Outsourcing is perhaps one of the most dramatic changes that the legal services industry has undergone recently. Legal process outsourcing (LPO) is no longer just a trend that only a few law firms have adopted; it is now a major requirement for law firms across the globe. LPO can be defined as a procedure wherein a law firm or the legal department of a corporate entity obtains support from an external law firm.
The economic recession from 2007-2009 called for innovative procurement methods and opened up the legal industry to more flexible and buyer-friendly fee structures. With technology connecting people across different regions of the globe and the expansion of the automotive, consumer goods, pharmaceutical, and healthcare sectors, the demand for legal services has grown substantially over the past decade. Analysts at Technavio predict that the global legal services industry will grow steadily at a CAGR of almost 5% by 2020.
Impact of outsourcing on the legal services industry
Cost-effectiveness is one of the key benefits of outsourcing legal services. With wage differences between in-house legal personnel and outside vendors being somewhere between 30-70%, legal firms, especially in countries like UK and US, have benefitted a great deal from LPO.
Increased use of technology and the adoption of big data has encouraged well-established law firms to expand their operations into the untapped markets of Thailand, South Africa and India. These countries are witnessing immense growth and expansion of their infrastructure and goods and services industry, which both require a transparent legal system for easy implementation of operations.
As legal work is outsourced, many firms have successfully reduced their turnaround time on vital legal projects. The combination of offshore and onshore teams has enabled several legal organizations to reduce the time of project completion and ultimately gain the loyalty of their clients. For example: the 9 hours and 30 minutes time difference between Canada and India allows for operations to be conducted nearly 24/7.
Access to a wider talent pool is another important impact that outsourcing has had on the legal industry. In many cases, litigation firms might lack certain resources, such as technical staff. With outsourcing, a firm can easily have the work done overseas and get the best solution possible without having to invest a great deal in the hiring and training process. Market analysts are of the opinion that outsourcing has helped small legal firms in particular by filling in the gaps in their internal proficiencies. One example is the emergence of law firms in Dublin, which has become a legal outsourcing hub post-Brexit.
As several governments have adopted economic liberalization and relaxed their regulatory frameworks, the global legal service industry continues to experience change. In spite of challenges such as identifying the proper vendors and understanding the legal process of a different country, outsourcing has opened the doors of the legal service industry to greater competition and growth prospects.
Want to find out which companies are the key legal service providers?
