Sometimes it takes a good newspaper article to confirm what we all know is going on. In the UK external investors have been lining up to get involved with law firms. While not an option for US firms, it is actually a REAL OPTION for US law firms to take maximum advantage of LPO or Legal Outsourcing.
Over the last 18 months I’ve worked on 3 deals which have been broadly structured as follows:
- Law firm recognises the low value in some elements of its operations
- LPO sees great value in those operations
- Price is set to buy those operations
Of course, that is the ultra-ultra-simpleified version, but the facts are that law firms are starting to analyse what they want to do and what they do not want to do. Investing skills and financial resources in lower value activities is something that Corporates cut back on over the last 5 years. Law firms are following suit.
Firms have a small window of opportunity (probably 12-18 months) to release the value they are sitting on in their lower value activities. The LPOs are currently very open to buying capacity and deals that make sense to them from a long term perspective, but I believe their appetite will be sated by the end of 2013. Given the complexity of these projects, now is the time to start.
Here’s the article that sparked today’s blog: http://www.thetimes.co.uk/tto/law/article3465783.ece
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