Legal Process Outsourcing (LPO) throws up significant challenges for the legal profession. Other areas of outsourcing have purely been about value for money – either pure cost reduction or getting more bang for the buck. LPO, on the other hand, is a threat to top line revenue and is a business model (for Law Firms and General Counsel) that is shaking up hundreds of years of established processes.
The timing for the LPO revolution could not be more prescient. The outsourcing model is a mature delivery model in other sectors and many firms and in-house lawyers will have worked on those outsourcing deals. The global economy is driving all organisations to look at how to deliver necessary services more effectively and efficiently. The final ingredient is a set of credible LPO suppliers who have an established track record to prove that there is an alternative to the traditional models.
LPO, of course, is actually a short name for a wide range of specialist services. Regardless of the exact services in scope, never is the underlying business case in doubt. In my 2012 Global LPO Study, over 75% of business cases showed 30+% savings. I have seen business cases that far exceed that.
So, what is it that prevents Law Firms and General Counsel from making the strategic change to the way in which they deliver, provide or access services?
At the core you have to remember that Law and the practice of Law remains a highly profitable and well-paying profession by any measurement. Even though legal salaries may not have grown significantly during the last few years, nor have they grown in other comparable professions. While the collapse of a law firm attracts a lot of publicity, that attention really just proves how rare that event really is. Fundamentally, there is no financial desperation to drive changes in behaviours.
However, there is a growing awareness that “things can be different”. With the LPO market growing at 30+% per year, that work is not new work. It is billable activity that was being carried out by law firms and is now being carried out by LPO suppliers. That is work that will almost certainly not go back to law firms, ever. Further, that flow of work away from law firms is growing.
As I sit with Buyers and Suppliers of LPO services most days, I try to capture the issues and trends that I see happening and to share them – without betraying confidences – in the widest possible way. Only through lawyers embracing change, not fighting it, can LPO be turned into a real opportunity, not a threat. There are a growing number of models that demonstrate how to do this. Certainly “do nothing” is not an option.