During the COVID-19 pandemic, corporate legal departments and law firms around the world struggled to meet the new normal’s demands. Budgeting, resource management, and process optimization issues have put pressure on entire businesses. Organizational restructuring and changing legislation have resulted in increased legal spending. Other challenges include cybersecurity concerns, difficulties with remote work, process workflow optimization, and the adoption of new technology.
The global legal process outsourcing (LPO) market, which is predicted to reach US$30 billion by 2027, has surged as a result of this influence. LPO is becoming more popular among businesses because it provides solutions to problems involving people, processes, and technology. A winning partnership with a legal process outsourcing (LPO) provider is often the answer to increasing in-house skills and flexibility while lowering expenses.
What is Legal Process Outsourcing?
The process of a company, usually a legal firm or an in-house legal department of a company, seeking the support of a third party for legal allied services is known as legal process outsourcing (LPO). The process is known as “offshoring” when it takes place in a foreign country.
Since its inception in the mid-twentieth century, LPO has grown considerably, and it is now a dominant business, with law firms in the Global South exporting legal services to typically white-shoe law offices in affluent countries at a much-reduced cost.
Why Does LPO Matter?
The market size says it all. It is estimated that global spending on legal services outsourcing was over $690 billion in recent years, with the United States and Europe accounting for about 60%. This implies the high demand for legal services, with corporations and law firms seeking an alternative strategy to manage large volumes of work while keeping costs low and profits high. Opting for Legal Process Outsourcing (LPO) is increasingly become a norm today, as key legal duties are taken care of by an external counsel, by adhering to specified parameters and timelines.
Among the leading outsourcing countries, India has the advantage of a large pool of English proficient lawyers trained in the common law. Hence, it is hardly surprising that India is expected to account for USD 11.01 billion of the worldwide Legal Process Outsourcing (LPO) requirement by 2025.
The Need for LPO
Today’s business dynamism has catalyzed complex service delivery requirements across business units. This has intensified the challenges encountered by corporate legal departments, which are in need of evaluating and implementing LPO solutions. The following are some of the reasons why law firms should consider outsourcing their legal processes:
- Costs: Due to increased regulations and litigation expenses, corporate legal spending is soaring. As a result, companies are seeking methods to save legal costs, and legal departments are being challenged to figure out how to be more effective and efficient.
- Process & People: Legal departments have struggled to create a comprehensive corporate project management capability as well as the tools needed to manage their projects effectively. Approaches to service delivery that was successful in the past for corporate legal teams are no longer adequate to achieve the vision and criteria for the future.
- Technology: With an increasing demand for technology and tools to streamline legal work increases, companies are confronted with the problem of developing such tools internally or engaging an external provider to give an end-to-end or best-in-breed technology solution. In areas like legal matter management, document review, billing, legal word processing, and contract management, legal departments still lack automation and integrated technology solutions, further depleting expenses and resources.
To overcome these issues, corporate legal departments are increasingly resorting to legal process outsourcing. This decision proves to be worthwhile for corporate legal departments, by helping them overcome many of these issues with the merits covering the areas of people, process, and technology.
Industry Trends for LPO
According to legal industry trends for 2020, law firms are expected to deliver value to their clients beyond the traditional services and support. As firms struggle with rising legal costs, legal process outsourcing is considered a lucrative alternative. As a result, there is a growing emphasis on exploring legal outsourcing services as a viable solution. To stay competitive and profitable, more law firms are turning to legal outsourcing. Case in point, the global legal process outsourcing market is expected to develop at a compound annual growth rate of 31.8 percent between 2019 and 2025.
Several other studies have strongly indicated the incredible growth of LPO as an industry:
- According to Thomson Reuters and the Georgetown Law Center for the Study of the Legal Profession, the annual spend on legal process outsourcing, e-discovery, and document review services amounts to $6.2 billion.
- The study furthermore has unveiled that contract attorneys, in-sourcing, and staffing services account for $900 million in annual expenditures.
- As per Research and Markets, between 2019 and 2025, the litigation support segment of LPO is forecasted to register a CAGR of over 34.0%.
The demand for LPO services is being bolstered by changing regulations and the bolstering of business activities. With the ultimate goal to expand the customer base, law firms of all capacities are expanding their boundaries, and outsourcing partners have been enabling them to achieve their business targets well within their budget.
While there are several aspects to legal services outsourcing, e-discovery has been making a substantial contribution to the industry’s growth. Owing to the increase in demand, outsourcing companies have adopted two major approaches to deliver the best quality in e-discovery: (i) provide end-to-end services by collaborating with partners (ii) build an indigenous e-discovery technology solution. The providers have been constantly reinventing their offerings to provide niche specialization and an intensive quality control mechanism to deliver impeccable, cost-efficient services.
Benefits of Legal Process Outsourcing
In-house consulting has numerous advantages, but it eventually hits its limits due to the increasing density of rules across many sectors. The deployment of outsourced legal experts as part of legal process outsourcing can indeed deliver a decisive competitive advantage. It improves the internal team’s capacity, efficiency, and overall performance, a key driver for business growth. This reality has been reaffirmed by the 2019 Altman Weil Survey – “62.1 percent of law firms report that outsourcing work to contract lawyers have resulted in significant improvement in company performance.”
While there are numerous benefits of legal process outsourcing for law firms and in-house legal departments, the major ones are:
- Effective cost-cutting
- Access to extensive legal expertise
- Reduce turnaround time
- Expanding the practice area expertise
- Flexible staffing for each of the client cases
- Access to new technology and exclusive talents
- Embrace business innovation & transformation
- Finding work-life balance
Which legal services to outsource?
Before outsourcing any work to a third party, you must first determine which of your legal department’s most crucial areas might benefit from standardization. So, which legal services are best suited for outsourcing?
The following legal processes are frequently outsourced to professional service providers:
IT and Administration: The complete information management services, such as data collection & extraction, data entry, and billing review processes are often outsourced to third-party providers.
E-discovery for easier document review: The tedious process of scanning, coding, and conducting document reviews is now outsourced to harness a large pool of lawyers and cost-efficient services.
Contracts: With an exhaustive Contract Lifecycle Management (CLM) to be dealt with diligently, from creation, negotiation to approval, outsourcing is the way to go.
Besides, legal research and drafting, intellectual property (IP), pre-compliance monitoring and implementation, multi-jurisdiction risk assessment surveys, drafting deposition summaries, leases, wills, trusts, powers of attorney, agreements, legal articles, demand letters, and other correspondence, and corporate documents are all examples of significant outsourced legal work.
What outsourced legal services are the most beneficial to a law firm and how do select a legal outsourcing provider?
Your LPO service provider should preferably provide custom solutions that address legal issues holistically. So, how should a company choose an outsourcing partner? By assessing the need for LPO and looking into legal work outsourcing options that match your requirements.
So, how should a business choose an outsourcing partner? Consider the following factors before making a decision:
- What level of expertise does the vendor have in your domain?
- What technological capabilities do they have in LPO?
- Is there a team of subject matter experts in-house at the service provider?
- Is the outsourced process capable of delivering long-term, tangible efficiencies?
- What methods do they use to ensure data security and confidentiality?
Comprehensive LPO services with Cenza
Cenza adds value to legal firms through products, services, and solutions that provide a wide range of LPO benefits, including enhanced flexibility, cost savings, AI-integrated tech solutions, process ownership, and consistency in quality. More importantly, the utmost security to your enterprise data with our ISO certified information security system.
Talk to our experts about legal process consulting services and technological solutions that can help you achieve long-term goals. Create a more profitable business with legal process outsourcing.