LPO: Approaches to Technology

In managing for efficiency, managers often refer to the intersecting elements of people, process, and technology.  Legal Process Outsourcing (LPO) industry participants initially focused on reducing people costs by moving work to lower labor cost jurisdictions like India.  For most, it quickly became apparent that coordinating onshore and offshore labor to deliver consistent, measurable results would also require the development of consistent, coordinated processes.  However, their approaches to technology are among their most significant differences from each other.  Some industry participants have invested in the development of industry-specific technologies that allow them to tightly integrate their people, processes, and technologies.  Others have adopted technologies on a project basis to provide the best fit for each client, while still others have adopted a combination of these approaches. There are pros and cons to these approaches, and potential clients should fully consider them when selecting an LPO provider. 

Let me illustrate with a comparison of technology approaches using contract management offerings.  Specific offerings vary along the contract lifecycle that includes drafting, review, negotiation, cataloging, monitoring, and renewal.  Each of the major LPO vendors offering services within the contract management lifecycle provides lower cost labor (mostly in India), and most have implemented some sort of workflow to optimize their processes.  However, only a few have invested in the development of sophisticated contract management applications.  One such company is UnitedLex, whose

“…use of technology enables our client service philosophy – which is to deliver solutions, not bodies in seats.  We have found it critical to have a proprietary technology platform to enable the rapid deployment of consultative led solutions for clients.  Most commercially sold software requires an expensive and lengthy integration process.  With more than 50 in house software developers, we are able to rapidly tailor software to address the unique demands of our clients.  The two most immediate benefits of this approach:

  1. Clients experience measurable results in less than 60 days.
  2. Clients have material input to the design of the initial deployment that will yield highly intuitive interfaces to help drive greater adoption among internal teams (lack of user adoption is the number one killer of transformation programs).”

[from an email communication with UnitedLex CEO Dan Reed]

Another LPO leader, Infosys, has also created its own contract management system called ICAP (Infosys Contract Administration Platform). According to Rahul Shah, Infosys’ LPO Practice Head, ICAP is available for a per-user per month cost, without upfront costs and Infosys trained staff can provide abstraction services to facilitate the use and implementation of ICAP.  In an email exchange with me, he outlined how technology transformations are “part of [Infosys] DNA,” and, as a result, they have customization tools for workflow, document management, and auto-extraction to facilitate transformations.   

These companies’ considerable software development efforts and tight coupling of software and service can provide significant efficiencies in a way that fully considers the technology’s implementation within a global delivery model.  The risk, of course, is that having implemented one of these systems, the cost to change software or service providers can be very high. Shah notes that Infosys supports a range of products, including those from other vendors.

 Integreon’s Matthew Banks, takes the middle ground noting that:

“…in many instances, proprietary software allows [Integreon] to offer unique, flexible, and fairly priced solutions.  In other instances, clients have software they want to use or third-parties solutions are so robust that it does not make sense to build our own.  So for many of our service lines, clients can choose either Integreon proprietary software or commercial-off-the-shelf software.  More specifically, across several service lines, Tachyon is our proprietary software for job management and workflow; some customers have licensed it for their internal use.  In contract management, we find that law department requirements vary significantly so we work with a range of third-party tools, for example, Upside and Selectica.  We are also evaluating more specialized tools, for example, to analyze variations across contract collections or to extract key terms automatically.”

[from an email communication with Integreon Senior Vice President Matthew Banks]

The mixed approach provides maximum flexibility for clients, but buyers must weigh the benefits of integrated solutions with the freedom to change, and the increased negotiating power that comes from having separate software and services vendors. There is, of course, a corresponding increase in complexity in negotiating with numerous vendors, and the potential to not be significant enough to merit the required attention from any of them.  

The most common approach to technology among LPO vendors is to be agnostic.  CEO Candice Corby expressed Cobra Legal Solutions’ “overarching commitment to integrating best-of-breed technology solutions,” and Michel Sahyoun, Senior Vice President Client Solutions & Chief Technology Officer at QuisLex championed it best:

“When it comes to our contract services, we espouse a very agile and consultative approach to technology solutions.  Clients’ needs and capabilities drive any proposed solutions. For example, if a client has implemented a contracts management system, we collaborate with the client’s technology team to jointly determine the optimal way to interface with their system. On the opposite side of the spectrum, some clients do not have an existing system, and we work closely with their business and IT teams to either implement a custom solution that fits their specific needs, or deploy a highly effective, open source document management system.”

[from an email communication with Quislex CTO Michel Sahyoun]

The benefit of application vendor agnosticism is the opportunity to work with products that derive a robust feature set from clients beyond the LPO space.  In addition, legal service providers will often have many clients using a given software product which can lend their client companies more clout with software application companies than they could get on their own.

With any of these approaches, it is important to make sure the vendor has a critical mass of people familiar with the application to be used.  This is less of a concern with vendors who have developed their own products, but LPO firms are growing quickly, so skills can be an issue even with in-house software. 

As you can see, there are tradeoffs to the various approaches to legal services vendor technology adoption.  The approach can vary significantly between vendors.  It can also vary among different offerings from the same vendor, so I recommend a separate comprehensive analysis for each of contract management, e-discovery, document review or other legal service.

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