The U.S. legal industry remains flat despite an industry uptick globally. In contrast, the U.S. legal outsourcing market is growing, with legal outsourcing providers (LPOs) winning more work from larger clients who appreciate quality product delivery and cost savings.
In the midst of this LPO boom, corporate legal departments have become more educated buyers of outsourced legal services. According to the report “Legal Process Outsourcing 2013-14,” an inside perspective for buyers of legal services, on average 47% of companies outsource 11 – 30% of their legal work to LPOs. By working with LPOs, in-house legal teams are able to reduce budgets and focus on more strategic work. In turn, they can better deploy outside counsel on matters that are high level and highly complex.
With General Counsel (GCs) increasingly accustomed to outsourcing models, they have developed a keen understanding of how LPO capabilities, experience, quality and cost can best meet their legal needs. At the same time, the LPO market has exploded and legal service outsourcing is available in myriad shapes and sizes. With this in mind, LPOs are focused on demonstrating their value, and how that value can be maintained during their partnership with in-house legal departments.
Just as legal departments have evolved, so have LPOs. What was once a solution for large volume / low complexity work, LPOs now partner with GCs in a number of different ways to help them minimize risk and maximize budgets. The expanded range of services available includes, among others, document review, contract management, IP support, compliance, transaction and litigation support.
LPOs have also improved their own operational efficiencies which have increased overall confidence in the outsourcing industry. For example, leading LPOs have adopted the latest project management processes and procedures to manage and organize high volume, large-scale projects. These tools also work to improve reporting and measurement. Additionally, LPOs have invested in new software and technologies to increase efficiency and reduce costs for clients. Automated review of documents and contracts, for instance, reduces both time and risk. And thanks to LPOs’ attention to cost and project management, which are often coupled with fixed-fee or alternative fee arrangements, legal departments are better able to monitor and track budgets.
Savvy LPOs realized long ago that project management, transparency and lower cost were integral to the efficient operation of a corporate legal department. It seems that in-house legal teams have reached that conclusion as well, and for the first time, see LPOs as key players in their long-term success.