Considerations for short-listing of Vendors- Part 1

This post and the upcoming post shall concentrate on a few important considerations that usually weigh with the foreign law firm /corporation while short-listing vendors for the purpose of off-shoring legal work.

These are being specifically discussed here because different start- up companies more often than not seeks advice on these matters.

As an Indian LPO it is extremely important that you impress the foreign law firm about the fact that your small little management team does have adequate experience about setting up, operating and smoothly making go an off-shoring business. In case you can show that one of your managers has extensive experience of operating an offshore business in either the U.S. or UK, it shall build high confidence in the prospective customer. This and a little more, you need to establish in no uncertain terms that your management is also alive to the “off-shoring weather” as it prevails in India.

Next consideration would be your staff and the lawyers who would actually execute the work on the production floor. It is necessary to establish that your lawyers have the subject matter expertise to execute just the kind of assignment which you are pitching for. With a team having a subject matter expertise in contract management you could not have pitched in for legal research and vice versa. It would be relevant to mention at this point, that, just to show that your team is efficient in everything please do not clutter your website with a laundry list of all legal and paralegal activities.

Potential clients would also judge whether your lawyers have the technical expertise to handle the kind of work that is being offered to be off-shored. For example with a team which is specialized in handling document review software you could not have filled in a RFP for a US Personal Injury Case Management Project, to be executed through a case management software and vice versa.

Size does matter with the buyers. This is one reason why big law firms approach vendors which have a huge infrastructure. It is not that big LPOs always have a big team to start up a project. It is also not a fact that they always get projects which involve 50 or 75 lawyers at the very onset, but it is a fact that they have the capacity (read, manpower as well as finance) to scale up their operations almost overnight if the project so demands. To test the power of the vendor to scale up, the off-shore buyer looks into the financial capacities of the vendor, its investors and the board.

Though it might prove to be immensely expensive for small LPOs, but having a manager on board with a US or a UK law degree can prove to be immensely beneficial. The presence of such a person would hold out to the world at large that the vendor’s management team has direct knowledge of the foreign legal system.

*Investing in LPO*

More and more firms coming out to catch with the demands in legal offshoring work, the sense is in right investments, a perfect strategy to follow for a better return to your investments. LPO is for sure a golden opportunity that the legal industry throws on far flung destinations, but many newly started LPOs had to down the shutters for not able to tap this prospect.

Like any demanding industry, legal process offshoring firms require a strategy to maintain infrastructure. Market services, have a good legal team, a highly decorated office or a flaringly designed office would not help secure the market. The organizational make-up should not only impress the clients, also satisfy their challenging concerns about the firm.

European and US firms have a very different outsourcing perspective than the local legal firms; they are very concerned about deliverables and quality standards. Costs and savings may not be the top priority in all circumstances. To make sure their quality criterion are fulfilled, they want to see people behind the veil; to know how well trained they are; their selection procedures and would prefer their own lawyers joining the offshoring office. Using proclaimed softwares, integrated data security systems and secured work places also give them a judgment of quality and credibility of the LPO. Evidently, a work force and infrastructure that is just not capable but also satisfy their concerns or looks good in their view should be tacitly designed.

New start LPO also falls out from US market for lack of competent staff, the Indian lawyers are not trained on the US law and there is little number of institutes imparting the training. Lack of knowledge on US law in such LPO degrades the quality of work leading to loosing work from the client. Legal firms are also reluctant to give a second chance; hence a one time bad mark can prove crucial to future work from the client.

Pointing to all these aspects of Legal Process offshoring, a right

investment or budget that look beyond the office infrastructure and a

qualified legal team to a more polished ambience, which enlightens your LPO in front of the clients, will pave to better marketing of the services.

*Information Technology for LPO*

To quote, Information technology sustains Legal Process Offshoring would be

never far away from reality. The technology has made the growth of LPO

sector possible. Have you thought, how is LPO & IT related?

Legal Process Offshoring requires huge amounts of data to be transferred

between the legal firm and LPO. Significantly, LPO has to process and

maintain this data. Therefore, information technology stands with legal

data right from its transit from the legal firm to the LPO Company, each

stage of data handling, storage, processing and journey back to the legal

firm.

Information Technology provides many solutions for the LPO like data

encryption and coding, network and data security, data base management

systems, digital technical libraries, software for handling legal work,

technology to supervise work by the legal firms in far away locations and

promote communication between LPO and the legal firm.

Data encryption and coding is an unavoidable part as confidential data is

transferred sometimes across open networks; so, the security of data needs

to be ensured. Providing network and data security is yet another important

requirement. The computer networks and data within the LPO and legal firm

have to be protected against any attempt to retrieve or damage data and

against attack by computer viruses by placing sufficient security systems

such as firewall.

Client data can run into huge volumes. Hence, a suitable data base

management system is needed to manage this data, calling for storing it in a

stacked manner and a system to easy access and provision to work with the

data. Fail-safe systems to prevent any loss of data should also be

incorporated. Preparing legal work would mean scrolling through digital

libraries on legal books, case studies and in case of patents a database of

old patents etc.

Open softwares are available for handling legal work, but the industry

depends on proprietary software sometimes custom build to suit individual

requirements. These softwares contain tools made specially to operate

functions needed in the process of legal work. Some softwares provide access

for the legal firm to monitor work from their offices abroad.

Communication is a key to any business, the Information technology has

brought down distances between the concerns, and it makes no difference if

the firms are thousands of miles apart or in the same city. Utilities like

Video conferencing have made virtual conferences possible adding a punch

to effective communication.

IT, therefore, becomes an inseparable part of legal process of offshoring by

bringing security, systematize, communication and facilitate work to be done

in remote locations. Information technology would certainly evolve with LPO

providing solutions all the way in every turn of future. Join us at Global

LPO Conference 2010 and learn more about IT and LPO from the veterans.

LPO AND ETHICS

LPO and ethics have been always knitted together, for Legal Process Offshoring raises many questions on ethics. These were timely dealt with by American, European and many local bar Associations; which resulted in framing various Model rules of conduct for legal offshoring. Ethical issues range from legality of offshoring, quality of work, client confidentiality, charging clients for overhead cost in outsourcing and conflict in work done.

Only lawyers practicing in the country are bound by the Court of law, whereas offshoring meant legal information crossing borders to lawyers and non-lawyers not covered by the law. Addressing the ethical issue lawyers are needed to take full responsibility for the work outsourced, obliging to supervise the work outsourced and keeping a tab on the competence of the firm or the lawyer to whom the work is outsourced while assuring the work quality.

The quality of work done by non-lawyers in the outsourced firm is often a matter of regard, but the well-trained and skilful lawyers working in the LPO firms supervise and ensure quality content.

A lawyer is restricted to pass client confidences or secrets to a third party and it would require the client’s consent to do so, however the clients in many cases are reluctant to allow lawyers to share their confidential information to firms abroad. The overseas LPO Company is bound to see that the client data remains confidential in every stage. The facilities maintained by the LPO vendor for ensuring it become a very important factor in this regard.

Bar Associations has at all times voiced against over-charging clients in the pretext of offshoring. The associations argue to incorporate the offshoring expenditure in their normal fee structure to the clients. Conflict of work is a simple but notable thing to be ensured by the lawyer. A conflict checking mechanism should be maintained by the lawyer to check that no conflict arises in the work done by the outsourced firm that could be adverse to the interests of the client.

Ethics in LPO is both static and dynamic in nature, with a one time static assessment of capability and credibility of the LPO firm, and a routine dynamic process of evaluations of assigned job. Ethical issues are not to be addressed as hindrances to legal offshoring but a moral conduct that has to be maintained in the process of offshoring legal processes.

Myths and Realities of Legal Offshoring

Legal offshoring is a fast expanding industry worldwide; however several myths surround the concept. The significance of the legal provision demands addressing these issues. The emerging business volumes in the LPO industry stand testimony against the charge. The myths sometimes form a hurdle in off shoring legal work. In fact offshore outsourcing is an essential part of globalization that ensures an upper edge for many reputed legal firms in the very competitive world.

One of the primary concerns of outsourcing is the quality and the confidentiality maintained. Contrary to the myth, offshore legal service providers maintain a high quality of standards in paper work; they employ professional trained lawyers and paralegal staff and have a systematic approach to the work. The offices are maintained with necessary security systems from CCTV cameras, biometrically operated doors to secure computer networks. Confidentiality is greatly regarded by these firms to maintain the reputation in the industry. Firms offshoring work can also get the work insured against any malpractice.

Violation of Attorney-Client Privilege was a cause of apprehension in the initial years of legal outsourcing; as law accepts Attorney-Client confidentiality and exempts disclosure even in the Court of law, it was thought to breach the agreement on disclosure to a third party. Conversely various US based Bar Associations have maintained the creditability in outsourcing making the system ethical.

Many legal firms alarm of facing competition from the companies once they have access to the database of its clients. But these firms do not eye the market, they rather prefer to clench to their market of supporting the legal firms abroad. Their business infrastructure is persisted to suit the way.

Another baseless fear in the industry is about the loss of jobs. The panic could be well compared to the situation in the beginning of industrial revolution, the employment of automated machines, computers. It was well seen that such adventures lead to more jobs through methodical work. Offshoring helps legal firms to concentrate on core job increasing their efficiency and business thereby creating more employment.

Looking towards the realities over the myths of legal offshoring, it is a very important process every legal firm has to adopt to keep itself at the top of the market, sustaining themselves in the changing legal business models.

LPO = Good for Big and Medium Sized Organizations

To remain competitive, medium-sized firms in U.S and U.K are considering outsourcing their work to countries that can provide services at a lower cost, without compromising on quality. Medium-sized firms face major competitions from their respective industries and to survive among them, the key solution is to offer services at affordable cost. When the lawyers in their own countries charge exorbitant rates, achieving their target of affordable services is a far away dream unless they arrive at a suitable solution. It is at such turn of events, even medium-sized organizations consider outsourcing their work.

The basic legal services like document review in U.S law firms are expensive and costs minimum $150-$200 an hour. For the same or better quality of work, companies in countries like India charge around $20-$70 per hour. When services are available at such a fraction of the cost, we shouldn’t be surprised to see U.S and U.K based medium-sized organizations outsourcing their work to India. Especially in the case of a small or medium firm, when they are trying to provide a competitive service in their industry and the best way to reduce their cost is to outsource their work to a country, where the cost is considerably low.

When the attorney and lawyer fees within U.S are becoming increasingly unaffordable and the same high-value service is available at 20-30% of the cost, the tendency to outsource work to other countries counts as a natural phenomenon.

Medium-sized firms are happy for cutting short their expenses, otherwise spent for skilled managerial and technical resources, overhead costs and office maintenance costs. Outsourcing work helps the small and medium size firms be exposed to highly efficient and flexible talent pool, well versed in their attorney and law skills, English skills that can meet client requirements and help them sustain and grow their businesses.

We invite you to take part in the Global LPO Conference 2010 and meet your suitable vendor(s) for your small or medium-sized business. With our Breakfast Meeting, One-On-One Meeting and opportunity to evaluate vendors using Pilot Project Models, treat this opportunity as the best platform to find a cost-saving scheme for your business.

LPO Growth in Small Destinations

Small destinations are set to become major destinations for the legal offshore outsourcing industry in the future. The firms in these countries are fast developing to meet the newly found demand in the legal industry.

The monetary difference isn’t the only reason for the movement, the quality of work and the standards maintained are at par with the industry. With the advent of Information Technology, it made little distinction to outsource work to firm in the same country or overseas where the cost is far less. Many legal firms have now joined hands with global LPO companies in a bid to stay competitive reducing their overhead cost. And the recent economic recession have speeded up the decisions for the tie up.

Well trained talent pool along with the different working hours also help. Moreover, the small destinations that are taking a leap to the legal outsourcing industry also have a strong English speaking and well-educated population. They aim to serve primarily US and UK markets for legal offshoring services.

Some of the works outsourced are contract drafting and management, litigation support including e-discovery, document review and management, patent drafting support, transcription of legal data, legal research etc .

India is a major hub for legal outsourcing, said to be holding around 85 percent of the market share and the trend is tremendously growing. The present infrastructure of the legal industry in India easily adapts to the demand. A good number of efficient lawyers and paralegal staff add to its leverage. Seventy percent work for LPO firms in India comes from USA; Indian lawyers are preferred to do the paper work for their graze in grammar and writing skills. The legal system in India is based on British system enabling ease in handling technical legal work.

Philippines and India, have led the global legal outsourcing industry in the past year. And in the last one-year alone, the industry has seen a 40-50 percentage growth.

South Africa is rising to be an alternate center to India in the area of legal process outsourcing. It also projects the same advantages of the LPO industry in India.

Mauritius takes advantage of its multiple linguistic skills – English and French. Already, established in the BPO industry, and the strong workforce in both outsourcing industries, lawyers and good governmental support in their ventures, Mauritius will soon emerge as leading destination in LPO.

Governments across these countries have identified LPO as a major source of revenue and is supporting for its development. Kenyan government has initiated setting up of parks and special economic zones.

In the coming years, India is likely to face challenges from the emerging LPO destinations such as Philippines, Kenya, Mauritius and South Africa. However, the continuing demand will keep all the countries involved to have a steady growth in business. At Global LPO Conference 2010 – Buyers and Vendors Meet, buyers will have opportunity to meet vendors from these countries and find the best vendor for their business.

Outsourcing is here to stay …

Outsourcing as a trend has caught the imagination of world but like every successful thing it has its own critics.

In recent times there has been much of speculation about Mr Obama’s policies and its impact on outsourcing. But should we really need to be worried about it? Should we ring the danger bells? Is it a bubble which will burst or is it a flash in the pan?

I believe the answer to all these questions is a big No ...

There is a strong case for the outsourcing industry to stay and in fact grow at a very fast pace. Recent trends show an exponential growth in outsourcing especially in newer areas like legal outsourcing.

So, why am I bullish on the outsourcing industry and particularly legal outsourcing industry? Here is my rationale based on facts: Mr Obama’s comments are more towards IT and software industry and does not affect the legal process outsourcing. In fact American companies generate more than 50 per cent of their business outside the US. To be globally competitive, they have to depend on globally shared services.

Outsourcing started as a way of obtaining services from outside supplier at a cheaper cost than possible in one's own organization or country. It still is the primary motivation but is it the only one? Companies have realized that Outsourcing not only helps in achieving the cost advantage but also provides a quality and timely services.

The compulsion of US to outsource work is also an admitted fact by Mr Obama by the remark that "…. but not enough talent at home”. Hence, to carry out growth, the US companies will be requiring talents from outside.

Infact several researches show that Outsourcing has a beneficial impact on the outsourcing client company. It is no surprise that the biggest employers of the local talent are the companies who are the largest outsourcers.

Trends in the legal outsourcing are even more encouraging with big legal support service providers like Integreon and CPA Global signing up multi million dollar deals with the giants like Rio Tinto and Cameron McKenna respectively. They are also partnering with magic circle law firms notably Clifford Chance, Eversheds and Pinsent Masons showing keen interest in the legal outsourcing. Recently, Slaughters and May has also expressed a keen interest in outsourcing some of its operations to big Indian LPO’s like CPA to reduce its cost.

With trends like this I can say with conviction “Outsourcing is here to stay”.

What Is In For Me?

The offshore outsourcing of legal documents continues to grow, for the reason, both law firms and corporate legal departments of corporates find it essential to cut their expenses for their overall growth and profit. The cost factor is often shown as the best reason to outsource, though in reality, outsourcing can also help you find the best manpower to handle the legal documents. If not entirely, you can depend on an offshore outsourcing firm to process a part of your work, and reduce your workload and provide a better turnaround time.

Finding the best vendor for your business is often a challenge, when many countries have dozens of legal outsourcing companies to serve. It is a tough task to locate and evaluate multiple outsourcing companies, finding how they work, and assigning sample works before deciding on the best vendor for your business. The vendors, on the other hand, have to take great pain to prove their efficiency.

With a number of legal outsourcing firms spread across the world, to arrive at a decision on the best firm for your requirements, a platform to test a project in real mode can thus make a huge difference before you sign the crucial contract.

At the Global LPO Conference 2010 – Buyers and Vendors Meet, we focus on eliminating the risk you face on hiring an outsourcing firm without knowing their in-house procedures. Here, we provide the venue for buyers and vendors to interact face-to-face and delve into their work methodology and ensure, they work according to your requirements. You can ask the vendor to perform a short pilot project that would reveal the vendor’s capability to carry out your services. You can provide proper instruction and ask the vendor to do an assignment, the one you believe is critical to handle. Giving a challenging assignment will help you judge the vendor’s ability to work even on high-risk situations. Basing upon the performance, buyers can plan for One-on-One business meetings and Office Tours with the same LPO vendors in India.

While buyers can evaluate and choose the best of the vendors through the short live projects; vendors have the chance to interact with potential clients, showcase their business facilities and methodologies and rope in the best clients. Interestingly, from a single platform, vendors can find one or more clients.

A common stage for the buyers from US, UK and Canada and vendors from countries including like India, Bangladesh, Philippines, Sri Lanka, Israel, Kenya, Mauritius, and South Africa will definitely prove to be the best of the meet, for both the parties to meet their requirements, and eventually benefit from their respective businesses.

The Economics of Outsourcing

The natural progression of a nation’s economy usually flows from agriculture to industrialization to services. The first two (agriculture and industrialization) can be affected by imports or foreign competition but realistically speaking cannot be outsourced. It is only when the economy enters into the third and definitive stage of services that the law of survival kicks in and paves way for outsourcing.

In a commercial contest of homogeneous service providers, the winner is usually the vendor with the best price. This simple economic principle gets elevated almost to law of nature in a credit starved economy. Jingoistic economic fervor apart all of us realize this simple home truth that if a law firm is able to retain a client by billing him at $X an hour because some of its back office processes have been outsourced then there is no way it can continue to service the same client at $X+10 an hour merely because it has been forced to severe its outsourcing ties given to political interests. The market would simply cease to exist at that price.

The irony of the so called debate around outsourcing is that it’s not new at all. Any time there has been a technological advancement in the forces of production, it has been stoutly met with charges of job elimination. The transition from a farm based economy to an industrialized economy wasn’t a cakewalk either. But people came around when they realized that there was a better way of doing things. That is all there is to outsourcing- it is a better way of doing things.

By mixing issues of trade with politics of nationality and unionism, we only tend to serve political interests and not economic. Outsourcing is not about transfer of jobs from one country to another. It is about creation of value. If legal services can be provided at better prices without compromising at quality then the service providers would find a way- whether outsourcing or some other method.

So this November rather than the resisting the countlessly repeated cycle of change, join us to find out how you can best adapt and grow...

The Market for Lemons...

In his Nobel Prize winning paper titled ‘The Market for Lemons: Quality Uncertainty and the Market Mechanism’ economist George Akerlof addressed the problem of information asymmetry which occurs when the seller knows more about a product than the buyer.

Akerlof analyzed the problem of information asymmetry using market for used cars as an example of the problem of quality uncertainty. Akerlof in his market analysis concludes that given to the absence of reliable information about the car condition, a buyer would only be willing to pay average price for a very well maintained used car (cherries), as he has no way of differentiating between an ordinary (lemons), an average and a good car. This in turn would drive out the sellers of good cars who would not be getting fair value for their cars. As a result of the exit of the good car owners, the average quality would come down, causing buyers to revise downward their expectations for any given car. This, in turn, motivates the owners of moderately good cars not to sell, and so on. He goes on to successfully predict that this implosion would continue till the market capsizes under its own weight as a result of unavailability of reliable information.

This problem of information asymmetry manifests itself in all the markets but it becomes more pertinent and complex in a global business scheme. Legal businesses are built upon years of practice and reputation. It is a business model essentially based on trust and the ability to deliver in crunch time. Hence when a law firm decides to outsource some of its business operations, it is not just outsourcing back office support but it is hedging its years worth of stellar reputation on the LPO vendor’s ability to deliver on deadline while maintaining highest level of professional ethics.

Since the stakes are higher in the outsourcing industry in general and in LPO industry particularly, it is of utmost importance that a law firm before deciding to outsource its office operations is able to vouch for the credibility of the LPO Vendor. The Global LPO Conference is a unique opportunity to interact with the LPO service providers, visit their operational facilities and select the business partners that can best serve your interests. So join us this November and enhance your business prospects by distinguishing between cherries and lemons...

It's time-II...

In our last post, we tried to give you a flavor of the strategic importance of global alliances in legal industry. The undeniable rationale behind formulation of suitable and lasting alliances is also applicable to another risk mitigation plan of diversification.

It is interesting to note that while the elite law firms have forever been diversifying their practice areas to keep up with the requirements of the clients and developments in law, there is precious little that has been done in terms of diversification of back-end support and cost cutting measures.

With the coming of age of the Legal Process Outsourcing industry we are increasingly seeing diversification both on the lingual and practice front. One standard problem that the global legal players continuously face while dealing with LPO service providers is of language. The industry with its origin in the English speaking common law world has so far been of little assistance to many European nations. However, this is set for course correction. With the leaders of the industry predicting massive recruitment and 100% growth, expansion plans are in full sway. Many LPOs now aim to conquer the lingual barrier by setting up bases in civil law jurisdictions in order to provide back end support to a new range of clients.

The second diversification has quietly crept in without much ado and fan fare. As the LPO industry has steadily shown its competence from one legal arena to another, it keeps on attracting new portfolios. Beginning with document review to research to case note preparation to patent outsourcing to drafting, the LPO industry now offers a fool proof model with reliable processes to serve the needs of a diverse practice law firm.

This diversification of outsourcing of back office support serves the dual role of insuring against the cyclical nature of legal business by cutting costs; and secondly it enables the outsourcing law firm to aggressively pitch for additional business with its existing resources as a large portion of its standardized legal service is now being taken care of by reliable business processes.

Hence, come this November, it’s time to explore and diversify. We invite you to the Global LPO Conference 2010 to interact with a select group of LPO service providers and find out how the LPO industry is successfully servicing the global law firms across the lingual and practice divide. It’s time...

It's time...

History bears witness that human beings tend to go tribal in the face of the unknown and find solace in similarity in crisis. However, historically the strongest and unlikeliest alliances are also formed during times of adversity. Some of the strongest military, diplomatic and trade alliances have been formed on the sidelines of the biggest crises that world has seen.

Hence as we see some signs of global economic recovery, it’s not time to adopt a protective economic model that will see short term concentrated pockets of growth at the cost of sustained economic progress. It is not time to lose out on monumental opportunities on account of constraints. It’s time to adapt and thrive.

Legal industry given to its affinity to the financial and commercial world has perennially been cyclical and prone to booms and busts. At a time when leaders of the world are repeatedly getting together in multilateral forums to revamp the global regulatory model; it is incumbent upon the global legal community to get together to set its house in order and put effective processes in place that would help reduce costs while not compromising on quality.

Legal practice with all its variety and flavours has forever been evolving from ‘Mom and Pop’ small time practices to Queen Counsels to Big Ticket Law firms to specialized boutique law firms... so on and so forth. Legal Process Outsourcing is the next and definitive step in this evolution. Legal outsourcing works not because of the vagaries of exchange rates. It works because it allows you to optimally allocate and utilize your resources by putting your best brains on the big ticket items while back office support is efficiently managed.

Globalization is not merely about migration of human labour and capital but it also represents coming together of minds in order to forge a better tomorrow. So, this November we invite you to join some of the finest minds in the legal industry to forge lasting solutions and alliances that serve you and your client’s needs better. Come find out why you should have been part of this evolution all along and why it’s not too late to ride the wave of legal change.

The Global LPO Conference is a wonderful opportunity to introspect and examine your existing business practices, inquire and investigate about business opportunities and initiate alliances that will counter act the cyclical nature of the business. It’s time...