Sunday, July 22, 2007

Canadian LPO interests, Canada's leading law related portal did a recent article on Legal Process Outsourcing in its publication, Lexpert Magazine. The article is another evidence of increasing Canadian interest in Indian LPO capabilities.

The article quotes Russell Smith, President and Chairman of SDD Global (one of the fast growing LPO companies in India) and this blogger along with partners at Canadian law firms specializing in outsourcing. Some snippets:

“I would say 90 per cent of the work [being done in North American law firms] can be off shored to India,” says Smith. “If it's not walking into court, holding the client's hand or having a meeting–which by the way most clients don't need anyway–it can be done here.”

“The sector isn't large enough to warrant substantial government focus at this time, but learning from the past I think the government will be very encouraging,” says Jindal. “You can see that I.T. outsourcing has changed the way so many people live in India. Looking at that success I think the government is excited about delivering offshore low-cost, high-quality services to the world.”

“I think its going to be very interesting to watch and see how this market develops over the next five years,” Gross says adding that she would predict that corporations, more than law firms, will begin to use the service.

“The pressure on internal legal departments to find ways to cut their budgets has been increasing by leaps and bounds,” she points out. “More and more Canadian in-house counsel may either start calling on Indian firms directly or directing their Canadian law firm to outsource some of the work.”

“There are times when there might be a good business case for it and it makes sense for any organization capable of doing it properly and effectively but it's not the silver bullet or the panacea to cut legal costs,” she warns. “To the extent that it helps clients cut legal costs and get better service, that's what we're all trying to do… It's certainly not going to devastate the legal markets in Canada onshore.”

Exciting times ahead ...!

Thursday, July 12, 2007

Pangea3 Secures $7 Million Series C Funding from Sequoia Capital

NEW YORK, July 10 /PRNewswire/ -- Pangea3 LLC, the global leader in legal process outsourcing to corporate in-house counsel and U.S. law firms, announced today that it has closed $7 million in Series C funding, funded by Sequoia Capital India. Sequoia Capital's investment underscores the significant demand among legal departments and law firms for outsourced
legal services as a solution to increasing legal fees. Sumir Chadha, managing director of Sequoia Capital India, will join Pangea3's board of directors.

Press release here.

Tuesday, July 10, 2007

Nazi inspired LPO!

A reader of this blog wrote in to say the following, it is kind of funny!

By the way, just by way of comment, I was approached here in the US by a company called Legal Circle. I went to their site and they seem to be part of Fox Mandal in Delhi, how though in God's name can they possibly be quoting Hitler on their website. Are they mad? Look on their services section. I can't believe in this day and age that a company can think that aligning their strategy to history's worst dictator can be a sales tactic. Why would they do it?

Here's a link to what they are talking about. Its a motley crew, LPO space!

Update: Due to some smart-ass comments such one below from "Brendan", I am moved to inserting a snapshot from the Legal Circle website (with the Hitler comment), which has since been updated but in a rather foolish and obvious manner.

Saturday, July 07, 2007

Raj Abhyankar's new company LegalForce has a long but interesting article on patent part of offshored legal services. The motivation for clients to use patent preparation and prosecution related offshoring is articulated is articulated well. Of particular interest is commentary on the nature of LPO firms providing patent services, some snippets:

There are three basic forms of legal process outsourcing:

1) Full Service Providers:
Full service LPOs ostensibly provide a set of services mirroring that of a patent law firm, but deliver these services using foreign attorneys and engineers. Many such models, with the exception of a handful, are led by non-patent attorneys. Such organizations compete with law firms for legal work, and often seek to position themselves as being able to offer services at a substantial discount from that of U.S. patent attorneys. The ability of such companies to perform legal services is limited to the extent to which the engineers or attorneys that they hire in foreign countries like India can replicate certain tasks performed by U.S. patent attorneys.

Companies that fit this model include Evalueserve, Pangea3, Lexadigm Solutions, Office Tiger, and a number of others. In such organizations, the training received by these foreign engineers or attorneys to ensure quality and consistency of work product is often minimal. Many such full service LPOs depend on either their clients or retained patent attorneys for short-term legal training. Because these LPOs are formed as corporations rather than law firms, the numerous protections offered by U.S. patent law firms, including attorney client privilege, attorney work product privilege and confidentiality, are lost. Furthermore, state bar regulations governing accountability for the validity of certain work product and preventing conflicts of interest are also not enforceable in such models. As such, full service LPOs often lack credibility with clients and are viewed as a threat by U.S. patent attorneys in private law firms.

Some of these companies have made efforts to adjust for their shortcomings. They have tried, for example, to employ U.S. patent attorneys to review work product at certain stages in an attempt to improve the quality of their services. However, the differing styles of U.S. patent attorneys in private practice has proven to be a challenge when training foreign support staff, and these companies have not been able to enforce a consistent set of quality control and best practice metrics in conformance with U.S. patent legal standards.

2) Support Service Providers:

This second category of LPOs provides support services to U.S. patent attorneys, usually through a foreign company. Such companies prefer to operate primarily as back-end
providers rather than interfacing directly with end clients. Examples of such companies include Intellevate, Bluefile, Brainleague, and Mantan Services. Some of these foreign companies have been started by U.S. patent attorneys and established U.S. patent law firms. For example, Intellevate was started by partners of Schwegman Lundberg Woessner & Kluth, a law firm in Minnesota, and partners of Lee & Hayes in Seattle helped launch Bluefile. As such, many companies in this category have the benefit of highly specialized training programs conducted by U.S. patent attorneys. Such companies do provide valuable services to U.S. patent attorneys, particularly those in small firms or having solo practices, and they manage much of the docketing, paralegal, and support functions that are required to keep a law firm operating smoothly.

Outsourced support providers realize that they may not have the skills or internal resources to hire and manage their own U.S. patent attorneys. Hence they usually choose to partner with U.S. patent law firms who handle the front-end legal work while they provide the firms with paralegal and technical support services. The principle challenge for this type of legal outsourcing company is growth. Their growth may be limited because they only provide a limited spectrum of support services to a very specialized market segment. To fuel growth, some of these companies have begun to work with clients directly. For example, Intellevate now works with Microsoft in addition to supporting more than fifty separate law firms. By working directly with end clients, however, support providers may breed distrust in law firms supported by such companies or practicing patent attorneys. They may begin to feel that their support services partner has ambitions to compete with them directly in the future.

3) Offshored Subsidiaries:

The third type of legal outsourcing company is a wholly owned subsidiary of a foreign or U.S. law firm that leverages labor arbitrages created by globalization in offering legal services. Examples of such law firms include IP Horizons, Global IP Services, Raj Abhyanker LLP, Evergreen Law Group, and Lawrence Ho & Associates. These firms usually have offices in two or more countries, and employ attorneys and engineers in their foreign offices to support U.S. patent preparation and prosecution work.

The advantages of such a model are that the U.S. law firm owns the offshore subsidiary, which allows both an extension of state bar privileges to the subsidiary and ensures that both quality and confidentiality concerns are closely monitored. The biggest challenge for such globalized law firms has been training and retention of personnel in the offshore subsidiary. Ensuring uniformity in training is expensive and is difficult to accomplish without significant investments. Retaining good employees also requires policies that encourage participation and a sense of ownership.

Friday, July 06, 2007

First Concrete Step Towards an LPO Trade Association

There has been some buzz in the industry about forming a body comprising several LPO provider, a la National Association of Software and Services Companies (NASSCOM), the Indian chamber of commerce that serves as an interface to the Indian software industry and Indian BPO industry (Source:

See the recent MindCrest press release and comments from LawScribe's Mark Ross. The following is a release from a representative of the body. I am certainly excited to see collaboration take place in this fast-growing space. So here's the breaking news on the formation!


At least 33 LPO companies in India, including several of the largest and most prominent in the industry, will be meeting in New Delhi on Saturday July 28, to form a trade association, tentatively named the National Association of Legal Process Offshoring Companies (NALPOC).

The meeting will be held at the Hans Plaza, a four-star hotel in Connaught Place, from 10:30 a.m. to 6:00 p.m. with a break for lunch at 1:30 p.m. The meeting will be chaired by a neutral facilitator, approved in advance by prospective members. All LPO companies in India are welcome to attend the meeting and send up to two representatives each, but registrations are requested by July 10 and must be received by July 18. For registration details and other information, please email Vidya Devaiah at

NALPOC is intended to become a much-needed voice of the LPO industry in India, not only to represent the industry, but also to create the best possible reputation for the industry, worldwide.

The following is a tentative statement of general objectives for NALPOC, subject to modification at the founding meeting:
1. Promoting the best image of the Indian LPO industry worldwide. Ensuring that this image is maintained through self-regulation, with members preserving the highest ethical standards and practices.
2. Providing an information platform for Indian LPO companies and specific industry services, with the dual purpose of attracting the best and the brightest to work in the fast-growing LPO field, and as an information resource for customers interested in off-shoring their legal processes to India.
3. Organising business meets, seminars, conferences and other media for open communication, in India and also overseas, to keep the industry up-to-date on the latest LPO news and innovations and provide a forum for overseas customers to discover the possibilities of the LPO industry in India.
4. Fostering a good relationship with the Indian Government and foreign governments that could impact our industry, and participating in the composition and development of government policy and legislation that will favorably affect the interests of our membership. 5. Working with universities, colleges, law schools, secondary schools, and other educational institutions, both in India and overseas, to increase the pool of suitable job candidates for the Indian LPO industry, and to facilitate their training and recruitment.
6. Representing the interests of the Indian LPO industry in relation to national and international agencies, trade associations and other organizations, in all areas relevant to our membership.

Thursday, July 05, 2007

Businessworld piece on LPO

I must say here's one piece which makes so much sense. The print version is here, snippets below:

A decade after legal work began to be outsourced to India, the industry has grown to reach an annual turnover of $60 million(Rs 246 crore). But despite the hype over how legal outsourcing and other such value-added services would alter the global economy by moving high value, white collar jobs out of western economies and into India, the fact is that this is not happening.

$60 million sounds like a reasonable estimate. I don't think the day will ever come when even theoretically every Western lawyer will be replacable by an Indian lawyer. In India, law doesn't seem to be a career of choice for many and it doesn't seem things will change vastly anytime soon. This, of course, affects how many of legal graduates being churned out by law schools across India are suitably deployed for doing offshored legal work.

William Tanenbaum, international chair of the technology, intellectual property and outsourcing group at Kaye Scholer LLP and a partner in the firm’s New York office, says the mistake LPO proponents make is in assuming their industry’s trajectory will mirror that of the business process outsourcing (BPO) industry. “There’s never going to be an absolute, compelling case with legal outsourcing the way there is for outsourcing of call centres and work that are commoditised,” says Tanenbaum. “U.S. law firms are not offshoring any work because they are afraid of confidentiality issues, lack of control, besides they still have to figure out what they can send out that would be high volume enough to make it worth it.”

Tanenbaum, who advises several U.S. clients on legal offshoring issues, also says legal outsourcing will not take off in the way that information technology support and other services have because the former are highly subjective and judgement-oriented and less reducible to standard delivery models. Further, he argues, “You really are tied to specific client information and don’t get the high-volume advantage that you do when you are doing commodity work. Others may disagree, but it is a major consideration.”

This makes quite a lot of sense. With IT, at the end of the day you have a machine telling you if the code cooked by a programmer will or will not be acceptable to a western client. Thus, quality is quite measurable, even in operations of vast scale. The same holds true for BPO/call-center type of work - easy to define metrics for measurement of quality. Finding suitable metrics to measure quality (scale will only add to the challenge) in work output based so much on judgement won't be a trivial task.

Others do disagree. Christopher Arena, a partner at Philadelphia-based intellectual property law firm Woodcock Washburn LLP, says legal outsourcing will increase with time. “Corporate budgets are not getting bigger; they are getting tighter,” says Arena. “It’s an issue that’s here to stay, the law firms and the corporations and the LPOs in India should figure out a way to do it effectively.” He adds that ultimately it boils down to providing value to clients.

That could, in fact, be the key to the problem. “Law firms have less of an incentive to offshore as such, because it is their clients who foot the bill anyway,” says Sonny Ajmani, principal consultant at Opera Solutions in New York, a global consulting firm that advises clients on outsourcing and offshoring. “Unless there is peer pressure, which will induce competition or pressure from the clients to reduce costs, I don’t see law firms going the offshoring way.”

From the grounds, I can say that there is enough proof for the hypothesis that corporates have been and will continue to drive offshoring of work, including legal work. Corporations are generally used to the idea of getting it done remotely, be it manufacturing, IT or lower-end back office support.

“Unlike many areas, such as information technology, banking, finance and insurance services, where as much as 10-12 per cent of the services may be offshored to India by 2015, the corresponding figure for legal services is only 1 per cent.”

I don't think anyone can confidently say that a tipping point in offshoring of legal services will come, but then no one can say it won't.

The reasons are many. For one, when companies assess their costs, legal expenses normally figure at the bottom of their list. This is partly because legal costs are not fixed and difficult to estimate. There is also a reluctance to tinker with legal costs because of the high risks entailed by negative legal outcomes.

“Nobody wants to touch legal costs because your internal counsel will tell you that if you lose one major litigation, you’ll wash away any savings you can get through offshoring,” says Opera Solutions’ Ajmani.

Ajmani says there is still scope for Indian LPOs to grow. First, they should forget about trying to win the real high-end work that has a significant impact on the future of the firm like, say, litigation. Instead, he says, they should focus on more routine jobs, such as the drafting of contracts, which is essentially a standardised process and relatively easy to farm out to third party service providers.

Already, the great part of legal work being outsourced to India is of this type, with patent and trademark filings constituting about 70 per cent of all LPO revenue.

Currently, only around 10 per cent of LPO work is related to litigation support, which is categorised as high-end LPO business. However, in terms of the total global legal process outsourcing market, which is pegged by the Quatrro research firm in TTTT at $20 billion (of this $6 billion are offshorable), it is precisely the latter segment where bulk of the opportunity lies.

Higher end is more profitable, lower end will give the scale, conjuring a right mix is skill!

Wednesday, July 04, 2007

Valuenotes' research update on Legal Services

Here's the press release from Valuenotes about their research update on Legal Offshoring. As with the report last year, the numbers are suspect. Here are a few snippets:

A recently released report by ValueNotes estimates that the current Indian revenues from legal services offshoring are slated to grow from $146 million for the calendar year 2006 to reach $640 million by end 2010. The industry employed around 7,500 people in the legal offshoring space in India as of end 2006. The number of employees is expected to reach 32,000 by end 2010.

Let's see: 7,500 people (which is a grossly suspect figure in itself) earning $146 million (suspect again) ~ $10/hour (@ 2000 productive hours per person per year). Why would anyone have such low rates and still continue to be in this relatively challenging business? I think the effective billing rates (discounting writing hours off which often happens in the name of training, client development, hiring ahead of work etc.) should be about $35-45/hour for better known players and about $20-30 for lesser known ones. Any lower doesn't seem either scalable or sustainable.

The Indian vendor space has over 100 service providers that can be categorized into three groups: Captive centers of corporates, Third party - Niche service providers (Stand-alone LPOs) and Third party - Multiservice providers. Third party vendors dominate the LPO space by employing the majority of the workforce in the sector. However, vendors with niche focus and multi-service providers differ distinctly in terms of service offerings and capability.

Hmm... 100 service providers, 7,500 people in all - Pangea3 is one of the largest players with about 220 employees, so an average of 75 people per player seems suspect. I hope the report isn't including the "onshore" employees for multishored companies, which many of the names mentioned are. Again, I hope the report isn't counting overall employee strength for Broadline BPO/KPO companies with some (often marginal) proportion of services under the "legal offshoring" gambit.

The Legal services outsourcing industry has grown at 50% CARG through 2005-06. This growth has been driven primarily by increasing demand, vendor maturity and capability of vendors to offer higher value services. Based on our exhaustive primary research and analysis of this sector, ValueNotes has identified a “List of frontrunners” which includes Evalueserve, Integreon, OfficeTiger, CPA Global, Mindcrest, Pangea3 and Quislex. We have also identified ‘‘Emerging players’’ that have potential to emerge as winners within their chosen niches. These include players like LawScribe, New Galexy, SDD Global Solutions, Tusker Group, Aptara, Lason and Quattro BPO.

But hey, some research is better than none, isn't it?