The evolution of corporate legal process outsourcing

This story is the second part in a four-part series. The third installment will discuss the LPO industry’s response to several of the legal community’s concerns about LPO.

The legal process outsourcing (LPO) space has undergone several transformations in the decade since its inception:

•   Increased scalability and diversification of services. Many LPO providers have extended the geographic reach of their services and now support multiple languages. In addition, LPO providers today are more likely to offer end-to-end, ongoing legal services as opposed to one-off services.
• Consolidation and collaboration. Over the past decade, many small LPO players inIndiawere forced to shut down or consolidate with other LPO providers due to their inability to reach sufficient scale to operate profitably. The LPO market is becoming increasingly dominated by large business process outsourcing (BPO) players that are making large investments in the higher-margin LPO market. Capital investment in LPO is on the rise,[1] and a number of collaborations between law firms and service providers have recently been formed.[2]
• Large multi-year contracts. An increase in the number of large outsourcing contracts with corporations has signaled the growing maturity of the LPO space. In 2010, for instance, Microsoft signed an agreement with Integreon Managed Solutions for legal support services, including contract review. It also has retained Integreon as its exclusive provider for offshore managed document review.[3]

As another example, in 2009, CPA Global contracted with mining giant Rio Tinto to provide legal outsourcing work.[4] Although these are just two examples of recent corporate LPO deals, various sources have projected overall growth in the LPO market by approximately 26% between 2011 and 2014 alone.

The growing maturity of the LPO marketplace has given corporations renewed incentive to assess the value of a balanced insourced and outsourced legal support business model. Considering the options available today, companies that take a thoughtful approach to LPO have the opportunity to potentially achieve significant cost savings, improve service levels, focus their in-house legal workforce on higher-value activities, and create additional capacity for unanticipated legal needs.