I recently participated in a panel discussion called “Unbundled Work/Unbridled Success: Sourcing Canadian Legal Services Differently” at the Sixth Annual Canadian Bar Association Law Firm Leadership Conference. A significant portion of the conference covered legal process outsourcing (“LPO”). Professor Richard Susskind moderated the session on LPO. The conference was well attended by virtually all of the major law firms in Canada and the majority of the attendees were the managing partners of these firms.
The conference was a personal highlight for me, for two reasons. Firstly, Richard Susskind was the moderator of the LPO session. Need I say more? For those of you who don’t know who Richard Susskind is; let me enlighten you. Susskind published The End of Lawyers? Rethinking the Nature of Legal Services in 2008; and in 1996, he published The Future of Law. Suffice it to say that Susskind has a very strong opinion about where the legal industry is going globally in the future.
Susskind’s books predict significant new pressures on the legal marketplace and, as a result, great change in the legal industry. Susskind challenges lawyers by asking them to ask themselves what elements of their current workload could be undertaken more quickly, cheaply, and efficiently, or to a higher quality using new methods of working. He argues that the market will not tolerate expensive lawyers for tasks that can be better performed with modern systems and techniques; and he claims that the legal industry is being drawn towards the commoditisation of legal services, and by new and disruptive legal technologies. Is there a threat to local lawyers? According to Susskind, their jobs may be eroded; however at the same time, for entrepreneurial lawyers, Susskind foresees different law jobs emerging which may be highly rewarding, even if different from the law jobs of today.
My second highlight was that although there appears to be low awareness (in Canada) of what LPO is all about, many of the law firms attending the conference were not opposed to LPO. In fact, a number of lawyers openly expressed their view that LPO is likely to be a viable way forward for law firms to do “routine repetitive” work. Imagine that! It was refreshing to see law firms viewing LPO potentially as offering them a competitive advantage over competitors.
On the M&A front, the market for LPO businesses is heating up. Infosys is reportedly looking to acquire an LPO business and Thomson Reuters recently announced that it has acquired Pangea3 (one of the early entrants to the US LPO business). The public markets and venture capital industry are clearly not interested in investing in law firms (as a business per se). That is clearly not the case for investment in LPOs. What does that tell you about the LPO business model? According to Mitch Kowalski’s Financial Post Legal Post Blog, law firms that do not have a well-thought business answer to LPOs may soon be “out of business.”