UK: LPO will increasingly stay onshore

Legal process outsourcing (LPO) will increasingly become a strategic priority for law firms in the coming year and a growth in the number of UK-based LPO providers is likely, it was predicted this week.

In its annual guide to trends in legal outsourcing, US-based LPO consultancy Fronterion suggests that “the growth in onshore and hybrid on/offshore delivery solutions will begin in earnest in 2011. This trend will be equally prevalent in the US and UK.”

Much of the attention paid to LPO up to now has focused on offshore legal services, but onshore LPO provides an alternative for legal professionals who are wary of sending work abroad, it said – City firm Herbert Smith recently set up on outsourcing base in Belfast citing concerns over keeping it within the UK as one of the reason. In future, said Fronterion, “[LPO] won’t be understood as simply sending legal services to low-cost centres on the far side of the world, but will be seen as a new, more effective manner of delivering certain segments of legal and legal support functions both within the same country as well as abroad”. Fronterion also expected the range of services offered by LPO providers to expand.

Overall, LPO services will increasingly be adopted by UK firms and regions outside of London will be emerging growth markets, said Fronterion. But it predicted that apart from the UK, “Europe will continue to remain slow in the uptake of LPO due to a number of factors including language difficulties, regulatory challenges and general business climates”.

Fronterion anticipated that the outcome of regulatory bodies addressing the ethical implications of LPOs, expected in both the US and the UK next year, will be “largely favourable, or at least non‐discriminatory, toward outsourced legal services”. Last month Legal Futures revealed that the Solicitors Regulation Authority is set to launch a “thematic review” of LPO in 2011.

The report identified a number of trends in legal services that it said are having an impact on LPO, including changes in technology, globalisation and a growing appetite among consumers for value for money. It observed a trend for firm-wide adoption of LPO and a corresponding consolidation in the LPO provider market, as well as an increasingly willingness by legal businesses to publicly acknowledge that they are users of LPO services.

Concluding, the report predicted that LPO in the US and elsewhere will increasingly become a strategic priority for many firms. “What was once relegated to a handful of leading‐edge innovative partners, outsourced and offshored legal services has emerged as an important strategic issue for senior leadership and managing partners.”

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