Recently, my Google alerts have been filled with commentary from colleagues in the LPO field heralding that the demise of our financial markets spells more business for LPOs. While that may be true in the long run, I don’t think it is an accurate depiction of our market place. I also believe it is important for LPO service providers and others in the legal community to follow the situation carefully and with the appropriate level of respect for the extremely challenging times facing Americans of all walks of life. We don’t need to paint a picture of the LPO community as vultures circling around the kill.
I tend to agree with my colleague Mark Ross of Law Scribe – here is his post from yesterday – I think his play of devil’s advocate is right on…bravo!
The Financial Crisis and Firm Wide Buy-In for Legal Process Outsourcing
by Mark Ross
Stories and articles abound within the Indian legal press, on how the financial meltdown on both sides of the Atlantic will propel the still fledgling LPO industry into the stratosphere. Click here to read an article from the Hindu Business Line as a perfect example. Purely to play devil’s advocate for a moment, while I concur that in a tough economy, where the pressure to keep costs under control is of paramount importance, as much as there are drivers pushing the utilization of LPO services, there are some extra hurdles to overcome.
Achieving firm wide buy-in to a strategy of offshoring legal services functions, at a time of financial uncertainty, may not prove to be the easiest sales proposition, irrespective of how much financial sense it makes. The General Counsel, CEO, or Managing Partner you’ve been dealing with for the last couple of years will find other items rising to the top of the agenda, such as redundancies, department closures, forced mergers and the like. You don’t need to be a rocket scientist to work out that any LPOs or other third party providers for that matter, who were touting Heller Ehrman for business, will very quickly be turning their attention elsewhere. In terms of prioritization, major firms more than ever before, prior to looking overseas for the solution to reducing overhead, may simply cut unprofitable areas of practice and play the “leverage” game with those associates working in the still profitable practice areas.
That said, as I hinted above, I am to a certain extent playing devil’s advocate. Once the dust has settled I do agree with my peers within the LPO industry. The financial pressures many corporations and law firms are now experiencing, together with the anticipated litigation flowing from these troubled times will only serve as a springboard to the continued growth of the offshore legal process outsourcing industry.
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4 comments:
LPOs are here to stay. They provide a way to cut down costs without sacrificing quality. That is what people should see and not the short-term effects of a weak economy.
With the recent financial crisis that banking institutions are undergoing, big businesses turn to settled business strategies in order to dig themselves out of their hole. Unfortunately, since LPOs are a fairly recent phenomenon, the idea of sending work out to business/legal process outsourcing providers in order to cut down on costs is an area that is often overlooked. I really think firms and big businesses should tap into this resource now more than ever in order to get themselves out of this mess.
It will be very interesting to see exactly how the financial crisis shakes out around the world. It appears that we are all in this together notwithstanding the de-coupling nonsense that was so popularin the Indian press this time last year. In-house legal departments were under pressure to reduce costs prior to the crisis. Managing these costs for in-house counsel in the post-Lehman era will be issue one. The crisis will increase pressure on in-house counsel to outsource lower end legal work to an even greater degree. The real question is for the law firms. When will they live up to their fiduciary duties and direct their clients to LPOs?
LPOs offer a high-quality alternative to the traditional (i.e. costly) practice of law. Their time has come.
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