Legal process outsourcing: the provider landscape

Abstract

Purpose

Nearly all legal firms and in‐house counsels will have to consider the opportunities and risks afforded by the rapidly changing legal process outsourcing (LPO) market, estimated to be worth $2.4bn globally, and growing rapidly. The purpose of this Industry Insight is to assess the current LPO provider landscape by analyzing data on 27 LPO providers.

Design/methodology/approach

The authors analyzed LPO provider data collected in 2011 by Orbys, a leading sourcing and transformation advisory firm based in Europe. The 27 providers in the sample include specialist LPO providers, full service LPO providers, and global BPO providers that offer LPO services. The authors assessed LPO provider services, provider competencies, geographic location, pricing, team composition, and staff turnover rates.

Findings

The LPO providers in the sample provide a variety of services, including litigation, intellectual property, corporate, compliance, procurement, employment, property, and consulting services. LPO providers allocated most of their human resources to litigation (26 percent), intellectual property (14 percent) and corporate/compliance (12 percent) services. LPO providers balance team composition – the percentage of onshore resources located close to the client versus offshore resources in low‐cost locations – to reduce client costs while still delivering quality services. The average team composition average was 22 percent of resources onshore and 78 percent of resources offshore, mostly in India. The authors also analyzed LPO prices by skill level and location. For example, the average daily rate for a fully qualified lawyer based in India was $248. LPO provider turnover rates ranged from 3 percent to 34 percent, with an average turnover of 15 percent.

Practical implications

This research on the LPO provider landscape helps to inform potential clients about LPO services and the global LPO landscape. The authors also identify three practices to help clients achieve success with LPO engagements. First, consider overall value, not just price. Second, mediate the effects of high LPO provider turnover. Third, assess and develop client‐retained capabilities, because outsourcing legal services is not about abdicating responsibility, but about learning to manage legal services in a different way.

Originality/value

Legal process outsourcing is the next evolution in the provision of services. Because the LPO market is less mature than the information technology outsourcing (ITO) and business process outsourcing (BPO) markets, very little research has been done on LPO in general or on LPO provider capabilities specifically. This Industry Insight helps to bridge the knowledge gap.

Citation

Lacity, M.C. and Willcocks, L.P. (2013), "Legal process outsourcing: the provider landscape", Strategic Outsourcing: An International Journal, Vol. 6 No. 2, pp. 167-183. https://doi.org/10.1108/SO-11-2012-0021