By now, you’ve no doubt read that Thomson Reuters has acquired legal process outsourcing company Pangea3. As other commentators have stated here and here, the acquisition brings credibility to the legal process outsourcing industry and expands Thomson’s workflow and information offerings (e.g. Westlaw). However, instead of simply widening its array of information services, Pangea3 provides Thomson the opportunity to create a legal-centric consulting firm with more similarities to Accenture and IBM Global Services than to LexisNexis. Accenture and IBM both offer global clients a full range of business consulting, technology, and outsourcing services. Thomson now has these overlapping elements with subsidiary Hildebrandt Baker Robbins (legal consulting), divisions providing practice management and operations applications (technology), and Pangea3 (outsourcing). It also has additional consulting and technology legal services that fit into this structure.
Thomson has clearly considered this arrangement of offerings. In November of 2009 Pangea3 announced that Bradford W. Hildebrandt, Chairman and Founder of Hildebrandt Baker Robbins, joined its board of directors. As a result, for the last year Mr. Hildebrandt has had a front-row seat in watching the evolution of LPO and Pangea3’s position within it. In addition, Hildebrandt Baker Robbins has been analyzing and promoting legal outsourcing through its blog. In April, Hildebrandt consultant Lisa Rohrer posted Porter’s Threat of Substitutes: Do LPOs Present a Competitive Threat to Law Firms?, suggesting that legal process outsourcers are potential Porter-style substitutes for legal services, and in May, Hildebrandt consultant Kristin Stark posted Five Forces Continued: Legal Outsourcing – Substitute or Complement?, stating that “By resisting clients’ interest in pursuing such partnerships [with LPOs], law firms jeopardize client relationships and fail to provide clients with the superior value and service they seek.” Mr. Hildebrandt himself seems to have considered both the future of LPO and the potential for India as a market in his June 2010 blog post, Brad Hildebrandt’s Update on the Indian Legal Profession.
The Pangea3 acquisition is a significant boost to the LPO industry, but also proves a significant third “outsourcing” leg that will allow Thomson to provide a full suite of consulting, technology, and outsourcing services. The acquisition is further indication that LPO is a part of the larger reshaping of legal services in the U.S., and should be considered within this context. It may also provide a roadmap for other service providers to plan and extend their offerings.
RESPONSE: In response to a request for comment on this analysis, Tony Abena, president of Thomson Reuters’ Global Legal Services unit (the executive who will oversee Pangea3), called it “speculative at this point,” emphasizing that “Pangea3 will be managed as a stand-alone business,” just as Hildebrandt Baker Robins is. Thomson, he stated, plans a ‘specialist’ model for its legal consulting services businesses, as compared to the highly integrated ‘generalist’ model found at firms like Accenture.
While any projections about the future of the legal industry are speculative, Global Legal predicts that a vendor (or vendors) will emerge to offer legal practitioners a fully integrated set of services that drive efficiency.
Global Legal welcomes feedback as we continue to analyze the evolving strategies and business combinations in the legal services industry.