I recently presented a webinar entitled Evaluating Legal Process Outsourcing (LPO) Providers. (A copy is available at www.RedBridgeStrategy.com.) During the presentation, I described a process with the following major steps:
- Analyze the appropriateness of globalization/LPO for a given buyer;
- Design an applicable service delivery model;
- Select vendors or plan for shared services (“captive”) operations; and
- Implement with a governance model and manage the transition.
As part of vendor selection, buyers typically select a set of vendors from whom they request responses to an RFP or RFI. Given the explosion in the number of companies offering LPO services, we are often asked which companies should be included in the “universe” of vendors to whom to send the RFP. The number of vendors to include will vary with the buyer’s familiarity with the industry, the time allowed to evaluate RFP responses and resources of the buyer, but we generally suggest between six and twelve. So how does a buyer cull the universe to between six and twelve?
Defining the Universe of Vendors
Assuming a U.S. buyer of legal services and an overseas-based provider, one of the biggest considerations will be comfort for the buyer that a vendor operating in a foreign country both understands, and can respond to, the buyer’s needs. Obviously, increasing this comfort is the whole reason for the RFP process, but some comfort can be gained from a relatively cursory review of vendor materials for adherence to reasonable models of people, process, systems and market presence.
High-level considerations in evaluating a vendor’s people might include:
- Does the vendor have a management team with experience operating an offshore business in both the U.S. (U.K.) and its country of operation (typically India)?
- Do vendor staff have direct experience in the subject matter related to your needs – such as discovery review, intellectual property, or contract management?
- Do vendor staff have direct knowledge and experience with the U.S. (U.K.) legal system?
High-level considerations in evaluating a vendor’s processes might include:
- Does the vendor have a set of defined processes to undertake the work you are outsourcing?
- Does the vendor have specialized knowledge and/or training programs for the work you are outsourcing?
- Has the vendor implemented processes to address conflicts and privilege?
High-level considerations in evaluating a vendor’s systems might include:
- Does the vendor have systems designed to optimize the process you need them to execute?
- Does the vendor have experience working with the applications you use for the work you are outsourcing (e.g., e-discovery or matter management software)?
- What provisions does the vendor have for managing confidentiality and security?
Considerations in evaluating a vendor’s presence might include:
- Does the vendor have an existing relationship with your organization either onshore (e.g., consulting, contract attorney) or offshore (e.g., IT, BPO, KPO services)?
- Does the vendor operate in geographic locations that are advantageous and appropriate for your business needs?
- Is the vendor an appropriate size for the work you are outsourcing? Is the vendor a financially stable and viable business?
- What is the vendor’s reputation for quality and professionalism? Do all of their communications back up their reputation?
Much of the information above can be gleaned from marketing materials, vendor staff interactions and vendor websites including both corporate sites and blogs. Clearly, this analysis is necessary to cull the list of vendors to a manageable size, but not nearly sufficient to select a vendor for outsourcing. A further selection through review of RFP responses and site visits will be critical to final vendor choices.
If you are working with LPO vendors today, what questions did you use in your initial selection process? Are there criteria you wish you had considered, in hindsight?