Sub-prime mortgages took flight in the US loans market as a means of providing people who wouldn't normally have access to credit with lifelines for house purchases. Following a relaxation of interest rules earlier this decade, the loans were offered to clients with poor credit histories, and higher interest rates were built in to offset the risks. The rule change brought controversy from the start – controversy which has continued in the aftermath, with many fiscal experts suggesting that the loans were overmarketed to a vulnerable audience.
Litigation that has flowed from the resulting blame game is now contributing to activity in the India-based LPO sector. US law firms are struggling to contend with paperwork linked to both the ongoing cases and the costs they are incurring. Among the tasks that have been outsourced to India-based LPOs are discovery and litigation support, document drafting and legal analytics, plus tasks associated with insurance and bankruptcy such as claims review and insolvency filing.
Bhaskar Bagchi – country head of legal outsourcing major, CPA Global – is among those who have detected a sea-change in the policies of US law firms. He told India's Business Standard magazine on 9 July that, 'the economic slowdown in the US and other economies has … motivated legal departments and law firms to turn cost-conscious and explore offshoring options.' As the slowdown continues to affect business in the West, the trend is likely to continue.