The Evolution of LPO

Prominent in-house lawyers have warned Australian law firms that legal process outsourcing is no passing fad. Speaking at the Australian Corporate Lawyers Conference, Telstra general counsel Sue Laver said LPO in Australia is the “next wave” in legal services and as clients, Australian corporates needed to be actively encouraging firms to take action.

Malisons’ Stephen Jaques announced last month that it would be offering LPO to all clients where appropriate, following a trial run on a discovery project. According to Sue Laver, as a result of the quality of work and cost savings on the discovery project Telstra would now look to send more commercial work to the LPO. “We got better results than we would have if we had used paralegals in a law firm,” said Laver. “Cost is a factor, but quality is what really impressed us, there is more rigour in their processes.”

Some law firms have been reluctant to investigate working with LPOs according to AMP general counsel Brian Salter. “We have loads of rote work. We went to law firms and spoke to them about LPOs, we put it to them that we would all benefit from it, and they were reluctant,” he said.

Some firms and legal commentators have criticised the use of LPOs, claiming they cost local jobs. According to George Toussis, senior legal counsel Hewlett-Packard, when the company switched to using an LPO for repetitive legal work not one of its 600 lawyers globally were retrenched.

According to a paper by Deloitte LLP, titled “The Resurgence of Corporate Legal Process Outsourcing: Leveraging a new and improved legal support business model” [PDF], in an economy where controlling costs is paramount, LPO may seem an attractive option for reducing rising corporate legal costs. However, many executives have historically had concerns regarding LPO’s feasibility and effectiveness. The paper presents a view that the LPO marketplace has matured to the point where concerns about LPO can be put to rest.

The paper explores the evolution of LPO since its inception, describes a strategy for adopting an LPO business model, and summarizes key considerations in evaluating LPO options. Deloitte believes the time is ripe for companies to pursue the potential benefits of using LPO as part of a balanced insourced and outsourced legal support business model: cost savings, improved service levels, and a streamlined in-house legal capability focused on higher-value activities.