Legal Process Outsourcing

SKJ Juris Services Pvt. Ltd.Urban and Civil

Jan 3, 2019 (15 days and 13 hours ago)

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Legal Process Outsourcing refers to a mechanism wherein a law firm and/or a corporation obtains legal support from an outside law firm or a legal support services company. In legal process outsourcing, such outside law firm or a legal support services company may either be based out of the same territory or overseas. The work outsourced overseas is generally termed as legal process offshoring. SKJ Juris is a legal process outsourcing company that is based in the US with its delivery center based in an offshore location i.e. in India.

INTRODUCTION TO LEGAL PROCESS OUTSOURCING
(LPO)



A.

Legal Process Outsourcing


a value added KPO service

Legal Process Outsourcing (LPO) is one of the value added
K
PO services which involves
legal work that companies outsource to more economical offshore

destinations.

Legal outsourcing
consists of various processes which can be classified into low skilled quantitative tasks or high
end qualitative tasks.

Low skilled quantitative tasks consist of:



Paralegal Services & Legal Coding



Corporate Secretarial
Services



Legal Memo Development



Medical & Legal Transcription



Document Management



Litigation Support



Data entry



Immigration data analysis and working on
labor

relations
.

Whereas the high end qualitative tasks include:



Intellectual Property Rights & IPR Por
tfolio Management



Patent Search & Application drafting



TM and Copyright Registration



Legal Research/Opinion work



Document Review and Analysis



Intelligence Services



Contracting and Administration





B.

Evolution of
legal process outsourcing

The legal process outsourcing (LPO) industry emerged in the late 1990's, when a handful
of major corporations established "captive" legal departments to handle their high volume,
process oriented work.
Legal Process Outsourcing (LPO) was at a fairly nascen
t stage since its
emergence and evolved gradually.

The first generation of LPOs was all about redlining documents and very low
-
end types of
legal work. Law firms
have gradually engaged in

much higher end legal work
.

LPO 1.0 (“first
wave”) was the initial s
tage for the
LPO
industry and focused on
labor

arbitrage for services. LPO
2.0 (“second wave”) noticed the growth from smaller to bigger LPOs and it focused on maturity
of legal services delivery models. The LPO 3.0 (“next generation”) is considered as the

“third
wave” LPO. The third wave LPO is about provision of integrated solutions with the combination
of legal and IT knowledge. Enhancement of the conventional practices can be achieved through
LPO 3.0.

The advent in technology and the changes observed i
n market requirements over the years
has had quite an impact on the evolution of the legal process outsourcing (LPO) industry. The
evolution started with the gradual acceptance of outsourcing legal tasks to third
-
party service
providers by the legal indust
ry. The year 2008 was considered to be a turning point for LPO
providers. The industry received a major commercial push following the global economic
slowdown, as more organisations and law firms looked out for ways to reduce costs. One of the
methods to r
educe costs, adopted then by companies was to outsource routine legal tasks,
typically of bulk volume.

Legal process outsourcing originally comprised law firms and large corporations
outsourcing large document review projects for litigation disclosure or
transactional due diligence
to an offshore provider. However, the recent economic downturn, along with market
liberalization

and pressure from clients on prices, has driven many firms to look again at LPO. Legal business
culture has seen a dramatic change with increased focus on unbundling legal services in order to
benefit from the economies of
scale. The

most significant chan
ge noticed in the LPO industry has
been in the quality and complexity of the services rendered by LPO providers. With the growing
acceptance of the LPO industry in the corporate space, it has fuelled the expansion of the industry
to a large extent. Current
ly, the much sought after tasks undertaken by service providers include
managed document review, due diligence and contract management. The change in these services
has been in terms of the augmented complexity and end
-
to
-
end breadth of the services. For
i
nstance, in litigation, this is likely to involve areas such as deposition prep and surveillance
audits. Earlier, these tasks were confined only to the purview of in
-
house or specialist counsel.
Considering the contracts side, services now involve end
-
to
-
e
nd contract negotiation and
managing open source software licensing
programs
.


C.

Growth Trends in LPO
Industry:

Transformation from Labor arbitration to Labor
Innovation

The LPO market has expanded significantly over the last 10 years to include in its ambit

different service lines ranging from document review to compliance, research and contract
management.

LPO, after undergoing different phases of development, have now moved to the
next phase. It has undergone an archetypical shift from the previous generat
ion to the next
generation.

LPO has no longer remained the source for
labor

arbitrage only. It has evolved since its
inception. The value proposition for LPO is undergoing a change. The LPO concept includes not
only off
-
shoring concepts but also near
-
shoring, blended shoring
.
The
LPO
space has over a
several

legal providers globa
lly offering a variety of services across a number of locations. While
providers have evolved organic and inorganically, there remains a lot more scope in terms of
growth and innovation as the industry matures. This innovation includes but is not limited t
o:



Further integration of technology within service offerings to ensure quicker and more
efficient delivery



Harnessing corporate and law firm relationships to support growth



Regulating billing rates given increasing inflation offshore

According to an es
timate provided by the Global Legal Post, about half the companies
outsource an average of 11%
-

30% of their legal work to LPO providers. LPO offerings include
cost
-
effective, high
-
quality services in corporate, litigation, merger and acquisition, complia
nce
matters, corporate restructuring, etc. The niche work undertaken by LPO providers
such as SKJ
Juris, Integreon, etc.
requires skilled resources for carrying out more complex and high
-
value
tasks. The industry now relies on technology to a large extent,

including both third
-
party solutions
and proprietary software, in order to provide technology
-
enabled services to clients specifically
for electronic discovery and contract management and review.

Back in 2005, ValueNotes, a research firm,
was one of the
first analyst firms to track the
(then fledgling) LPO industry. At the time, outsourcing of legal services was a “hot” new service
line with much promise. Growth rates between 2003 and 2008 averaged more than 40% a year,
though on a small base. Coupled wit
h low entry barriers, this attracted hordes of new entrants.

The number of Indian service providers jumped from around 40 in 2005 to more than 125 by
2008. Early adopters (buyers) were willing to experiment with pilot projects, and this allowed
start
-
ups t
o win small contracts and get going.

According to a report by ValueNotes

in 2010
, the industry employ
ed

about 24,000 people
and earn
ed
revenue

of $640 million
.

In late 2010, a ValueNotes survey of legal service buyers in
the US and UK revealed signs of dis
illusionment amongst customers. Significantly, complaints
about quality, consistency and skills were complemented by concerns over data security and
client confidentiality
.

The 2012 legal outsourcing market global study estimated the global LPO market had
grown on average at a rate of 32% in each of the past three years and suppliers it consulted
expected a similar rate of growth for the next three years.

It stated that the total LPO market,
which currently employs nearly 9,000 people, equated to a mere 0.2
5% of the global legal
services market, while anecdotal evidence suggests existing LPO users “have only outsourced
about 5% of what they could potentially outsource”.

The report further revealed that
LPO arose
because of a perception value gap between the
law firms’ outputs and the costs they were
charging for those costs.

Key future drivers for growth in the LPO industry were “continued
budgetary pressure from general counsel” and “client pressure on law firms”, it said. A lesser
driver for growth was alte
rnative business structures.

In the past three years, the legal outsourcing industry has grown about 60% annually.


In a recent article dated January 05, 2015 published by Value Notes, it has been
predicted that “The Global Legal Process Outsourcing market to grow at a CAGR of 27.4% over
the period 2014
-
2019”
.

According to the report, one of the primary drivers of this
market is
significant cost reduction. Labor arbitrage, which is the shifting of processes from more expensive
locations to less expensive locations, is regarded as one of the most advantageous benefits of
outsourcing business processes. The outsourcing of
legal processes helps firms gain access to
local expertise and advanced technologies in other countries, while simultaneously maintaining a
lean workforce.


D.

Outsourcing venture
in

India

Legal outsourcing has gained tremendo
us ground in the past few years
.
LPO firms,
primarily from India, have had success by providing services such as document review, legal
research and writing, drafting of pleadings and briefs and providing patent services
.

Today, India is one of the most important destinations for LPO.

India is geographically
placed in a time zone that is distinct to that of the US and UK, thereby enabling round the clock
legal support to these countries.

In the context of an LPO initiative, a client company selectively
delegates certain legal functions
and services that are traditionally performed in the United States
to an LPO provider based in an offshore location such as India. The provider offers the client a
skilled or trainable workforce at costs that are significantly lower than those demanded by
US
counterparts. The basic value proposition of the LPO, then, holds that outsourced legal work will
be performed offshore by trained, qualified and locally licensed lawyers and paralegal staff at a
fraction of the cost of having the same work performed b
y US
-
based legal professionals.

The LPO industry in India is expected to grow at an average rate of 30% annually and,
according to a NASSCOM
-
CRISIL study, LPO in India is the fastest growing segment. Driven by
an impetus from a post
-
recession environment c
haracterized by higher bankruptcy cases,
regulatory compliances and cost pressures, LPO is also expected to grow by USD 1.3 billion
globally by 2015. In India, over the same period, it is expected to reach 18,000 professionals with
annual revenue of USD 96
0 million. NASSCOM also indicates that the Indian KPO sector has
engaged more than 250,000 KPO professionals in the last year.

After the economic meltdown of 2008, the Indian LPO industry witnessed a major change.
With a number of global companies opting f
or mergers and acquisitions to stay afloat, bankruptcy
and lawsuit filings became more prominent, creating the need for an independent sector for
documentation review and legal research. But, as market conditions troubled corporate clients
with rising lega
l expenses, enterprise legal functions were forced to transform into leaner
organizations and in
-
house counsels underwent cost cutting and streamlining, along with all other
support functions.

With law firms and corporations becoming increasingly selective

about the resources they
hire and instead choosing to outsource, India has become an attractive destination for law firms,
corporations, and other businesses from the US, UK, Australia, and other countries looking for
LPO providers. Soon, corporations beg
an to pressure their internal legal departments to outsource
certain processes to cut costs and, as a result, they began using the services of Indian LPO
providers.

In the contemporary context, outsourcing legal work to economically viable destinations
has

become a practical necessity. And after achieving success in the BPO segment, India is set to
emerge as a leader in the KPO segment as well, particularly in the LPO sector, considering the
country’s large base of talented and qualified legal professionals
.

To sum up, due to the continuous increase in costs and greater advances in technology,
LPOs are increasingly attracting legal work. Notwithstanding the distance and time zone
differences, attorneys who outsource must undertake efforts to supervise LPO wo
rk. It has been
an
i
nteresting journey for LPOs until now and the future seems bright for LPOs to be seen as
transformational partners for law firms and corporate legal departments rather than the perceived
outdated thought of it just being a back office.


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