms is that lawyers are not the only ones who know about legal outsourcing. Many Fortune 500 companies have taken notice of the cheap billing rates for lawyers overseas and cut out the middleman (the U.S. firm) in favor of dealing directly with the legal outsourcing firms. Restrictions on unauthorized practice of law are avoided by simply having the U.S.-based in-house counsel or a local law firm review and approve the outsourced work.
In an interview with the Metropolitan Corporate Counsel, Jane Weir, director in the forensic and dispute practice of Deloitte Financial Advisory Services LLP, said that the economic downturn motivated companies to look at how much they spent on legal services in a search for ways to reduce costs. She believed that law firms will also seek out LPO vendors as a way to reduce costs and manage data for their clients.
This phenomenon has been a part of the legal experience since the 1950s, where it was restricted only to patents.Later, firms began to contract certain services to back door firms. The process of subcontracting part of the legal process to different countries is at a nascent stage, with relatively consistent market growth. Legal process outsourcing has predominantly been to countries that had previously taken advantage of the business process outsourcing wave. LPO providers have established themselves in Canada, India, the Philippines, the United States, Israel, and Latin America.
Legal Outsourcing usually comprises of paralegal and research support, contract drafting and revising, contract management, library services, patent, trademark and prosecution and litigation support.
In the current economic climate, corporate law departments are not alone in having their budgets progressively tightened. Whether through an innovative sourcing strategy or shared services, a variety of methodologies have emerged which enable the legal departments to control costs and improve efficiency. Legal Process Outsourcing is the most substantial out of them all.
A number of U.K companies, including members of the Fortune 500 and some of the country’s largest law firms, are now embracing the idea of outsourcing routine legal business to India, South Korea, Australia and other locales that offer far lower labour costs. Leading Magic Circle firm Clifford Chance has outsourced some of its routine legal business work, such as document processing, to Integreon, an Indian law firm. General Electric has set up a subsidiary in India that employs about 30 lawyers. Sensing an opportunity, a handful of companies have sprung up in recent years, both in the U.K. and abroad, that sell outsourced legal services.
LawScribe, Allen & Overy, Linklaters, Lovells, Clifford Chance, Eversheds and Underwoods are just a few of the law firms that have embraced Legal Outsourcing. The pressure to improve business development and lead generation, whilst associate wages and property costs continue to soar, means that interest in outsourcing and off-shoring amongst British law firms will only grow.
In recent years the global spending on legal services has been estimated at over 170.75 billion British Pounds. With such demand for legal services, corporations and law firms need to handle large volumes of work, whilst keeping costs in check and maintaining profitability. This is where Legal Processing Outsourcing comes into the picture, where core legal functions are delegated to external counsels who complete the assigned task on the basis of set parameters and fixed timelines.
The entire legal profession has undergone a dramatic shift with the advent of law professionals focusing on legal outsourcing. LPO is not just a fad or a passing phase. The trend has shifted from domestic law firms, to an increasingly competitive global marketplace with massive scope and job opportunities. The clock is ticking fast and in time LPO will be a much sought after industry to work with.
So much for calling Legal Outsourcing a passing craze! We believe it’s here to stay.