Press Release: Top 10 LPO Trends in 2011

Dec 15, 2010 – Fronterion, the leading international consulting firm for outsourced legal services, today has released its second annual report outlining the prospects for the legal process outsourcing (LPO) industry in the coming year.

Following a breakthrough year for LPO in 2010, the Fronterion Ten for 2011: Top 10 Trends in Legal Outsourcing for 2011 reveals the most important trends in legal outsourcing for the next 12 months.

A significant prediction for 2011 is a rise in the use of onshore LPO providers, those who deliver services from low-cost domestic locations in the United States and Europe. Attracted by significant savings in such locations, combined with the benefits of servicing clients within the same time zone, law firms and LPO vendors will continue to invest in onshore services alongside traditional overseas options.

Next year also looks to be the year that local regulators and trade bodies definitively respond to the way outsourcing is changing legal services across the globe. There are significant ethical and regulatory issues attached to legal outsourcing. For example, how do firms demonstrate adequate supervision when work is performed by an LPO vendor? Who is liable for the work done by LPO lawyers? And, how much should law firms charge their clients for work done by LPO providers on their behalf?

The American Bar Association is currently consulting with its professional members concerning changes to its draft rules, while the United Kingdom’s Solicitor’s Regulation Authority is considering a major of review of LPO in response to the growing number of firms sending legal work to outside providers.

Another key trend is greater transparency. The first major US firm will go public with its LPO arrangements next year, something those in the US legal industry have been unwilling to do until now. The increasing application of technology, which allows LPO providers and law firms to work together more closely, will be another growing trend in 2011.

More consolidation is likely, following the example of Thomson Reuters who acquired Pangea3 last month in the largest deal ever seen in the legal outsourcing market.

Using its unrivalled access to LPO firms and their clients, Fronterion again set out its predictions for 2011. Fronterion managing principal Michael Bell said: “This year, we’ve seen many of our 2010 predictions unfold in the industry. For example, we projected LPO would become an increasingly valid career path for young lawyers. Both in low-cost jurisdictions and in parts of the US and Europe, LPO firms have been ramping up their operations to meet increased demand, and at a time when traditional law firms jobs have been harder to find.”

“We see 2011 as a pivotal year for legal outsourcing as it continues to develop from a niche practice to a truly global industry.”

 

Fronterion’s Top 10 for 2011 are:

1. A Fundamentally Changing Legal Profession. Continued downward pressure on costs and the globalisation of legal services provide a perfect environment for LPO. Those who refuse to engage with LPO will increasingly become a minority – the industry can no longer be ignored.

2. Enterprise Approach. Many firms already outsource legal work at partner or department levels. However, LPO is more effective and efficient when a firm implements a firm-wide or ‘enterprise’ approach, led by senior management.

3. Onshore Expansion. The growth in onshore and hybrid on-offshore delivery solutions will begin in earnest in 2011. This trend will be equally prevalent in the United States and United Kingdom, with LPO providers and firms already building capacity.

4. Expanding Client Geographic/Jurisdictional Reach. Demand for LPO services will spread to new markets. In the US, law firms in Texas, the Midwest and the Pacific Northwest are potential growth markets for LPO. In the UK, regions outside of London are also emerging growth markets. However, continental Europe will remain a challenging environment for LPO.

5. Progressive Value Proposition. LPO providers will have to offer more services and a more progressive value proposition to remain competitive. Alongside traditional litigation support, LPO vendors may also have to offer contract portfolio servicing, compliance, diligence, human resources, medical and broader legal support functions.

6. Increasing Technology Applications. As a result of the growing importance of technology, LPO vendors will use technology as a key selling point. Technology platforms will be used to offer diversified services and as a means for vendors to further embed themselves in client organizations.

7. Dynamic Vendor Landscape. The unprecedented growth and industry consolidation initiated in the fourth quarter of 2010 will continue to shape the dynamic LPO vendor landscape in the coming year. Overall, these consolidation trends are positive for the industry as vendors emerge stronger, more capitalized and, most likely, considerably larger.

8. Public Acknowledgement. The growing acceptance and adoption of onshore and offshore LPO will become more visible in the coming year. This will become increasing prevalent in the US, where in past five to six years, corporations and law firms have remained virtually silent on all LPO related matters.

9. Divergent Vendor Approach. Competition means that LPO vendors will have to differentiate themselves from each other in terms of services offered and delivery models. No dominant model exists (yet) and a range of different approaches will emerge next year.

10. Ethical Guidance. Regulatory bodies start to address the changing legal landscape. In the US, ethical commentary is expected from the ABA’s Commission on Ethics 2020. In the UK, announcements are expected from the SRA and the Law Society. Other jurisdictions that have been silent so far may follow suit, such as Australia, Canada, and South Africa.

 

For the full Fronterion Top 10 for 2011 report visit www.fronterion.com/tenfor2011/

About Fronterion: Fronterion is the leading international management consulting firm exclusively focused on advising law firms and corporate counsels on outsourced legal services. Working with some of the largest law firms in the world, Fronterion helps clients structure and implement highly innovative legal outsourcing engagements.

Fronterion is in a unique position to comment on the industry and forthcoming industry trending through its unrivaled market-wide perspective matched with a granular understanding of the legal outsourcing industry

For more information about Fronterion contact mediarelations@fronterion.com. Additional resources are available at www.fronterion.com.