In a recent post (LPO is a Distinct Legal Services Industry – Porter’s Five Forces), I outlined how LPO firms have emerged as a new class of competitors, or partial substitutes, for some services offered by law firms. I agreed with Hildebrandt’s Kristin Stark that many law firms could be providing clients with superior value and service by incorporating lower cost discovery review into their services.
Law firms should consider structuring LPO vendor services into fixed-priced, litigation offerings. Firms should be able to offer lower prices while maintaining profits in return for vetting and managing LPO vendors and providing integrated litigation management. Clients would receive lower, predictable prices and a single point of accountability for litigation matters. LPO vendors would get more business and have the opportunity to work with clients and law firms to continuously improve processes and lower costs for all parties. The two biggest obstacles to law firms incorporating lower cost discovery services are financial and ethical. In this post I will outline a viable financial model, and a subsequent post (The Ethical Challenges for Law Firms to Embrace Alternative Fees & LPO) will highlight some of the significant ethical challenges.