A new year brings new perspectives, and legal experts have already begun to ponder the long-term future of legal services outsourcing. Matt Packer listens in
In recent weeks, NewLegal Review has featured forecasts indicating what 2011 may have in store for legal outsourcing (please click here and here for those articles), but what about the longer term? A five-year timeframe offers a broader canvas for considering the future, and a recent podcast from the American Bar Association (ABA) offered just such an invitation to a panel of legal experts. The subject? Potential trends that legal services outsourcing (LSO, also known as legal process outsourcing, or LPO) is likely to follow up to 2015.
Cassandra Burke Robertson, a law professor at Cleveland, Ohio’s Case Western Reserve University, argued that multishoring would provide LPO with vital motivation over the next few years, as clients seek increasingly to process their workloads on a constant basis. ‘For a lot of the corporate clients that are driving the LPO process right now,’ said Robertson, ‘their two biggest concerns are cost and quality. And to the extent that they can get quality work done at low cost abroad, they are happy to work with partners based in single locations.
‘But multinational providers are really the future of the LPO world. If you have people on several continents, you can work around the clock. Economies of scale, labour costs: these [advantages of multishoring] are really driving the international provider.’
Robertson also predicts that grassroots activity from pro se litigants – people who seek to represent themselves in court – may help to create an equally productive source of work. ‘What is interesting is the expansion of LPO into other sectors of the law,’ she said. ‘Primarily we’ve been talking about large corporations outsourcing legal services, especially in support of large-scale litigation, and that is what has driven the growth of the industry up to this point. But we are starting to see some other kinds of services coming out.
‘Providers are beginning to offer services to pro se litigants, [such as] preparing court filings and other documents and consulting with them on legal strategy – and that is something that really interests me because I think that we have tremendous under-served populations.’
Pro se litigation is one of the fastest-growing areas in the US court system, with 92% of prisoner petitions recorded for 2007 filed on a self-represented basis. In March 2009, the Administrative Office of the United States Courts revealed that, in the previous fiscal year, pro se filings lodged in US Courts of Appeal rose by 12%, from 24,690 to 28,055. In the course of that rise, pro se filings related to criminal appeals more than doubled. In Robertson’s view, the scale of this activity could bring beneficial changes to the statutory framework in which providers operate. ‘It might put pressure on state boards to either open up legal practice more, or to allow more unbundling or other sorts of pro se support,’ she added.
According to Robertson, legal outsourcing is about to enter a period of ‘tremendous growth’ – and aspiring lawyers have much to look forward to when it comes to their job prospects. ‘The growth in outsourcing of legal services generally is going to increase the number of legal services that people purchase,’ she said, ‘so I don’t think it will have a negative impact on the employment of lawyers in the United States – I think, if anything, there will be growth.’
A melting-pot legal sector?
But will the growth of legal outsourcing take place against a backdrop of more active mingling between law firms, their corporate clients and LPO providers? That question was the focus of Michael D Bell, managing principal of outsourcing consultancy Fronterion. ‘What’s the best way for these parties to interact together in that triangular relationship?’ he asked. ‘That’s something we’re still exploring as an industry.’
Bell stressed that there are two primary approaches that law firms don’t take when they are delivering their services. ‘The first is technology integration,’ he said, ‘and the second is the ability to embed process and metrics into the delivery process. So, while LPO is known for its hallmark of labour arbitrage, the real value drivers are [the opportunities to] integrate technology, and embed these processes.’
That flexibility, Bell added, has enabled LPO providers to take on specific kinds of work. ‘For example,’ he said, ‘you see this a lot with contract management. Essentially this is a very new area in terms of legal services because it [has proven to be] so uneconomical for a law firm to go into a corporation and review, analyse and build out its entire contract management portfolio. Whereas LPO providers’ lower cost base has made this a growing field, and it will continue to be a significant service area.’
In Bell’s view, LPO providers are able to make longer-term investments and grow their capabilities and technologies because, unlike law firms, they are not distributing profit shares between partners at the end of the year. ‘The investment cycle is certainly different,’ he said. ‘Going forward, it’s fair to ask whether we’re going to see LPO providers acting like law firms or law firms acting like LPO providers. Certainly we are going to see some interesting melding of law firms and providers in the UK following the implementation of the Legal Services Act.’
Given the statutory developments at large in the US and UK, and growing appreciation for the work of LPO providers, it appears that legal outsourcing is poised to lead the way for a more dynamic and fluid legal marketplace.