Working with LPO Vendors: Relationship or Transaction?

If you are thinking about working with a Legal Process Outsourcing (LPO) vendor, you will generally do well to evaluate vendors with the assumption that your relationship with the selected vendor(s) will be a long-term relationship and not simply a single transaction.  Even if you are seeking a vendor for a discrete instance of work (e.g., a privilege review of documents for a single piece of litigation), you are likely to have recurring instances of similar work, and may want to outsource them again in the future.  By investing the resources up front to make sure that the right vendor is selected, you can save potential future costs by (i) minimizing the likelihood of incompetent or otherwise inappropriate vendors, (ii) having selected an alternative vendor in the event a primary vendor is conflicted out or otherwise unavailable, and (iii) having selected a vendor that has the desire and ability to grow with your needs.  In forming a relationship with a vendor, I generally recommend that clients establish a dedicated team at the vendor to service their needs.

Law firms in the U.K. seem more prepared to accept and manage LPO teams than their U.S. counterparts (or perhaps they are more willing to do so publically?).  As a result, U.K. firms seem to be developing more holistic relationships.  The widely publicized deals between Rio Tinto & CPA Global (see Times of London article by Richard Susskind), and Simmons & Simmons and Integreon (see article in The Lawyer) are two examples.  U.S. clients have typically been more focused on transactional discovery work. 

As an LPO client, the benefits of conducting a relationship with permanent, dedicated resources are ultimately related to quality.  Ideally, you will gain a vendor account representative who understands your needs and a core team of professionals dedicated to your matters.  A core team will learn your processes, procedures, tastes, and eccentricities, resulting in faster turnaround, fewer errors (errors include “missed preferences”), and lower costs.  In addition to familiarity with your practice processes and procedures, dedicated teams also allow outsourced staff to become familiar with the substantive and procedural law affecting your legal work, whether that law governs Delaware, New York or England. A dedicated team will also allow you to take an incremental approach to outsourcing by experimenting and gradually increasing the mandate of offshore resources.  If a significant one-time transaction suddenly arises, you – and your LPO vendor – will be much better prepared to take it on quickly and efficiently.

For vendors there are multiple benefits to a long-term relationship: predictable revenues, a client coordinator (i.e. sales person/manager), the ability to better anticipate resource needs, and a set of standardized roles and services that can be used develop talent and manage growth.  All of these benefits serve to incent the vendor to work more collaboratively with your team and to provide a high level of service and ensure a continuing relationship.

There are, of course, potential downsides to establishing a relationship with an LPO vendor or vendors.  When you send work to an outside vendor, particularly one in a different country, you lose a measure of control.  The best way to mitigate the uncertainty associated with a loss of control is by starting with a small initiative, and incrementally increasing the use of LPO as trust and comfort builds.   Another potential downside is that vendors with an established revenue stream may become complacent, and may not work as hard to earn your future business.  At the current stage of the LPO industry, I don’t think any LPO vendor can afford to be casual with any of their client relationships, no matter how well established.  However, there is always the risk that a relationship will not work out, so make sure that your contracts provide exit clauses, and that you have a plan to transfer your processes and data back in-house, should that become necessary.

Clients will always need to make sure that vendors can meet their needs, but when clients and vendors maintain a continuous, cooperative relationship, the lessons from the BPO and IT industries show that benefits can accrue to both parties.

2 Responses to Working with LPO Vendors: Relationship or Transaction?

  1. […] Working with LPO Vendors: Relationship or Transaction? « Global Legal globallegal.wordpress.com/2009/10/28/working-with-lpo-vendors-relationship-or-transaction – view page – cached If you are thinking about working with a Legal Process Outsourcing (LPO) vendor, you will generally do well to evaluate vendors with the assumption that your relationship with the selected vendor(s)… (Read more)If you are thinking about working with a Legal Process Outsourcing (LPO) vendor, you will generally do well to evaluate vendors with the assumption that your relationship with the selected vendor(s) will be a long-term relationship and not simply a single transaction. Even if you are seeking a vendor for a discrete instance of work (e.g., a privilege review of documents for a single piece of litigation), you are likely to have recurring instances of similar instances of work, and may want to outsource them again in the future. By investing the resources up front to make sure that the right vendor is selected, you can save potential future costs by (i) minimizing the likelihood of incompetent or otherwise inappropriate vendors, (ii) having selected an alternative vendor in the event a primary vendor is conflicted out or otherwise unavailable, and (iii) having selected a vendor that has the desire and ability to grow with your needs. In forming a relationship with a vendor, I generally recommend that clients establish a dedicated team at the vendor to service their needs. (Read less) — From the page […]

  2. Chere Estrin says:

    There are lots of changes going on, particularly in e-discovery. You might like to know about The Organization of Legal Professionals (www.theolp.org), a non-profit organization providing certification of e-discovery through education and collaboration.

    Vendors, law firms and clients alike want to know that the professionals they hire are capable of servicing their needs. This organization is dedicated to assisting attorneys and clients alike in reaching that goal.

    Join us today!

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