LPO: A Primer for Solo Attorneys

Update, Dec 30, 2007: A reader of this blog wrote in to share their own reason for embracing LPO, I am sure other Solos find themselves in a similar situation.

I am a solo practicing in Kentucky and I am very interested in LPO. I work between 60 and 70 hrs per week to keep up with my very busy general practice and I fear that my professional success is coming at the personal cost of my family. Long story short, I need to maintain and/or increase productivity while at the same time cutting back my hours by at least 20 per week.

Earlier Post

Susan Cartier of the blog Build A Solo Practice inspired me to write a guest post on how Legal Process Outsourcing can benefit solo attorneys or small firms. The following is the original post, that Susan may edit and post on her blog. Any queries are welcome at my email id.

Jonathan ‘Lawsome’, See offshore!

So you’ve decided to go solo? Congratulations, the life with dreams of a mahogany furnished office, graying hair and firm politics wasn’t for you. Good riddance!

Now that the time has come to begin the journey towards proving yourself to yourself (and perhaps others), lets get going. You may have heard about India. Yes, contrary to the notions you have, India is no longer the land of snake charmers and there are other modes of transport than elephants! As it was known-to-be in the last millennium and early this millennium, India is an economy powered by knowledge. Even though there are many reasons for India not being great in the sports requiring physical agility, there are enough Indian minds that are agile enough. If you have been around for some part of the past century, you would have heard of some Indian scientist or the other. Yes, Indians are good beyond the Patel Motel dhandho and Pooja and Priya Grocery Stores and Video Parlors!

As you may have read over the past few years, India has become the destination for knowledge driven industries and call-centers. IT outsourcing was the first to pick up and there now exist behemoth Indian companies in that space. There is a grand range of activities getting outsourced, from call centers to animations, from payroll to architecture design. Somewhere in that spectrum lies the outsourcing of legal work. As has been repeated ad nauseam, two of the critical reasons that enable the Indians to serve low to medium complexity western legal work are the common law background of the country’s own legal system and that most Indians study in what are known as “English-medium” schools i.e. schools where the medium of instruction is English. And given the fact that the great Indian middle class lays an almost inordinate amount of stress on the importance of education, there are enough kids who are good. Add to it the fact that it is a country with a billion plus people, you have many very competent people. A joke about the competitiveness ingrained in Indians goes like, “In India, even if you are so gifted to be one in a million, there are more than a thousand people like you!” So all of these factors combine to make the phenomenon of legal outsourcing a reasonable success at the moment and outstanding success-to-be in the times to come.

And you can be a part of this success. Go offshore! No, I didn’t mean that you move to India yourself but rather that you think about having some people work for you and build your practice, helping you become increasingly competitive and profitable at the same time. If using offshore resources also enables you to scale up your own operations, why not?

That said it isn’t straightforward to embrace legal offshoring, at least not just yet. I keep a tab on the industry development and growth and my own research says there are more than 140 “LPOs”, all shapes and sizes, including some fly-by-night operators. Nascence and lack of regulation has led to presence of some players and companies that no serious and mature industry will let survive. However, help is close to find! Read on…

First, remember that trusting the vendor you ultimately choose is very important. If there is cynicism in your mind, the relationship will not succeed.

Choosing the vendor: For solos like you it is not always advisable to go after the big names. You won’t be the largest client for them and therefore not always high on their priority list. One big client and your work will be de-prioritized. Choose a mid-sized vendor, who has certain advantages that work in his favor, may be a non-metro location or may be attractive stock options for employees or whatever, such that he is able to provide you with quality resources and commitment to service. Make sure you meet the vendor before you start regular work with them. This may mean sitting in a coach seat for a trip half way round the world, but if the relation works out and grows, it will be worth the backache and the bad food!

Confidentiality: It is just natural to be worried about the confidentiality of the documents you send offshore. India and Indians are no better or worse when it comes to protecting the confidentiality of data, so take the same amount of caution as you would in your country. There are vendors who might be able to do the work cheap for you but let’s face it, there is no way for you to know or control a situation where your work is floating around to sub-contractors of the vendor who couldn’t care less for confidentiality. So don’t take this lightly and take utmost care to build confidentiality into the contract that you sign with the vendor with heavy penalties in the event of a violation.

Conduct pilots: Good looking websites, impressive management profiles, ISO standards for data security are great first level of filters in your due-diligence process. However, you must ensure that the vendor has people who can deliver according to, or close to, what you need. It may be a long call to expect training to help parrots to analyze for you! Conduct pilot projects with the vendor, paid pilots if you have to. Usually some research or draft that has already undergone your scrutiny and efforts can make for a good pilot.

Train your people: No one knows more about your style and nuances better than yourself, so the best teacher for people who work for you is you. Train the team who works for you on law, research and analysis, drafting, etc. Having said that, make sure your vendor respects the fact that you spent effort in training their people and that your intellectual property is not used beyond what you permit. Also, make sure you work with the vendor to help him retain the people you train.

Try and increase the skill of the people: Just as your coaching job does not stop at the initial training when you hire in your own country, having a resource offshore is no different. Conduct constant feedback sessions for the people who work for you. Such sessions don’t have to be elaborate: inline comments, regular teleconferences and occasional video-conferences, if both your vendor and you have access to, are enough. Start with low complexity work for your offshore resources and over time (few months or as applicable) increase the complexity of the work that you send offshore. For example, if you are a patent prosecution lawyer, start by asking the vendor to conduct searches, gradually moving the writing the more descriptive sections and over a longer period of time moving to claims drafting. Work with your vendor to draft a guidebook for your style. Conduct periodic tests for the people who work for you. They will value it.

Meet them: Agreed, physically seeing your vendor or his resources may not be often possible. But do it when it is possible, combine an Asian vacation with a day’s visit to your vendor’s premises. Speak to your team often. Form a relation; it matters a lot to Indian people if you ask about their family, interests and aspirations.

Form a group: You must realize that you will not be the largest client for your vendor, so you cannot always have very pressing deadlines and too much iteration beyond the original scope of work agreed. The simple lesson there is that, scope your work carefully and don’t leave it to the first draft to realize what all should have or should not have been done. Like it or not, in this world, might is right. Therefore, do form a loose association or a group of people in your profession who can pool together to have enough regular work for a couple of vendor’s people (or more, depending on your specific case), if you can. Having a predictable inflow of work is also good for your vendor and thus you (or your group) will always be an important client for him.

Legal Body Shopping: This isn’t a common form of practice in the LPO space and I am not aware of a prior use of this phrase, but do work with your client to see if it is possible to form an arrangement where the people who work for you can be trained at your location for sometime and then sent back to the vendor’s location but dedicated for your work for a committed period of time. This notion worked very well for IT companies and their western clients in the 90s. Move to Full-Time Employee (FTE) model when possible for you, it boosts productivity, reduces costs and helps increase the complexity of work that you can get done offshore.

Billing rates: You are in it for long and for value. As with any other relation, getting it to work to your benefit will take time and effort, so don’t nickel and dime about the rate too much. As the saying goes, if you pay only peanuts, you get only monkeys!

Be nice: Give references to the vendor, if you like them. Doing so will make the vendor always respect you, your work and your demands. Seeing friends benefit from LPO, a notion that you introduced to them, will only make you popular and respected! After you have become confident of the quality of the work product, share it with your clients and pass on the benefits to your clients. You are sure to gather a lot of goodwill doing so. However, make sure your vendor does not poach your clients, make the relation work to your benefit.

Do remember, persistence pays, so don’t give up because an experiment or two failed. Buy the CD, or call me and I will sing this for you:

I’ll never rest until I can make my own way

I’m not afraid of fading

I stand alone

Make offshoring work for you. Welcome to India!

LPO: The talent bit

The following is an email exchange with a reader of this blog, I often get such mails from people willing to enter the industry but worried about the talent availability. I think there is no easy answer or a short-cut strategy to the trained talent shortage problem, perhaps an industry consortium supported training forum may help - long call, I know!

Hi Rahul
Firstly I would like to thank you for creating a vast online information center which provides valuable insights in to LPO business. I'm in the process of setting up a center where in we'll be providing paralegal services to US based law firms. We would be providing services mainly related to Document Review, Legal Research and Transcription. In this process I was a bit skeptical in deciding the right type of people to hire. It would be great if you could help me by providing some valuable inputs regarding this. Some of the key points that I'm not sure about are:

• What type of lawyers to hire (fresh graduates from Law Schools/ experienced)
• What key capabilities to look for in the prospective candidates.
• What type of training needs to be imparted in order to get our team fully equipped for production.

My reply:

Being a relatively nascent space at this point in time, LPO does face a bit of talent crunch and you would need to devise your proposition for attracting the right talent carefully. My suggestion would be to spend a good amount of time getting the first few people, carefully document the process description of the service offerings you would deliver from India and work with your clients/counterparts to create comprehensive training plan and documentation. If you have these three things (good supervisors, process documentation and client/US attorney/paralegal developed training material), then you can hire people with relatively little work experience, and in some cases even freshers.

You must keep in mind that an average Indian law student may not be suitable for working in an environment that a company serving Western legal needs from the word 'go'. So, you do need to spend an adequate amount of time training those people not only on matters related to the work product they will be delivering but also on soft skills.

Key skills to look for are no different as you would in any other industry: dedicated people keen on learning a lot of new things, agile enough to grow with the company and the industry, good written and oral communication skills and willingness to give the company and their career enough time to develop and not get impatient. Having a better than average academic record will help too not only from a "learnability" perspective but also for sharing team resumes with prospective clients. There is a fine balance that would need to be maintained though when it comes to hiring the right talent. You wouldn't want to hire say the rather "high-fliers" from the top schools, because even if they do join you, their impatience co-efficient, so to say, will be high enough making it difficult for you to retain them.

I would advocate grooming the talent in-house rather than always relying on poaching experienced people as a hiring strategy. It is very important for the industry to have, what I call, multiple "entry points" i.e. companies which have great training programs, good enough for fresh graduates or people with no relevant work experience to come in, get trained, work for a good amount of time before considering moving on. It does not serve the industry for only a couple of companies to have training programs while all others luring people from those companies when it comes to setting up shops or increasing headcount. The presence of certain training-only companies will also help the industry.

LPO: A New York lawyer grieves!

Elisabeth Kübler-Ross must be a genius, the model she described in 1969, so aptly outlines the grief of a closed-minded NY lawyer who was angry enough, even in this festive season, to lambast the whole notion of legal offshoring and the millions of dollars worth of benefit that American corporations and law firms have drawn from it.

I have seen young parents worry about the influence of crime on impressionable minds, that practicing criminal law can, in extreme cases, also have its effects is a new one!

SHG, Esq - can I propose you start benefitting from offshoring by using secretarial services, perhaps someone who could help you with idioms? At the least, Medical tourism can do YOU good.

All the animals in the zoo,
Monkeys, elephants, tigers and shrew
The monkeys eat peanuts,
The elephants too,
The tigers eat meat and
they might eat YOU!
- Laura Reynolds, age 12, London

Update: Mark Bennett takes a third-party view of the "conversation" between SHG, Esq. and me. Mark notes that certain aspects of US legal work can be offshored. Bulls eye! I have myself noted in a previous post that it is unlikely we will see a day when even theoretically every Western lawyer will be replacable by an Indian lawyer. May be criminal law is not an area suitable for offshoring, but are all Solos practicing criminal law?

Similar cynicism was witnessed when Intellectual Property work first started going offshore - from "My cat could write a better patent application..." to "...they eventually found the right company and trained its non-lawyer employees how to write solid applications. Now, a year later, Carpenter & Kulas has filed more than 100 patent applications that were outsourced to India...".

150 IQ is a powerful asset, don't under-estimate it!

Snippets from Mark's post:
...
So if the LPOs are hiring smart Indian lawyers and training them well, there's no good reason to think that they couldn't do the bulk of the work that the bulk of American lawyers do. Aside from document review, American legal research is well within the reach of properly trained Indian lawyers. Contract drafting, as well, might be feasible. Teaching law is a cinch.
...
And there's the rub. Much of what lawyers -- especially trial lawyers, and most especially criminal trial lawyers -- do requires a thorough grokking of the culture. Such knowledge of American (or Texas, or New York) culture can't be taught; it takes decades to absorb. And so communicating with juries, judges, and valued clients -- almost all we do as criminal trial lawyers -- cannot be offshored.

Those willing to benefit from India will find the right resource to help them, and the closed-minded ones will continue with their FUD drivel - the end customer has to decide for himself.

LPO: Transactional versus FTE Model

A reader of this blog, David, had the following comments on preferring a transactional model over an FTE model for a legal process outsourcing contract with Williams Lea, he refers to this previous post:

"Interested reading your article LPO: A Primer for Solo Attorneys.

To be honest much of what you say is very true for medium size and even the larger silver/magic circle firms.

However, I would like to add a rider under your section Legal BodyShopping: we are actually trying with Williams Lea LPO to move to a transactional model and away from an FTE model. This gives us greater flexibility and allows us to build without the FTEs sitting waiting for our work. Maybe this model is easier for larger firms to work and still get dedicated focused staff, but it certainly is the way to go on anything that can be transcationalised (if there is such a word.) We will be trying it on various areas, basic stuff like document production and volume legal services - conveyancing and even research.

I think it goes without saying that it is what works best for each individual or individual firm but certainly don't rule out the transactional model as the way forward for law firms.

I think the transaction model works well for the long term too. The FTE model is so fixed and rigid, it does not allow for a lot of flexibility and is the reason many people leave outsourcing contracts. In addition many of our corporate clients are wanting transactional pricing and therefore we are building with Williams Lea more of a partnership (without sounding too much of a cliche). We work with WL in legal process outsourcing areas to define the best areas for us to transactionalise."

Being an operations person, I will favor an FTE model, whenever feasible for my client, but as they say, the customer is the king!

Alma mater gets interested in LPO alumni!

It seems getting popular with your alma mater just got more defined, go open an LPO! Prestigious law schools are doing features on their promising alumni who took the, to use a financial term, contrarian route of either leaving active law practice in the US, or building such practice by way of LPO - food for thought for Solo attorneys?.

Columbia Law recently did a feature, "Is the Future of American Law in India?", by profiling Russell Smith, class of '85, and now Chairman of SDD Global. Some snippets:

Under the supervision of American lawyers in New York, Indian attorneys perform the types of tasks normally handled by American paralegals and associate lawyers — at a fraction of the price. Also, Smith pointed out, office space in Mysore is 43 times cheaper than in Manhattan. These savings are passed onto clients. Instead of billing $200 to $700 per hour in the United States, SDD charges $30 to $90.

Many large U.S. law firms — including Kirkland & Ellis, the country’s seventh largest — already outsource some of their legal work. But most do not like to publicize the fact and, in the foreseeable future, are unlikely to set up offices in India. “They can’t credibly bill an Indian lawyer at $365 an hour, and they still need that markup,” Smith said.

It is up to clients to force firms to lower their rates through outsourcing, Smith said. “There are some fields, such as mergers and acquisitions, which will stay in the United States, but a lot of litigation and contract work can be outsourced.”

[This is something almost everyone involved has opined time again - corporations need to push their outside counsel to adopt legal process outsourcing - is enough happening? I don't think so. Is law firm spread FUD when it comes to offshoring legal work a reasonable success. Perhaps.]

Many in the legal profession are concerned about what effect outsourcing will have upon the future of the profession at home. But Smith believes such worries are misplaced. “If legal services become more affordable, that will transform the field,” he said. “Right now, so many financial deals, especially those for less than $1 million, don’t get done because the legal fees for these transactions are so expensive. It’s not worth it. That’s all going to change with the rise of outsourcing.”

Coming back to the subject of this post: If you want to be in your law school's newsletter, go join an LPO - Jonathan Goldstein did (several months ago)! Heck, start by interning (if you have questions, just mail me)!

Legal Process Outsourcing Blog: Among ABA Journal’s BLAWG 100!

Legallyours PICKED AS ONE OF THE ABA JOURNAL’S BLAWG 100

Editors of the ABA Journal today announced they have selected Legallyours, your favorite Legal Process Outsourcing blog, as one of the top 100 best websites by lawyers, for lawyers.

Now lawyers are being asked to vote on their favorites in each of the Blawg 100’s 12 categories. To vote, go to http://www.abajournal.com/blawgs/blawg100. Voting ends Jan. 2, 2008.



“Lawyers nationwide are using the power of the Internet to educate the public about developments in the law, market their practices and attract new clients,” says Edward A. Adams, the Journal’s editor and publisher. “Our list of the 100 best lawyer blogs is the cream of the crop from our directory of more than 1,500 blawgs in dozens of categories, including blawgs focused on almost every state, law school and major federal court in the nation.”

If you have benefitted from this blog, or will benefit from it in the future (which I sincerely hope you do), please vote for this blog! To vote, please click on http://www.abajournal.com/blawgs/blawg100/toolkit, scroll down to about 80% of the page or search for "Rahul" and click on the vote button adjacent to the blog mention. Thanks for your support!

About the ABA Journal:The ABA Journal is the flagship magazine of the American Bar Association, and it is read by half of the nation’s 1.1 million lawyers every month. It covers the trends, people and finances of the legal profession from Wall Street to Main Street to Pennsylvania Avenue. ABAJournal.com features breaking legal news updated as it happens by staff reporters throughout every business day, a directory of more than 1,500 lawyer blogs, and the full contents of the magazine.

About the ABA:With more than 413,000 members, the American Bar Association is the largest voluntary professional membership organization in the world. As the national voice of the legal profession, the ABA works to improve the administration of justice, promotes programs that assist lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law.

Legal Outsourcing Vendor Strengthens Management

Update3: Advantedge Global Services announced getting a CEO and a COO.

Update2: Integron announced the appointment of Ron Friedmann as Senior Vice President, Maketing.

Update: Pangea3 announced addition of Shelly Dalrymple as Vice President and promotion of Lata Setty to Senior Vice President.


Fast growing Legal Outsourcing firm, UnitedLex Corporation, recently strengthed its executive team with the addition of Anup Bhasin as the Chief Operating Officer.

Anup has been associated with the remote processing industry in India since its inception and has an extensive background in operations, corporate finance and international business development with over 12 years of experience managing onshore and offshore operations. Prior to joining UnitedLex, Anup served as the Executive Vice President at IBM Daksh (IBM’s remote processing arm in India) and was the leader for its shared services group responsible for servicing the Company across all locations.

This is another example of executives with operations experience from the BPO sector graduating to higher-end outsourcing sector such as Legal Process Outsourcing. Another key observation about LPO firms of promise is that their management teams tend to be composed of lawyers educated both in India and the west. However, that alone does not seem to be sufficient and hands-on experience in running operations especially in the outsourcing seems to be an indicator of potential success, UnitedLex and Pangea3 are examples of that.

LPO: Clients look for scale

A reader of this blog, Claire, wrote in expressing her strengthened confidence in Centric (now acquired by Williams Lea) and put to words what was always suspected to be a top concern on a client/prospect's mind: Supplier's financial health, domain knowledge and ability to scale. Her comments:

My firm here in the UK was pitched to by Centric LPO at the beginning of this year and they did have an interesting proposition i.e. sorry to say, not just India as the solution. They had this matrix of services against locations and it was different. However, since the acquisition by Deutsche Post I think this makes Centric proposition more attractive to us. It's a scale thing. Just having that balance sheet makes you feel more comfortable. I think that's one reason LPO has been in its infancy for what seems like ages. The only real players in the market place, that really understood what they were doing, were really small India based players or big BPO guys with no idea what they were doing in the legal space.

I welcome more comments from readers about their experience of using or providing LPO services - the good, the bad and the ugly!

See also: previous post on the Centric acquisition http://legallyours.blogspot.com/2007/11/lpo-times-of-mammoth.html

LPO: The times of the Mammoth!

A reader of this blog, noted the entry of Williams Lea - a Deutsche Post subsidiary - into LPO via acquisition of Centric LPO (earlier mention http://legallyours.blogspot.com/2007/03/new-lpo-everyday_08.html). Thank you for this alert, Pat.

http://www.hemscott.com/news/latest-news/item.do?newsId=53878217339954

Looks like Williams Lea are getting into the LPO space too. They have a great track record in UK and US with Law firms but more in printing and document stuff, but this is an interesting move I think. Certainly another one to watch. They have bought Centric and are obviously taking the market seriously. My colleague reminded me that WL is owned by Deutsche Post so there could be some serious scale and push behind this.

British firms embracing Legal Outsourcing

Update: Mark Ross has an excellent post on the potential fall-outs of passing of the Legal Services Bill in the UK.

In probably one of the few pieces focussed on British firms and their LPO interests, this law.com article quotes the pioneering example of Clifford Chance in embracing LPO. The firm expects to save £30 million ($60 million) during the next three years by getting what may be considered quite manual (versus knowledge intensive) work out of India (they have a relationship with Integreon).

One of the partners at another large firm is acknowleged as saying that work such as document management, work that lends itself to economies of scale, is the one that firms consider first when they consider outsourcing. That the partner's own firm isn't outsourcing is a different thing.

The other LPO with greater focus on Document Processing related outsourcing from law firms, Chennai based OfficeTiger, is also reported to be working for another British firm.

Other large firms are also being mentioned in the article making it worth a read (may require subscription).

For a great example of a UK solicitor advocating outsourcing of atleast that portion of legal work that is considered grunt or mind-numbing my most associates and paralegal in US/UK, see this piece authored by Mark Ross of LawScribe.

LPO News: Oct and Nov '07

Sorry I have been away, my absence seems to have witnessed several developments in the space:

1. Infosys BPO Legal Services
Karlyn D. Stanley and Poonam Vasudeva have been roped in by Infosys for their new venture. Karlyn was previously a partner in a Washington DC law firm while Poonam worked for another LPO before joining Infosys. Economic Times coverage here

2. CPA and Integreon
CPA Creates Alliance With Integreon to Establish Dedicated Offshore Legal Process Outsourcing Center

3. LawScribe
LawScribe LPO Ethics Seminar Approved for MCLE Credit

4. SDD Global
a. The company has been tapped to navigate the legal issues for "Virulents," a collaboration between New Regency Productions, and Virgin Comics (founded by Richard Branson, Shekhar Kapur, and Deepak Chopra), to be distributed by 20th Century Fox.
b. Sony Pictures has come back to Mysore to ask the company for more legal work on a politically-tinged, blockbuster comedy, now set to be filmed in the first half of 2008, and involving some of the most famous actors in Hollywood.
c. Indian attorneys at the company are involved in every aspect of the legal preparations of Sacha Baron Cohen's next release by Universal Studios.
d. With its Chairman and President as lead defense counsel, the company is now doing all the legal work in rebuttal to the controversial Hollywood defamation action against "Da Ali G Show."

Indian doctors reach US courts, virtually

This is a new one for Indian talent helping US lawyers. And this time it is Indian doctors. Forget the $300/hour services being offshored, the outsourcing market is on a roll. How about seeking support from India for services that are typically between $500-$800 an hour?! St. Petersburg Times has this piece on the new use of India. Some snippets:

Sims, the Ocala lawyer, incorporates India into her law practice with a twist on the typical outsourcing model.

After a positive experience with doctors on a trip there, she started MD in a Box. For $90 an hour, the company links lawyers with Indian doctors who screen potential cases, analyze records and perform medical research. The same service with American experts costs between $500 and $800 an hour, Sims said.

The company's most powerful tool is also its most technologically advanced. Lawyers can hire an MD in a Box doctor to be present during depositions using Skype, a software program that allows the doctor to listen to the proceedings in real time.

If the Indian doctors catch a defense expert making a medically suspicious claim, they quickly send literature or rebuttal questions to aid the cross-examination.

Since MD in a Box opened for business last year, a handful of Tampa Bay lawyers have become happy customers.

More steps towards raising standards in LPO

Amidst growing concerns over infestation of the (young but promising) LPO space, can be heard calls for defining some quality (and perhaps ethics and conduct) standards by the relatively larger and more established players. See earlier post here.

More recently, LawScribe, one of whose directors is Mark Ross - LPO industry's persistent advocate of self-regulation and accredition of vendors - recently made this press release about formation of Legal Outsourcing chapter of International Association of Outsourcing Professionals (IAOP).

To quote Mark from the press release, "There is a compelling need for collaboration between clients, providers and advisors to address the requirements specific to the emerging legal outsourcing industry. There have been a number of calls from within the industry to bring about self-regulation and internal accreditation and quality standards. I believe that by bringing key stakeholders together through appropriate forums such as the IAOP we can help raise the standards and inspire confidence from within the industry."

Manhattan to Mumbai to Manhattan: LPO at work!

Update: The ABA Journal directory on blogs also includes this blog under the LPO category, see screenshot below:

The long awaited ABA Journal piece on LPO is finally out. This blog contributed to the piece and is happy about that!

The first instance of legal work being outsourced to India took place in 1995, says Rahul Jindal, a prominent LPO blogger. It started gaining steam after 2000, and Jindal estimates that there are about 100 legal outsourcing companies that employ between 600 and 800 Indian attorneys.

The piece is not your average LPO reporting concotion quoting the same numbers ad nauseam. The meat of the piece is really something on the lines of a-day-in-the-life-of-an-Indian-attorney-working-for-an-LPO - which I think is a novel perspective about the space.

LPO: The "genius" among us!

Update: Mark Ross of LawScribe has this story - about the same "company"!

"I read your latest blog posting with a smile on my face. I don't know if you ever managed to see LexGenius' website before they took down (following LawScribe's threat of immediate legal action!).

Their website was virtually word for word a duplicate of the LawScribe site - it went as far as to completely copy Kunoor Chopra's profile but substitute in the name of the LexGenius founder!!

Although we were flattered somewhat I was left with little alternative other than to fire off a quick email saying that if the website wasn't down within one hour, then they would be hearing from our attorneys. I actually received an email (quite polite) within minutes saying that they had taken down the site"

Quell horreur! Quell scandale!

The fascinating thing about India is that given enough time one can search for anything or anyone. Unfortunate as it is, a search for me-too or fly-by-night LPO vendors doesn't take long.
Consider this: The popular internet media outlet, Rediff News, published an interview - titled "India is the best in legal offshoring" - with Russell Smith of SDD Global. Soon after another legal offshoring company (probably) simply stole it! An LPO called LexGenius (!) changed the title to "LexGenius in India is the best in legal offshoring" and posted it on nearly 20 web sites, pretending the interview was with LexGenius. Nearly every site later took down the fraudulent posting, but at least one did not. You can see the phony version at http://www.articlealley.com/article_219752_18.html .

This blog has archived copies of the phony articles, just in case someone acts smart this time, as had previously happened! Anyone have more stories on such "vendors"?

Another LPO Industry Report

LegalForest, Robert Lee's company has a new report on LPO, available for purchase at their website.

My favorite quote from the preview is:

Proponents of the LPO industry might point to the recent $7M Series C funding of Pangea3 (July 2007), perhaps the leading general service LPO, as a sign of the increasing legitimacy of this industry. However, at the same time comes news that one of the top ten LPO providers (as ranked by the Brown Wilson Group annual Black Book of Outsourcing), NeoWorth LPO, is no longer accepting new clients, and in fact may be closing its LPO operation!

Having previously worked with Robert Lee, I can say with some confidence that the readers of this report should expect some commentary grounded in reality than analyst reports conjuring up numbers for present industry size and anticipated growth.

As Eminem may put it, will the real LPO vendor(s) please stand up?!

Small scale M&A in lower-end LPO

Update: Tricom India, a provider of EDD and litigation support services announced acquisition of US based ‘Apex Document Solutions’ a full service provider of litigation support services for legal practitioners.

Earlier...

Here's the piece. Some snippets below:


Mysore-based Software Paradigms (India) Ltd (SPI) on Monday announced the acquisition of Comat Technologies, a medical transcription (MT) firm. SPI is the city’s largest IT and business applications solution provider.

As part of the deal, SPI will take over all the US and UK BPO/LPO (legal process outsourcing) customers of Comat Technologies being serviced from Mysore.

Over 400 of its employees working on MT, legal transcription and legal coding services will be transferred to SPI’s payroll, taking the number of SPI employees to over 1,000 and double the size of its operations.

Rising rupee hurting LPO companies

A snippet from a Business Standard piece mentioning the hit in margins for LPO companies due to an appreciating rupee:

Tricom, however, has not been immune to the rupee appreciation thus far. Its operating profit margin, which was at over 51 per cent in FY07 and 48 per cent in the first quarter of FY07, shrunk to around 41 per cent in the first quarter of FY08 as the company made an exchange loss of nearly Rs 0.8 crore.

Sify Finance has a similar piece quoting Pangea3:
Sanjay Kamlani, co-CEO of legal outsourcing services firm Pangea3, said that his company was looking at incorporating clauses in new contracts, which would allow it to engage clients in future discussion on pricing in case the currency continued to rise.

Being a big enough business which gets affected by relative movements of currency may be a good problem to have, than not having the business at all!

LexisNexis: "LPO: Touching the Stratosphere"!

As mentioned in an earlier post the Honorable Mr. Justice K.G. Balakrishnan, Chief Justice of India, presided over the launch event for Halsbury’s Law Monthly this past week. It was heartening to see that the cover of the magzine with such patrician pedigree was on "this new new thing" - Legal Process Outsourcing (now also being referred to as Legal Services Offshoring) - the cover had a graphic of a rocket shooting into space!

Legallyours has a copy of the cover story (titled "“Beyond the Back Office: How Legal Outsourcing Companies in India Are Moving Up the Value Chain”) and will be happy to send the PDF to those interested. Please mail jindal [dot] rahul [at] gmail [dot] com for the same. Some snippets:

Lawyer jokes are as popular in India as they are in the West. “How many lawyers does it take to change a light bulb?” Answer: “How many can you afford?” Here’s a better one: “How many U.S. lawyers does it take to draft a successful legal brief in a complex case before the United States Supreme Court?” The answer is, “none!” Indian lawyers at legal services offshoring companies have already been there, done that.

Bradford W. Hildebrandt, chairman of the prominent legal consulting firm, Hildebrandt International Inc., has stated that "ultimately, there may be little limit to what can go offshore." And we are talking about services that now fetch a price tag of $250 billion per year and growing.

If it does not involve walking into court, holding a client’s hand, signing an opinion letter, or signing a court filing, most likely it can be done in India. Western legal services available in India include legal research, drafting of commercial contracts and litigation papers, applications for U.S. and U.K. immigration visas, patent applications and analytics, and a whole host of other high-value work.

The clients of such LPO companies are already reporting hundreds of thousands in savings:

SDD Global
Sony Pictures had to [obtain] an ‘opinion letter’ (outlining the activity and the risks involved) for insurance firms in order to secure cover for shooting a movie, and the movie’s fate hinged on the letter and the cover. Preparing the letter was a 400-man hour job which would have cost $250,000 to get done in the U.S. and Sony gave it a second thought. Eventually, the job was done in India for $43,000.

Atlas Legal Research
You may not be aware, but we had a small portion of that research complete when we hired Atlas. As a test, we had your team reproduce some of the same work done by our nationally recognized law firm. The legal research and opinions that your team produced were essentially identical, except for the price tag. Your group saved us 90%, and completed the work in less than half the time. For clarification, the research you did in less than one month saved us over $200,000

...

In a recent speech, Mark Chandler, the General Counsel of Cisco Systems, tackled these issues head on. Describing the traditional law firm model as “the last vestige of the medieval guild system,” Chandler mentioned offshoring to India as one of the solutions, and delivered the following shot across the bow, referring both to the young law associates and the large law firm system in general. [See the quote by Chandler in the actual piece]

Instead of embracing change, many Western law firms are continuing their old ways, some to even greater extremes. Hourly billing rates have increased over 30 per cent in the last few years. Starting salaries for untrained lawyers, straight out of law school, have climbed to $160,000 per year. In London, rates for big firm lawyers have reached the unprecedented level of £1000 (nearly $2000) per hour. At the same time, the mega law firm Jones Day recently admitted publicly that it is now offshoring legal work, in response to client demands. All of this bodes very well for the legal services offshoring industry in India.

The article also describes myths about offshoring legal work (for reasoning why these are myths, see the article):

MYTH NUMBER ONE: Indian Lawyers Lack the Skills and Aptitude to Handle High-End Legal Work for the West

MYTH NUMBER TWO: “You Get What You Pay For,” or in Other Words, Low Cost Equals Low Quality

MYTH NUMBER THREE: The Higher the Level of Work, the More Risk of Ethical Violations or Breaches of Confidentiality

The piece concludes with some predictions on "The Future of the Legal Services Offshoring Industry", in order not to hijack the article's audience, go buy the magazine (or mail me for the PDF of the covery story)!

On a lighter note, while I was coming out of the venue for the launch, one "commie type" stopped me and expressed concerns over whether India was becoming a dumping ground for grunt legal US work. Ah, these Reds, 123 to LPO, they struggle understanding any of it!

Overall, a very positive outlook for the industry. Way to go, LPO!

LPO: More Monies Pour In!

It may have seemed in recent times that the star of LPO is shining but only for a particular Legal Outsourcing company but I have some good news from the grounds. Even though there is a worrying increase in the number of "tiny to small" self styled LPO companies, credible companies in the space are working diligently and seeing impressive growth. One such company, SDD Global Solutions, with operations in the erstwhile princely state of Mysore, recently reported on new funding they have secured. Here's the press release:

SDD GLOBAL SOLUTIONS GETS MAJOR FUNDING

"SDD Global Solutions Private Limited, the only legal services outsourcing company in India managed by a U.S. law firm, announced on Tuesday that it has entered into a comprehensive funding arrangement with SFP Priority Co., Ltd., a member of the SFP group, a leading Asia-based investor. The arrangement underscores the significant demand for, and growth potential of, SDD Global's high-end legal services offshoring business.

This multi-faceted arrangement provides for a first round of US$2mn, to be followed by subsequent rounds on an as-needed basis. It is believed that this funding, combined with the investments that SDD Global raised previously, amount to the largest foreign direct investment made in any company in Mysore. SFP Priority will have two representatives join SDD Global's board of directors.

"We are very pleased with this tremendous vote of confidence in both our Company and Indian legal services outsourcing generally,” said Russell Smith, Chairman of SDD Global. “This will help us to more rapidly expand our business and to play an even larger role in the paradigm shift in the way legal services are delivered in the West," said Smith.

This arrangement is a key component of Mysore-based SDD Global's strategic plan to expand and consolidate its position as one of the industry’s leading players. The funding will be used primarily to (a) hire additional Western-licensed attorneys to augment both the Company’s extensive employee training program in India and its range of services offered, (b) expand its global marketing efforts, and (c) step up its ongoing recruitment drive for the best and brightest law graduates in India.

Established in April 2006, SDD Global has previously received equity funding from investors from organizations including Merrill Lynch, Cisco Systems, Goldman Sachs, and Barclays Capital, as well as a debt facility from State Bank of India. The Company’s roster of clients includes companies such as HBO, Calvin Klein, Sony Pictures, John Wiley & Sons, 20th Century Fox, Channel 4 Television, as well as multiple US-based law firms."

Chief Justice of India to Unveil New Lexis/Nexis Legal Magazine With Optimistic Cover Story on LPO

The Honorable Mr. Justice K.G. Balakrishnan, Chief Justice of India, is scheduled to preside over the gala launch event for Halsbury’s Law Monthly, the new trade magazine for the Indian legal industry, published by LexisNexis and Cyber Media. The cover story for the debut issue, “Beyond the Back Office: How Legal Outsourcing Companies in India Are Moving Up the Value Chain,” was authored by Russell Smith, Chairman of SDD Global Solutions. SDD Global is the only LPO in India managed by a U.S. law firm, and it has fast become one of industry leaders. The cover story is a veritable manifesto for the industry, complete with success stories from various LPO companies and statistics from expert reports. “The fact that this article was chosen for the cover story reflects a recognition of the growing impact of the Indian legal outsourcing industry, which we believe will become one of India’s biggest economic sectors in the years to come,” said SDD Global’s Head of Operations, Sanjay Bhatia. The article, complete with footnotes, will be availble on the web, after the launch, at http://www.sddglobal.com/.

Smith will expand upon the points in the article in a speech at “India LPO Summit 2008,” the first international conference on legal outsourcing, sponsored by SDD Global Solutions and NewGalexy, together with the leading business conference organization, the American Conference Institute. The event will be held on January 16-17, at the Grand Hyatt Hotel in Manhattan. SDD Global and NewGalexy will lead off the conference with a joint presentation on the current state of the legal outsourcing industry and future opportunities for both clients and providers. Other speakers at the conference will include leading representatives of Pangea 3, American Express, Accenture, Citigroup, Genpact, and major U.S. law firms Kilpatrick Stockton LLC, Kirkland & Ellis LLP, White & Case LLP, and Pillsbury, Winthrop, Shaw, Pittman, LLP. For further information, see http://americanconference.com/Law_Firm_Management/LPO.htm.

Watch this space for a first hand reporting from the event, thanks to the friends of this blog for arranging an invite.

Update: LPO Summit 2008

Here's the final agenda of the India LPO Summit Outsourcing Legal Services Offshore
Wednesday, January 16, 2008 to Friday, January 17, 2008 The Grand Hyatt, New York

Details at http://americanconference.com/Law_Firm_Management/LPO.htm

Pre Conference Workshop : Getting to Grips with Outsourcing your Legal Services Offshore: The A-Z of Negotiating, Enacting and Managing Outsourcing Relationships

8.45 Capitalizing on the Growing Trend of Outsourcing Legal Services Offshore: Examining Current Indian LPO Market Growth to Highlight the Increasing Viability of Offshoring

9:45 Panel Discussion: First Hand Experiences on Making the Business Case for Outsourcing Offshore - Qualifying the Viability and Benefits to Overcome Stakeholder Resistance

11:30 Comparing and Contrasting Different Models for Offshoring Legal Services: Which makes Best Sense for your Business?

12:15 Initiating an Offshore Legal Services Operation: Understanding Early Considerations, Structuring the RFP and Pre-Contract Considerations

2:15 Structuring and Negotiating an Outsourcing Contract that Meets Your Needs for Risk Management, Client Confidentiality and Protection of Work Product

3:00 Managing Offshore Outsourced Relationships: Effective Practices for Maximizing your Overseas Contract and Minimizing Reputation Risk

4:00 Avoiding the Ethical and Liability Risks Associated with Outsourcing Legal Services

4:45 Best Practices for the Ongoing Management of the Outsourcing Arrangement

There's also a Pre Conference Workshop on Wednesday January 16, 2008. The topic is
Getting to Grips with Outsourcing your Legal Services Offshore: The A-Z of Negotiating, Enacting and Managing Outsourcing Relationships (9.00 a.m. - 12.00 p.m.)

Details at http://americanconference.com/Law_Firm_Management/LPO.htm

Sticky Post: Visit LPO Summit 2008

The India LPO Summit Outsourcing Legal Services Offshore Wednesday, January 16, 2008 to Friday, January 17, 2008 The Grand Hyatt, New York. Details at http://americanconference.com/Law_Firm_Management/LPO.htm

Now, law firms offshore...

Bill Heinz of I/P Updates has an intriguing post on Bloomberg’s article “Jones Day, Kirkland Send Work to India to Cut Costs”. The article itself has some commentary on Law Firms' involvement in LPO. This is interesting and encouraging especially beacause of quotes from rather known firms. Snippets:

Clients are pushing law firms like Jones Day and Kirkland & Ellis to send basic legal tasks to India, where lawyers tag documents and investigate takeover targets for as little as $20 an hour.

"The objective is to have only the most valuable people in London or New York, and the others in India, China or Columbus, Ohio,'' said Robert Profusek, co-head of the mergers and acquisitions practice at Jones Day in New York, who sends low-end work to the cheapest locations and plans to open a document center in India. "Lawyers are service providers. We are not gods.''

General Electric Co. sends about $3 million a year in routine legal work to its Indian affiliate, said Janine Dascenzo, the Fairfield, Connecticut-based company's managing counsel for legal operations.

"India has very talented lawyers,'' she said. "But it's a misconception that you can just send work there and it gets done. You need proper supervision and security.''

Kirkland & Ellis, the seventh-largest U.S. law firm, works with offshore attorneys at the client's request, said Gregg Kirchhoefer, a senior partner in the firm's outsourcing and technology transaction practice.

"I'm not an advocate of offshoring legal services, but having worked in this area for so long, I understand the value of the model,'' he said. Typically, clients hire a provider and Chicago-based Kirkland helps manage the attorneys, Kirchhoefer said.

Armed with the knowledge of how little law firms might pay for offshore work, corporations can use the threat of cutting them out and sending legal tasks overseas on their own to force law firms to reduce fees.

Corporates first, then corporate directed law firms, and then law firms themselves. Small attorney firms all along. That, in two sentences is what I hypothesized the offshoring of legal services will be, and I am glad that is being ratified to a reasonable degree.

ALM's Conference on LPO

Mark Ross, LPO industry's volunteer reporter based on the West Coast has a post on ALM's West Coast Legal Industry Outsourcing Conference.

The conference is aimed at in-house and outside counsel, law firm executives, general counsel, and chief operating officers of corporate legal departments and aims to provide insight into the multi-dimensional practices of outsourcing legal work and support services.

Interested East Coast readers may also want to read my post on LPO Summit 2008.

LPO Summit 2008

American Conference Institute (ACI), the company that operates as a think tank, monitoring trends and developments in all major industry sectors is organising the LPO Summit in New York scheduled for the third week of January (16-17) next year. With speakers from Accenture; Citigroup; White & Case LLP; Pillsbury, Winthrop, Shaw, Pittman among others, the Summit looks rather promising.

The two day conference promises to cover a breadth of topic including future LPO trends, drivers for outsourcing, value proposition, modus operandi, potential pitfalls etc. There would also be a workshop walking the participants through all the steps from thinking about LPO to benefitting from it or as Kubler-Ross would put it, from denial to acceptance (only in the most positive sense!).

For further information, contact Ms. Rupande Mehta (r [dot] mehta [at] americanconference [dot] com) or 212-352-3220 ext. 482

Watch this space for more on the Summit!

Have monies, will LPO!

Business Standard reports that Jerry Rao of MphasiS fame is investing in an LPO company, JuriMatrix. What makes the news interesting is that one of the directors in the company is the younger Mr. Rao.

After investing in a wine company, Jaithirth (Jerry) Rao, non-executive chairman of MphasiS, has set sights on a legal processing firm (LPO), incidentally in which his son is an active member.

Jerry Rao has become an angel investor in a company called JuriMatrix, based in Bangalore and according to industry information, it is in the process of raising $12 million from a few of venture capital funds.

Perhaps, having the older Mr. Rao around also lead to inerest from known names ...

Rajat Gupta, former MD of McKinsey and Hema Ravichandar former HR head of Infosys are advisors to the firm.

Papa don't preach, just invest and bring your friends!

HCL in LPO?!

Surprise, surprise! FY 07 results have this line...

-- HCL BPO has built capability in Legal Process Outsourcing and Decision Support Services.

Anyone have more information?

LPO: New Comers Shine!

New names into the LPO space, SDD Global, JuriMatrix and Stratify recently featured in a Business Standard article. While SDD Global has made earlier appearences in the the media, thanks largely to its association with Hollywood (and its funny a la Borat!), this is about the first time Stratify, an Indian promoted Discovery software company appeared among "LPO" vendors. Some snippets:

Sony Pictures had to prepare an ‘opinion letter’ (outlining the activity and the risks involved) for insurance firms in order to secure cover for shooting a movie, and the movie’s fate hinged on the letter and the cover.

Preparing the letter was a 400-man hour job which would have cost $250,000 to get done in the US and Sony gave it a second thought. Eventually, the job was done in India for $43,000.

...

In comes Stratify, which has developed proprietary software, eDiscovery, which has automated document search and collection and tracks production of legal documents, a soft of product lifestyle management for law firms.

Stratify helps do away with many of the labour-intensive legal research processes and crashes time and effort needed to collect documents and communication relating to a particular case.

“We help reduce costs, errors and timelines,” said Ramana Venkata, President and CEO, Stratify, funded by the VC arm of the CIA In-Q-Tel, Intel Capital and Mobius VC. It plans to invest $10 million over three years in organic growth and much more in inorganic growth.

I am glad to see my hypothesis that 'LPO growth can be rather fast (in fact phenomenal) if LPO vendors embrace Legal Tech more aggressively' seeing some proof albeit the other way round (legal tech companies embracing LPO!). I think developing and leveraging technology not only lowers costs, betters turn around times but also lends a notion of measurability to the offshored process. And that can make a big difference in a prospect's mind. After all, a vendor using tech can quote Peter Drucker, "If you can't measure it, you can't manage it!" to say they can manage it!

Shine on!

Brown-Wilson group's Black Book is back!

Update: Here's Pangea3's press release.

Integreon released this press note on the findings of the fourth annual “Black Book of Outsourcing,” the Brown-Wilson Group's prestigious annual survey of outsourcing vendors and advisors.

Results published in the survey were compiled using information received from more than 22,000 global outsourcing users, decision-makers, analysts, employees and customers.

At the face of it, 22,000 would seem like a very reasonable number for a survey and results would seem worth their salt. But, things start to make little sense when one reviews the vendors being asked about in the survey from the participants - the list contains some of the mammoth IT services companies including EDS, CapGemini, IBM, SAP, CSC, Accenture, the Indian bunch of Infosys, TCS, Wipro, Satyam, HCL and so on and on!

Ah, you say - so how many of those 22,000 were actually LPO users? Well, its anybody's guess!

Anyway, here are the LPO-relevant rankings:




It is normal to seek salt while you re-read the pieces!

LPOs To Be a Focus of Economic Times CONSILIENCE 2007 World KPO Conference

Reflecting the recent rise of the LPO industry, the CEO's of three leading legal services offshoring companies will be addressing the annualworld KPO conference in Bangalore this Friday. The conference, Consilience 2007, has been organized by The Economic Times and The Times of India, and chaired by Genpact. The leaders of Integreon, Mindcrest, and SDD Global Solutions have been invited to address the conference, to be held at Le Meridien hotel from 10am to 6pm on August 10. For example, Russell Smith, head of SDD Global Solutions, will speak on the following topic:

Beyond the Back Office:How Legal Services KPOs Are Moving Further Into High-End Work

SDD Global's presentation will touch on such areas as:
-- Debunking the myth that LPO means the handlingof only commoditized, routine functions that do not require legal knowledge or talent.
-- Showing how legal services offshoring companies are attracting corporate clients instead of only law firms, starting a global paradigm shift in the delivery model for legal services.
-- Discussing how an affiliation with a Western law firm can propel legal services offshoring tohigher levels on the value chain.
-- The real truth about the percentage of legal work that can be offshored to India (most of it!).

Other presentations will include:

Keynote:
What is and is not considered LPO, The advantages and disadvantages, Case Studies
o Murali Neelakantan, Partner, Arnold & Porter (UK) LLP

Success factors from the US/UK point of view
o Ganesh Natarajan, President & CEO, Mindcrest

User's perspective decision making drivers for customers and why we are able to address those drivers here in India
o Matthew Banks, Senior VP, Global Legal Services, Integreon

More details on the conference are available at http://ms.timesofindia.com/ads/consilience/index.html.

LPO: Already Singing to the Consolidation Tune?

Update: Economic Times has another piece on consolidation within LPO.

Earlier post from May '06
A recent Economic Times news item titled, 'LPOs here head for consolidation' talks about the consolidation in the space - something that has been on the grapevine for a while now.

The Drivers

1. Presently, the sector sees little high-end work as most Indian LPO companies restrict themselves to areas like accounting, document management, agreement formatting and other secretarial services - (Hey, accounting, document management, agreement formatting aren't LPO services - they are secretarial services - and are, ofcourse, not high-end)

2. There are a little over 100 companies in the LPO space but only a handful are actually influencing intelligent decisions - (I agree with the nature of work many self styled LPO companies are doing, but not necessarily the number. I mean 100 sounds a little too high, that is when my own list includes tiny players too)

Add to the above list, recruiting trouble, lack of any location being very ideal, uncontrolled wages and hikes, training challenges fuelled by inexperience, and the herculean task of selling outsourced legal services

The Opportunity

1. Despite challenges in the industry, the opportunity is estimated at $200 bn for the US alone, not considering the equally high-potential European market. India is likely to receive 60% of around 40,000 legal jobs outsourced by the US by ‘10.

2. “The revenues to be generated by such Indian companies will be approximately $56m during July ‘05-July-’06”

I agree with the immense potential, especially for Intellectual Property work from the European region to get outsourced - the firms currently serving that market are way too expensive

So, given the drivers and the opportunity, sure consolidation will happen, but not sure if this is the right time. Even if some level of buying out et al happens, it won't be for mouth-watering sums, why should they be, the industry is too nascent still.

Allowing foreign firms to set up shops locally may trigger this, but no one knows when is it happening. The lawyer lobby is way too strong to allow that to happen any time soon.

So, consolidation - we'll will be watching you!

Florida Bar Ethics Opinion and ABANet's comments

Now, committees of the Florida Bar also issues an ethics opinion. Here's a piece on that and the relevant snippet.

Two committees of the Florida Bar have taken notice of the practice and have decided, so far, that legal outsourcing is acceptable under certain conditions. Reviewing documents, for example, is fine, but the Indian lawyers — who are licensed to practice law in India but not in Florida — are not permitted to give legal advice directly to clients here, says Lori Holcomb, director of the Florida Bar’s unlicensed practice of law department

Here's the piece on the ABA opinion. Some snippets:

The opinions maintain that foreign legal outsourcing should be subject to the same ethical requirements as domestic use of nonlawyer services, in particular targeting the following functions for the U.S. lawyer: Supervise the foreign lawyer’s work, preserve client confidences, avoid conflicts of interest, generally bill only for the direct cost of outsourcing, and obtain advance client consent in certain circumstances.

Foreign legal outsourcing “will expand exponentially because of discovery costs,” agrees Robert R. Simpson, Hartford, CT, Cochair of the Section’s Corporate Counsel Committee. He cites the new federal civil rules on electronic discovery and “sophisticated clients who see legal outsourcing as one vehicle to consider in keeping costs down” as driving demand for outsourcing. Law simply may be “a step behind the curve” of businesses that have set up call centers and technical support abroad, he notes.

Quality may be an issue now, but “as the services offering foreign legal outsourcing become more sophisticated and experienced, people will begin using them for more subjective functions,” predicts Simpson. He agrees, however, that law may be less readily amenable than other businesses to foreign outsourcing because of the “additional level of supervision that is required by lawyers. Lawyers are often poor managers. ‘Out of sight, out of mind’ is the problem. It is hard enough to manage people in your department,” he says.

Career Options in LPO

Sanjay Kamlani of Pangea3 wrote for HindustanTimes on career options for Indian lawyers. He draws a similarity between LPO companies and traditional law firms by commenting on the 'outsource' nature of both:

Since most people fear change and the unknown, this could be a daunting choice. But interestingly, all law firms are LPOs. Traditional India-based law firms outsource Indian legal services to Indian or overseas clients who prefer not to handle their Indian legal matters internally within their organisations. What people call LPO today simply refers to companies that provide legal services to corporate clients and overseas law firms (mainly in the US and Europe) about legal matters that do not relate to India. The irony is that both are technically “legal process outsourcers”; it is just that the term LPO has come to refer only to the latter.

He then lists some advantages of working for LPO companies versus traditional law firms:

• Diversity of work exposure
• Training in LPO
• Growth for those not sons and daughters of promoters!

For any hope on working for foreign law firms, when[ever] they [are allowed to] setup shop in India, see this post from Mark Ross'. It ain't happening anytime soon though, I think - Lawyers are a strong lobby.

Canadian LPO interests

Lexpert.ca, 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 ...!

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.

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.

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.

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: http://en.wikipedia.org/wiki/NASSCOM).

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!

LPO TRADE ASSOCATION FORMING ON JULY 28

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 vidyad@sddglobal.com.

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.

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!

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?