New Guidelines to affect LPO in Australia

By Deepti Krishnan, Analyst, ValueNotes Sourcing Practice|Posted on 22 January 2013

Australia is an emerging destination for Legal Process Outsourcing (LPO) providers looking to expand their client base in new geographies. The Australian legal industry is estimated to be worth USD 21 billion and the majority of the business of this growing market for legal services comes from corporations in Australia.
The results of 2012 Australian Corporate Counsel Survey by Deloitte revealed that 96% of in-house legal teams outsourced at least some legal tasks to organizations within Australia, while 27% also outsourced work offshore. The work outsourced includes litigation, mergers and acquisitions, industrial relations and contract management. While the numbers remain small, there is an emerging trend of work also being outsourced to LPOs.

For these in-house counsels, the ability to outsource basic but time consuming legal work has resulted in invaluable savings, allowing them to focus on more complex and sensitive tasks. In turn, they have placed pressure on law firms to reduce their bills through LPOs. As General Counsels (GCs) become more open to embracing LPOs, providers are actively marketing to them, offering lower cost solutions in areas such as contract management, drafting services, and legal research.
There are a few existing LPO providers in Australia. Pangea3 was the first Indian-based LPO to enter the Australian legal services market in2010 after signing a partnership agreement with the law firm, Advent Lawyers. It was followed by Integreon in 2011, when it entered into an agreement with Mallesons Stephen Jaques. Corrs Chambers Westgarth, a big Australian law firm, appointed Integreon and Exigent to its LPO Panel in early 2012, highlighting the increasing comfort of law firms with the idea of LPO.
As the adoption of LPO is slowly but surely on the uptake, the New South Wales office of Legal Services Commission published Draft Guidelines on practice issues for lawyers regarding legal process outsourcing. These guidelines make it clear that lawyers, whether in-house or external, can use LPOs to assist them in delivering legal services to their clients. The draft guideline covers the following areas:
Confidentiality: A legal practitioner should maintain their fiduciary obligations to their client by ensuring their LPO partner is competent and capable of performing the work required while ensuring the confidentiality of client information.

Client Consent: A legal practitioner must obtain consent from their client before disclosing the client’s confidential information to a third party LPO provider.

Conflict Management: A legal practitioner must ensure that their LPO partner is not engaging in any work which conflicts with their client’s interest.

Supervision: Legal practitioners who use LPOs are responsible for supervising the legal services provided to the client and are ultimately liable for the product of the provider.

Thus, the lawyers, as buyers of LPO, are ultimately responsible for the delivery of the legal services to the client. Though Australian lawyers have quality concerns, LPO providers have a great opportunity to tap this market. They need to take effective measures to overcome the concerns of existing and potential buyers, and implement a strategy to adhere to the expected guidelines. For this, LPO providers will need to invest in an onshore team to assuage the concerns of lawyers, and also invest in training programs, stringent quality controls, and a rigid data security system.

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