Polls predict legal outsourcing growth

Two recent surveys, emerging from both sides of the Atlantic, have forecast a positive outlook for the legal process outsourcing (LPO) sector over the coming years. The first, conducted through US-based website Legal OnRamp a social network for corporate lawyers took in replies to 35 questions by 84 people who worked for large companies with $1 billion or more of annual revenue. Meanwhile, the second launched by the UK Law Society took in 52 responses from law department heads at several FTSE 250 companies, plus a range of other businesses engaged in IT, retail and manufacturing.

Devised by prominent legal business consultant Rees Morrison and American Lawyer editor Aric Press, the Legal OnRamp survey asked in-house counsel what percentage of their department's spending would be moved to lower-cost offshore service providers whether directly or as subcontractors to in-country law firms by 2013. Remarking on the rapid spread of legal outsourcing in recent years, the survey reported that three respondent groups, of around 16% each, considered that they would shift spending to LPO specialists in the next five years. The first group predicted a shift of one to six per cent; the second six to 10%, and the third 10% or above.

Although the UK Law Society's In-house Survey on Offshoring was more conservative in its predictions, it still indicated that larger firms would outsource more work as an alternative to hiring traditional law firms for assistance. Of the survey's 52 respondents, almost half (25) were keen to divert work from law firms; while a substantial 40% expressed dissatisfaction with the fee requirements of traditional law firms, such as hourly billing, indicating a broad wish to seek other means of legal support. Around 30% of respondents thought that most large corporations would continue to offshore.

For many in-house lawyers, the survey showed, outsourcing patterns would continue to be determined by the nature of the work. Commenting on the outsourcing habits of larger corporations, one FTSE respondent said: 'As long as you select the right areas for outsourcing, the benefits can be significant.' The respondent added that outsourcing enables a business to decide where to focus its costly private practice resources.

Another FTSE company respondent placed the emphasis on education in an outsourcing relationship as a major factor in cost reduction, saying that proper management can produce savings of 50-60%. 'The key is to prioritise training around the cultural and business-specific needs of your company and make sure there's the right level of supervision,' said the in-house counsel, adding: 'This is how you can be sure that the theoretical cost and speed benefits can actually be achieved.' On the importance of finding the right offshoring combination, the respondent said: 'We use an offshoring company and also encourage our private practice firms to include an element of offshoring in their service to us.'

The Law Society conducted its survey in conjunction with the in-house lawyers' trade association, the Commerce and Industry Group.