Where did the term, “LPO,” come from?

The term, “LPO,” for “legal process outsourcing” is apparently a media invention. It derives from BPO, or business process outsourcing. But to the extent that the word, "process," suggests standardized, commoditized, easy-to-replicate tasks that can be performed without a lot of education, much less professional training, it is a misnomer for the legal services off-shoring industry. Typing a medical transcription, or answering calls based on a script, is a "process." On the other hand, legal research, legal analysis, or drafting complaints, contracts, patent applications, or legal briefs, is not a BPO-like, commoditized "process." Those are legal services, even if they do not amount to "practicing law," which can only be done by the supervising, licensed attorney (often in-house corporate counsel) who reviews the services that so-called LPO companies provide.

That is why many in this industry do not refer to themselves as “LPOs.” One company uses the phrase, a "provider of global legal and patent outsourced services." Another refers to itself as a "premium legal services company." Others refer to their "Legal Knowledge Services" or "Offshore Legal Services." Still another has adopted the label of "legal services organization."

Yet another potential misnomer is “outsourcing.” There is nothing new or controversial about the outsourcing of legal services. Every law firm in the U.S. and the U.K. is an outsourcing company. Their corporate clients have routinely “outsourced” legal services work to outside counsel for hundreds of years. If there were no outsourcing, there would be no law firms. What is new is not outsourcing, but off-shoring. What is new is the creation of a worldwide legal landscape, where offices and employees will be located in places determined by the actual needs of clients, rather than the habits of law firms that do not wish to change.

Some People are using a new term like “Legal Services Offshoring,” or “LSO.” That would be a better and more useful term than “LPO.”
 

WHY LEGAL OUTSOURCING? 

Most firms and corporations outsource primarily for cost saving measures and this is considered the biggest advantage for legal process outsourcing. While an attorney in major legal markets such as the US charge at minimum 250 dollars for work, countries that are offering legal process outsourcing charge just a fraction. Some countries, especially in the Indian sub-continent have gained prominence due to the fact that some of their attorneys with higher degrees work at meager salary. This has attracted major corporations to outsource some of the minor and less sensitive work in their legal departments. Another comparable advantage is the turnaround time since most countries that offer legal process outsourcing are either on the other side of the Atlantic and generally with customers from the US.

At face value, it would appear that outsourcing service work to another country is detrimental to the U.S. workforce. This is only at the surface, though. The net effect created is a positive one for the U.S. The creation of jobs in countries such as India leads to the creation of new wealth, and a new class of consumers will have increased purchasing power to buy U.S. goods. Countries like India, to which jobs have been outsourced, make for new markets for the U.S. to export to, and this in turn creates revenue for the U.S..

The outsourcing of service work also lends itself positively to the overall development of a U.S. business. Workers can focus more on specialized areas and precious resources can be freed up to further these. In turn, more specialized and focused businesses have a chance of creating additional jobs for more skilled workers by branching off into areas that require a special skill set. On a more macro level, the overall wealth of a nation like the U.S. can improve if companies are focusing on developing core businesses.

It goes without saying that the LPO trend offers great benefits. India’s legal services are affordable, efficient, and above all, skilled. Outsourcing legal work to India costs up to 80% less than the cost of using the services of American law firms. Because it is far less expensive to hire talent in countries such as India, an outsourcing company is in the enviable position of being able to commit larger teams of talented workers to more specific areas of concentration. An LPO, for instance, can afford the luxury of dedicating an entire team to register trademarks or process immigration visas.

But it isn’t just cost savings that make the LPO an attractive business prospect for U.S. companies and forward-looking law firms. As is the case with the BPO and the KPO, LPO users can avail of a range of benefits, not least saving time on getting important work done. LPO users can gain more operational efficiencies by focusing on core business activities while having access to a breadth of skills, technology and service offerings, at a reduced cost.