In a recent post (New Locations Offer a New Twist on Offshoring Legal Services), I highlighted the growing geographic breadth among Legal Process Outsourcing (LPO) vendors. Geographic breadth helps vendors distribute their operational risks and costs while providing access to a wide range of talent. Another measure of a vendor’s “breadth” is the range of services it offers.
As illustrated in the diagram above, vendors providing LPO services cluster into three major categories along a wide “services breadth” spectrum. They range from very small companies often focused on a single LPO service area (or those with only a tangential LPO offering), to others offering a full set of LPO services but little else, to those offering not only LPO services but a suite of outsourcing services that may include other Knowledge Process Outsourcing (KPO) services (LPO is considered a specific type of KPO service) or even generalized Business Process Outsourcing (BPO) or Information Technology (IT) outsourcing services.
Of the reported more than 140 LPO vendors, the vast majority are very small companies that offer little more than basic legal or support services. There are also some small companies with niche offerings, such as IPEngine, which focuses on intellectual property, or Global Colleague, which offers Chinese legal support services for western clients from Taiwan. The mainstays of the industry, such players as Pangea3 and Mindcrest, offer a robust set of legal and support services. The largest vendors offering LPO services, companies like Infosys and Wipro, offer a wide range of services but have not (yet?) focused their formidable assets on the legal services market. Emerging between the industry mainstays and the largest vendors are a few legal services vendors that have begun to address the market for ancillary services to law firms and legal departments. In addition to a full range of LPO and legal support services, both Integreon and UnitedLex provide finance and accounting specifically for legal departments. While numerous BPO vendors provide finance and accounting services, these vendors have focused on the issues specific to law firms such as the need for client-specific billing details and formats. In addition, Integreon has recently launched outsourced library services. According to the company, its “Bristol-based delivery centre is staffed with experienced information professionals who deliver the high quality services clients need at a cost savings of 20 to 30% compared to London rates.” Expanding in another direction, UnitedLex has begun offering Human Resources outsourcing to its legal clients. Legal organizations undertaking strategic reviews should consider their overall sourcing strategies and how these vendors and services fit into future plans.
The evolution of ancillary outsourcing services is likely to differ significantly for law firms than it will for legal departments. Law firms will have an opportunity to focus their skills and capital on the legal advice that will bring them competitive advantage while allowing vendors or partners to provide back office and, what will become, commodity legal services. Corporate legal departments will also benefit from legal-centric vendors services, but will be much more likely to source non-legal ancillary services, such as finance and human resources, from the generalized vendors that serve their corporations as a whole.
As technology and productivity have advanced, it has become easier to separate the components of the services that legal professionals provide, resulting in each service component being subject to its own set of market forces. These are the first steps to developing an efficient and highly productive market where highly skilled lawyers can command premium prices for their capabilities while standardized and commoditized services are priced in accordance with their value. Ultimately legal services consumers should spend less while receiving overall higher quality legal services.