Fronterion’s latest research, conducted in Q1-Q2 2009, indicates that more than 170 firms are currently offering offshore legal services. This number may further increase if less stringent provider parameters are applied. Based on our interactions with a number of these firms, a majority indicated potential growth in the near and mid-term. The growth of the industry is not without cause, as legal outsourcing continues to generate interest and excitement on both the buyer and provider-side.
The challenge is translating this “interest” into dollars and in turn sustainable cash flows. Based on our due diligence assessments, we find it imperative for contracting legal organizations to assess the financial viability and longevity of a prospective legal outsourcing provider. Prudence should drive the review of the prospective provider’s financial structure, client base, risk exposure, organizational track record and reliance on external funding.
The ability to meet SLA’s today does not ensure the viability of a long-term collaborative relationship necessary for a successful and mutually beneficial legal outsourcing engagement.