According to the newly published survey, “Future of Legal Process Outsourcing (LPO), 87% of in-house counsel noted that it is more difficult to manage legal risks related to company data than compared to five years ago. Additionally, 69% of those surveyed say they have seen an increase in spending on managing legal risk and compliance over the last five years. The survey was conducted by UK legal journal Legal Business in partnership with Clutch Group in December 2013 and received responses from over 200 senior in-house lawyers in the UK, Asia, and the US.
The Legal Business survey also revealed that LPOs have a large role to play in helping companies tackle large data and help companies mitigate risk. Highlights of the survey include:
*80% of respondents say they expect to see the Legal Process Outsourcing industry expand and improve its services over the next five years.
*58% of respondents say that LPOs and law firms need to work together on compliance and risk matters.
*37% of in-house lawyers say that LPOs are better equipped than law firms to use advanced technology and to use data and risk analytics.
*In-house counsel are using LPOs primarily for investigations and due diligence exercises; general litigation support and eDiscovery are close seconds.
*The UK LPO market is less developed than the US: 38% of UK-based respondents say they have used LPOs for legal work, compared to 50% in the US.
*An increase in the level of civil litigation is seen as the biggest driver behind rising legal costs. Greater scrutiny from regulators is close behind.
According to Alex Novarese, Legal Business’ Editor-in-Chief, “Our survey demonstrates the tremendous challenges and pressure facing today’s in-house counsel. From rising costs to exponential growths in data, in-house counsel are looking for efficient and cost-effective strategies to manage these new realities. If alternative providers can satisfy blue-chip clients – and a sizeable group of clients report that they do – they will keep moving up the value chain.”
These survey results and comments are in line with a number of expert predications that the next five years will see new market disrupters that begin to change the fundamental nature of legal service delivery. These new LPOs will not just focus on lowering the cost of legal services, but will try to reinvent the model altogether. There will be continued experimentation in developing new platforms for delivering legal services that will allow in-house counsel to focus on high level advisory work rather than routine assignments work. In all, the future looks bright for the LPO industry.
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The most popular Legal Process Outsourcing (LPO) destinations include China, Israel, Philippines, Sri Lanka and, of course, India. For a decade, India has reigned as the world’s premier outsourcing destination because of its favorable time zone, the better quality of experts from the country, foreign educated professionals, language and the similarity to English common law systems. Despite India’s supreme reign, LPO is moving beyond India’s borders into new countries and with new strategies.
As the LPO industry matures and expands, corporate legal departments and law firms alike are becoming more open-minded about the types of legal processes to outsource and where their LPO providers are located. The trend today is to think about outsourcing in its broadest terms as “to outsource any legal work — including from one law firm to another law firm — in any geographical location, for example from the UK to Kenya, India to Uganda and so on.”
This new mindset is leading to a surge in new destinations and operating models for LPO work. Examples of new LPO locations include the UK, Chile, Ghana, Jamaica, Poland, Romania, Russia, South Africa, the Philippines, and Vietnam. These regions share several important attributes: they offer a rich pool of multi-skilled talent with a high work ethic. They also have cost advantages, sound IT and telecom infrastructure, good connectivity, ease of travel, government support, business-friendly policies and cultural compatibility.
Relocating Legal Process Outsourcing
The concept of “near-shoring” is also gaining global acceptance. The term describes any outsourcing location “near” its primary market (for instance, Eastern European countries to Western European Countries), or as services delivered from an adjacent or nearby country. The near-shore outsourcing model offers a number of benefits equal to the offshore outsourcing approach. The primary benefits include:
*Proximity and Time Zone
*Cultural Affinity and Ease of Doing Business
Although near-shore rates can be higher, near-shore engagements offer greater efficiency gains that working in close proximity and in the same time zones can bring. Therefore, near-shoring can be more efficient in achieving higher percentages of work performed at a lower cost location than offshore. Thinking past simple labor arbitrage, companies that engage in long-term engagements, measured by strategic service level agreements, can better leverage the advantages of the near-shore model.
The near-shoring trend illustrates the value of LPO beyond simple cost-savings. With the huge global potential that near-shoring presents, LPO will be more widely adopted as a flexible, effective strategy for delivering legal services to a global business community.
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