The legal process outsourcing (LPO) business is witnessing a surge, thanks to the rise in the number of legal cases in developed countries hit by recession
Recession might have come as a blow globally, but for the LPO industry it’s an opportunity never seen before.
Bankruptcies and litigations have increased manifold, and so has become bailout packages from governments leading to significant rise in regulations. All these have fueled the need for legal works, and the direct beneficiaries are the LPOs.
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The LPO business, however, is not just about employing lawyers. It does involve technology and marketing in the base countries, namely, the US, the UK, Japan, etc. With an advantage in technology and knowledge of how the outsourcing industry works, BPOs and ITOs have turned out to be the worthy forerunners to the LPOs as far as technology is concerned. Some BPOs have actually taken to it on seeing the huge gains waiting to be tapped. Some of the big names of the LPO industry include Pangea3, Clutch Group, Integreon, CPA Global, and Mindcrest.
LPOs have emerged as a perfect solution to the in-house legal departments of large multinational corporations and law firms looking to cut on their legal costs. They employ highly qualified, skilled, and motivated legal professionals in India to accomplish low-end, standard, and less sensitive legal tasks outsourced to them. The benefits are mutual. While the US- or UK-based legal firms and multinational corporations manage to reduce their legal expenditure by almost 50 to 80 percent, Indian lawyers employed with the LPOs earn much more than they would if they practice in Indian courts on their own.
What has helped the cause is that legal systems of both the US and India have their origin in the UK legal system. Most of the LPOs do employ or work in association with British and American lawyers. They are the ones who provide additional training, most often in legal writing style, to the lawyers employed by the LPOs. For senior lawyers from the US, this association has come as a huge relief from the grueling task schedule, ensuring better remuneration at the same time.
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| The market size of LPOs in 2006 was $146 million and by 2010, the industry would be worth $640 million. -- Abhi Shah |
Most of the legal outsourcing takes place from the US and the UK, though other European countries and Japan have also stated doing the same. India has managed to emerge as the biggest destination of legal outsourcing, but countries like the Philippines and South Africa are also trying to take a pie out of the business, thanks to their comfort with the English language and the similarity of their legal systems with American and British ones.
The market size of the LPO business is anyone’s guess. Estimates vary from $40 million to $150 million. However, there seems a perfect consensus about one aspect — bullishness of the industry. By 2010 it is expected to reach anything between $640 million and $1.5 billion. Some enthusiasts say that by 2015 the size of the industry could be as big as $15 billion.
Reasons for increase in business
Recession and the desire on the part of legal firms and multinational corporations, particularly based in the US, to cut costs has turned legal outsourcing into an industry. It was encouraged by resolutions passed by some of the state bar councils in the US supporting such outsourcing.
Abhi Shah, co-founder and CEO of Clutch Group — the company named as the number one among LPOs in the 2008 version of The Black Book of Outsourcing – says recession has opened new vistas for LPOs in four different areas — litigation, compliance, bankruptcy, and foreclosure. For instance, bankruptcy of Lehman Brothers alone has led to litigation worth $1 billion.
Indian LPO companies have managed to impress outsourcing companies by embracing professional management skills and providing services matching American standards. Sanjay Kamlani, Co-CEO, Pangea3, says, “Legal talents in India have learned to implement Six Sigma tools and other methods to ensure consistent quality delivered in the most efficient manner.”
Corporate clients seem to be in the process of adopting backend legal outsourcing into their business models, as Kunoor Chopra of LawScribe says, “What I found very interesting is that corporate clients are now introducing us to their panel counsel because they want the law firms to seriously build offshoring into their business model.”
Outsourcing of lowend legal tasks is reducing the costs of LPOs by as much as 50 to 90 percent. Shah says the top 200 associates charge more than $300 an hour, whereas partners and senior lawyers charge close to $1,000 an hour in the US. LPOs, on contrary, charge anything from $32 to $100 an hour. Outsourcing to India provides higher savings as one moves up the value chain in the type of work outsourced, Chopra reveals. For secretarial type transcription or data entry work, savings are around 30 percent, she says, but as you move into litigation, corporate, and intellectual property support work like document and contract review, drafting, patent searches, illustrations, and applications, the savings increase from 50 to 70 percent.
Tremendous saving opportunities for legal firms showcase how LPOs can cash on these. For Pangea3 the last three months have been the largest revenue generators ever and the last six months have seen a 100 percent growth in business as compared to the same period last year, Kamlani reveals. Abhi Shah’s Clutch Group expects a year-on-year increase of 100 percent in business this year compared to last year.
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written by nick kri, October 25, 2010
Pragmatic Outsourcing
brought food to many families' tables. If it hurts the America's economy it became a blessing to those Asian who were enduring hardship for quite a long time.
written by Pratibha Rauthan, July 05, 2010
kpo
written by nancyth, June 14, 2010
written by Dashrath, April 01, 2010
Can you help me, I want work in LPO.
Regards,
Dashrath
written by IT Outsourcing, March 25, 2010
written by Philam, March 15, 2010
Phil
written by Nadeem Perwez, June 26, 2009
written by back office services, May 16, 2009
Regards,
accounting outsourcing services
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