Legal Process Outsourcing (LPO): What Is It?

Working in the legal industry is a fulfilling way to spend your working life –  but can be very taxing due to the complex nature of work performed.

There are multiple clients to look after, deadlines to be met, and reports to be filed. It can be challenging to keep up with the work, particularly if you are a smaller firm that doesn’t have an in-house legal team to satisfy your legal demands.

This is where legal process outsourcing (LPO) can be a real lifesaver – it can help take on some of the workload so that you can focus on other aspects of your business.

In this article, we will discuss legal process outsourcing in further detail, including what it is, how it works, various third-party considerations, and the benefits that your business can reap from utilizing this type of service.

We’ll cover the following topics:

• Definition of Legal Process Outsourcing
• Example of Legal Process Outsourcing
• Which Situations are Most Relevant for LPO?
• What to Look for in a Third Party Provider
• Tasks Able to be Outsourced
• Benefits of LPO
• Challenges of LPO
• Final Thoughts

Definition of Legal Process Outsourcing

LPO can be defined as the contracting out of law-related services and processes to a third party provider.

This usually involves sending work overseas to be carried out by lawyers in another country, who can often provide a more cost-effective service.

LPO is not a new concept — law firms have used it for many years to reduce overheads and increase efficiency. LPO is basically business process outsourcing or BPO for legal services. In recent years, however, the LPO industry has grown exponentially, with an increasing number of firms looking to outsource their work.

The global LPO market was estimated to be worth $11.6 billion in 2021, and is expected to grow to $61.7 billion by 2027 – a Compound Annual Growth Rate of 30.5%.

It’s something that isn’t going away anytime soon, so businesses need to understand how it works and the benefits that it can bring.

Example of Legal Process Outsourcing

Imagine you are a law firm based in the United States. You have been approached by a client who wants you to handle their divorce case.

This is a complex case that will require significant amounts of research, document drafting, and court appearances. It’s the kind of case that would typically be handled by a team of lawyers, paralegals, and support staff.

Unfortunately, your firm is already stretched thin and you simply don’t have the capacity to take on this case. This is where LPO comes in.

You could outsource the case to a third-party provider, who would be responsible for carrying out all the work on your behalf.

This would free up your time so that you can focus on other cases, and also save you money as you wouldn’t have to hire extra staff to help with the workload.

There are many different types of LPO providers, who can offer a range of services. Some will simply carry out the work on your behalf, while others will also provide additional support, such as project management, document drafting, and court appearances.

It’s important to find a provider that you can trust and who has the experience and expertise to handle your specific case type. Once you’ve found a reputable provider, you can start reaping the benefits of LPO.

Once you have outsourced the work, all that remains for you is to keep a watchful eye on the third-party provider so that you can ensure that they are meeting your expectations.

This can be done by setting deadlines and checking in on the progress of the work on a regular basis.

Assuming all goes well, you will have successfully outsourced the work and freed up valuable time and resources that can be better utilized elsewhere.

Which Situations are Most Relevant for LPO?

There are several different situations where LPO can be beneficial. Here are some examples:

You Need Extra Support During a Busy Period

The use of LPO can provide extra support during a busy period, as it allows you to draw on the skills and resources of an external provider. This means you don’t have to hire additional staff or invest in training new employees.

Furthermore, because an outside party provides legal services, they can often be more cost-effective than hiring full-time staff. Outsourcing providers tend to have lower overhead costs and can offer competitive service rates.

Here’s an example. For instance, a law firm may need to conduct due diligence on a new investment opportunity. By outsourcing this task, they can access the expertise of an experienced and specialized external team at a fraction of the cost of hiring in-house staff.

You Need Specialist Expertise

Sometimes, a law firm may need specialist expertise that they don’t have in-house. This could include specialized knowledge of a particular industry or region or access to the latest legal technology.

LPO can help firms access this expertise quickly and cost-effectively, allowing them to draw on the skills of external providers who are often more knowledgeable about specific markets and industries. For example, an offshore provider may be able to provide up-to-date information on local laws and regulations that would otherwise be difficult for an in-house team to acquire.

Other situations of specialist expertise could include needing a language translation service or access to a legal software that isn’t available internally.

You’re Expanding Into New Markets

If you’re expanding into new markets, LPO can be a great way to ensure that you have access to the right skills and resources. It lets you quickly access lawyers in different countries who are familiar with local laws and regulations. This saves time and money because you don’t have to hire locally or invest in training employees.

Furthermore, because an external provider is providing services overseas, they may also be able to offer more cost-effective rates than hiring full-time staff.

Advantages of exploring a new market through LPO include:

• Access to local expertise
• Reduced cost of hiring in-house staff
• Quicker access to the right resources
• A more cost-effective solution than hiring full-time staff.

You Want to Reduce Costs

One of the most apparent benefits of LPO is the potential to reduce costs. By outsourcing legal tasks and processes, you can save on staff wages, training, and other overhead costs of hiring full-time employees.

Using LPO also allows you to access services from multiple providers simultaneously, which can help you reduce costs in other areas. For example, if you need to renew a contract or hire new personnel, you can compare prices and choose the best option. This gives you more flexibility and makes it easier to find cost-effective solutions.

You See Opportunities for Making Extra Profits

Cost reduction is not always the primary goal of LPO. It can also be used to identify new opportunities for making extra profits.

For instance, if a law firm has an opportunity to tender for work outside of its core area, it may decide that it is too expensive or time-consuming to manage the process in-house. In this case, outsourcing the job could enable them to take advantage of the opportunity without investing additional resources.

In addition, by collaborating with external providers on specific projects, firms can access a wider pool of expertise and knowledge than they would have access to otherwise. This can open up new possibilities and help them to stay ahead of the competition.

You Want to Increase Efficiency

Finally, LPO is a great way to improve efficiency. Outsourcing legal services means that you can focus on what matters most: your core business operations.

Using specialized resources and teams ensures tasks are completed quickly and effectively, freeing time for more critical issues. Plus, since the provider specializes in a particular area of law, they can provide higher quality work in less time than it would take an internal team.

It’s important to remember, however, that LPO is not a one-size-fits-all solution — you need to carefully consider whether it’s the right option for your business before making any decision regarding the matter.

What to Look for in a Third-Party Provider

When considering legal process outsourcing, choosing a reputable and experienced provider you can trust is crucial. After all, you will entrust them with meaningful work that needs to be carried out efficiently and effectively.

Here are some key things to look for when choosing an LPO provider:

Experience And Expertise In The Area of LPO

One of the most important things to look for when selecting an LPO provider is experience and expertise. The provider should have a proven track record of delivering quality work on time and within budget. They should also be able to provide references from past clients who can vouch for their professionalism, reliability, accuracy, and customer service.

Law firms typically look for a legal process outsourcing company who understands the law and can handle complex legal matters. They should also have an in-depth knowledge of the industry to provide accurate legal advice and guidance to clients.

Especially how the provider handles customer support should also be taken into account. A provider willing to go the extra mile and provide additional services or advice can often be invaluable.

Flexibility To Adapt To Changing Requirements

The legal industry is constantly evolving, and its laws and regulations are often subject to change. Therefore, law firms must choose an LPO provider that can quickly adapt to changing requirements. The provider should be able to adjust their services accordingly so that clients always receive the best possible service.

Reputation For Reliability And Accuracy

When outsourcing any legal work, accuracy is paramount. Therefore, law firms must choose an LPO provider with a proven track record for reliable and accurate results. Researching the provider before making a decision is essential, as even minor mistakes can have severe repercussions in the legal industry.

Unreliable LPO service providers can cause significant delays and even cause a project to fail. Therefore, law firms must take the time to evaluate any potential provider’s reputation before committing.

Ability To Handle Large Volumes of Work

Law firms often have large amounts of work that must be processed quickly and accurately. Therefore, finding a provider who can handle the volume of work while maintaining high-quality standards is essential. A provider should also be able to scale up or down depending on the project requirements.

Strong Communication Skills

The provider should have strong communication skills, which are essential to any successful LPO arrangement. The provider should be able to understand the client’s needs and provide clear and concise information about the project scope and timeline.

They should also be open to client feedback so adjustments can be made if necessary. Good communication helps ensure everyone understands what is expected of them and allows for a smoother process.

Data Security Measures In Place

One of the most intriguing aspects of legal process outsourcing involves transferring sensitive data to a legal process outsourcing company. Therefore, law firms must ensure their provider has robust security measures and follows the latest industry standards.

A reliable LPO provider will use secure networks, encryption technologies, and other data protection measures to protect client data. They should also be willing to sign non-disclosure agreements with clients if needed.

A law firm would likely share confidential information with its LPO provider, so it is essential to ensure that the data is always protected. The leakage of confidential information can have severe implications for the firm, so choosing a provider who puts data security first is vital.

A Robust Infrastructure

It is also important to ensure the provider has a robust infrastructure. This includes a reliable IT setup, well-trained personnel, and sufficient resources to complete the work efficiently. The provider should also be able to scale up or down depending on changes in demand.

A law firm needs LPO service providers with a strong infrastructure as it will help them reduce costs and improve efficiency. In addition, having access to advanced technology can provide firms with a competitive edge by enabling them to offer better services at lower prices.

Scalability

Law firms need an LPO provider that can scale up or down depending on their needs. This is especially important for larger law firms that require flexible and scalable solutions to handle large volumes of work.

A reliable provider should be able to quickly respond to changes in demand by scaling up or down its services with minimal disruption. This will help ensure the firm’s clients receive the best possible service at all times.  

Cost-effectiveness

Law firms need to ensure they can get the most out of their investment in legal process outsourcing while still maintaining quality services.

Choosing a cost-effective provider who offers high-quality services is essential for firms looking to maximize profits without compromising on quality.

Tasks Able to be Outsourced

There are a wide range of tasks and processes that can be outsourced to a legal process outsourcing company. This includes, but is not limited to:

• Document review
• Drafting pleadings and other legal documents
• Legal research
• Deposition summaries
• Discovery responses
• Patent applications
• Contract management

Essentially, any task or process that can be carried out remotely can be outsourced. This allows you to free up time and resources so that you can focus on other areas of your business.

It is usually the case that simpler tasks that can be completed by anyone are outsourced. The more complicated tasks are usually kept in-house to ensure that they are performed to the highest standard.

3 Benefits of LPO

There are many benefits that your business can reap from utilizing LPO services. Here are three of the main ones:

1. Cost Savings

One of the biggest benefits of LPO is the cost savings that it can bring. By outsourcing work to another country, you can often reduce your costs by up to 60%.

This is because lawyers in other countries often charge much less per hour than their counterparts in developed nations.

2. Increased Efficiency

Another big benefit of LPO is increased efficiency. When you outsource work to another country, you can get the work done much faster than if you were to do it in-house.

This is usually the case since there are often more lawyers available to work on the project, and they can often work longer hours than lawyers in developed nations.

3. Improved Quality

One final benefit of LPO is the improved quality of work that you can expect to receive. This is because LPO providers are often very experienced and have a wealth of knowledge to draw upon.

They also have access to the latest technology and resources, which can help to improve the quality of the work that they produce.

4 Challenges of LPO

Despite the many benefits that LPO can bring, there are also some challenges that need to be considered. Here are three of the main ones:

1. Language Barriers

One challenge that can arise when outsourcing work to another country is the language barrier. This can make communication difficult, and may result in misunderstandings or errors.

It’s vital to ensure that your LPO service providers have good English skills, or alternatively, you may need to provide them with translators.

2. Cultural Differences

Another challenge that can arise from LPO is cultural differences — which can make it difficult to understand each other’s working practices and expectations.

Combat this by making sure both sides are aware of these differences, so you can both try and bridge the gap by communicating effectively.

3. Time Zone Differences

Finally, time zone differences can also put you in a sticky situation.

When tasks are required to be completed at very short notice, it might be night-time where the third-party provider is located. This can make it very difficult for urgent tasks to be completed on time.

4. Legal System Differences

This one might be obvious, but offshore outsourcing means the third-party might not be familiar with your local legal system.

They may be proficient in the legal system in their own country, but inexperienced in dealing with yours — which can lead to lower quality work.

To avoid this issue, consider nearshore outsourcing as an alternative.

Final Thoughts

Despite the challenges, LPO can be a great way for businesses to save money, increase efficiency, and improve the quality of work. If you’re considering outsourcing some of your work, be sure to weigh up the pros and cons carefully to ensure that it’s the right decision for your business.

The benefits show that LPO can be an extremely helpful way to manage your workload, save costs, and gain access to specialist expertise. If you think it could be beneficial for your business, get in touch with a reputable LPO provider today.