Legal Process Outsourcing (LPO)

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Legal process outsourcing, or LPO, is the exporting of legal services to low-wage markets overseas. Legal process outsourcing is also known as offshoring, onshoring, LPO, legal process offshoring, and legal process onshoring. An increasing number of companies are outsourcing legal work to destinations across the globe to reduce costs and remain competitive.

A number of factors have fueled the legal process outsourcing trend including:

  • Globalization
  • Economic changes and the rising cost of legal services
  • The growth of the Internet
  • Increased automation of legal processes
  • Developments in data security
  • New technology tools

Beyond cost savings, legal process outsourcing offers many advantages including access to outside talent, round-the-clock availability, and the ability to quickly scale up or cut back operations. Large organizations, particularly, many of which have their own internal legal departments, are outsourcing their back-end services. Back-end processes tend to be rote and less complex. However, ethical considerations and data security concerns are causing some to hesitate to outsource their simpler legal operations.

LPO Destinations

India is currently the largest LPO destination. As in the United States and the United Kingdom, India's legal system is derived from English common law. And, unlike China, which is emerging as an offshoring center, English is the language of instruction in Indian colleges and law schools. India also has one of the largest pools of English-speaking graduates in the world. Low labor cost is another major factor in sourcing work to India, and the nation possesses a large, highly qualified labor pool. Many Indian legal service vendors require a college degree as a bare minimum for employment. Most employees - even data entry workers - possess a graduate degree, and most legal employees possess a law degree.

Recent Growth in LPO

LPO is occurring in nearly all sectors of the legal industry. The work of lawyers, paralegals, legal secretaries and litigation support personnel is increasingly being performed by legal service providers on the other side of the globe.

The LPO market has grown by leaps and bounds and is expected to continue to do so, according to MarketWatch. A press release in 2018 reported a compound annual growth rate (CAGR) of 35 percent, and the industry is expected to exceed U.S.$40 billion by 2024.

A growing need for efficient legal firms that provide process-oriented legal services is expected to boost industry growth while digital technologies make document processing faster and easier. Outsourcing firms use e-discovery and various software tools to process data. Moreover, these tools are highly secure making them even more appealing. Governments are easing regulations, and there is a growing awareness among public and general counsels of the inherent advantages in outsourcing through a services provider.

The major players in the LPO marketing as of 2018, according to MarketWatch, were Axiom Law, UnitedLex Corp., Pangea3 LLC, Elevate Services, QuisLex Inc, Integreon, and Mindcrest Inc. These companies often engage in mergers & acquisitions to expand their services portfolio, and customized services in conjunction with pricing strategies are the factors affecting their LPO market share.