The legal process outsourcing (LPO) market is set to triple in size over the next five years, driven almost exclusively by US and UK lawyers, it has been predicted.
Coming in the wake of CMS Cameron McKenna’s £600 million outsourcing deal with Integreon (see story), Dr Alok Aggarwal, the chairman of research and analytics firm Evalueserve, said the need to become more efficient because of the Legal Services Act and specifically alternative business structures “is expected to boost the LPO industry” in the UK.
Dr Aggarwal’s report, entitled “LPO and the Great Recession”, found that the industry grew by 40% a year even during the recession, and estimated that annual growth will be 26% until 2015. “Currently there are over 5,200 professionals in the LPO industry in India and the Philippines, contributing annual revenue of $300 million (£206 million), and this is expected to reach 18,000 professionals with an annual revenue of $960 million by December 2015.”
The areas currently being covered are electronic document management services, electronic document discovery services, intellectual property services and what Mr Aggarwal called “associate-level” services, such as contract drafting and due diliglence.
The report, which does not mention other LPO locations such as South Africa, said that to mitigate the effect of the recession and to pre-empt alternative business structures, many large UK law firms are “beginning to implement new pricing models (and doing additional pricing analytics); designing and managing better legal work processes; modifying and re-using existing work products and templates; and partnering with other legal services providers to provide the entire array of services (from ‘commodity work’ to ‘customised’)”.
It continued: “In addition, some of these law firms are beginning to offshore many of the following functions: marketing and sales support; finance and accounting; information technology; clerical; paralegal; knowledge management; legal research; and library information and research services. For example, by 2012, Clifford Chance’s captive centre outside Delhi is likely to employ 300 professionals performing most – if not all – of these functions.”
Dr Aggarwal said that knowledge management would be a growth area for the LPO industry. “In particular, LPO firms can help in-house knowledge management teams of law firms – especially those with dispersed offices – to consolidate and manage all the available resources into an electronic repository to save cost and increase efficiency,” he said.