The Challenges of Legal Process Outsourcing (LPO)

Legal Process Outsourcing (LPO) refers to any processes or steps of work that are performed out of a country to a third party that supports the delivery of legal services. These processes or steps may range from simple steps to a highly complex delivery models. As the modern society gets more complex with modern regulations, the requirements of such services may originate from law firms, corporate, individuals, Independent Attorneys or even Government Sector. One estimate puts the market of LPO currently to be USD 250 million to grow to USD 640 million by the end of 2010 and further annual growth of USD 146 million per annum. And it seems highly predictable that majority of the share will be captured by India, having population that is generally good in English with significant costs differential as well.

LPO services offer certain definite advantages. The foremost of the same is costs savings. There are substantial costs differences between engaging an Attorney in a country like U.S., to that of country like India. Whereas, a specialized Attorney in U.S. may charge clients up to USD 400 per hour of work, in India we will see the whole projects spreading over several hours can be completed for the same billing amount. In fact, a well educated experienced Attorney can be hired in India for full time for as little as USD 1200/ to USD 1500/- per month working 45 hrs a week. When Companies realize such a huge difference in payment, they are willing to take a bit of risk and start looking for outsourcing partner. They are willing to compromise a bit on quality in the beginning. They would hope that with training Attorneys the anticipated gap in quality of work would go down and they would be able to reap substantial benefits in 6- 8 months. The Companies and law firms tend to ship the work that is of less risk, regular and repetitive in nature. In this tough economic environment, it makes all the sense to ship out regular, repetitive work offshore.

The second advantage of off-shoring the work is also the timeliness and sincerity that goes into the work. An in-house employee is more likely to get bored doing mundane work. Initially, an in-house employee will yield more productive, but over certain duration, it will be noted that timeliness as well as commitment to work will go down for a job that is non-challenging for an employee. It has been noted that work shipped to offshore entity is more likely to be done in time and with vigor as it is not a job for an offshore entity, but is a business. One of the very famous off shoring LPO mentioned that they are willing to get graduates and post-graduates do the document review (that can be done by a paralegal person in U.S.), with continued interest over a long period of time, whereas for their head office they would hardly get legal people to maintain their interest. For a lawyer in India, a document review may be a career in itself that s/he will think of working throughout her/his life.

The other advantage of a LPO business is variety of solutions that are offered by an outsourcing partner. The outsourcing partners deal with number of customers and have experience in industry. They use modern IT tools and sometimes come with easy solutions in solving complex problems. For example, an outsourcer would have latest designing tools to draw figures that go into patent applications. Or they would be subscribed to latest databases that give summary of latest judgments on a particular subject matter.

The formidable advantages that Legal Process Outsourcing (LPO) offers do not come without set of its challenges and if not handled properly the LPO advantages can turn into nightmare. Therefore it is very important how an outsourcer chooses it’s outsourcing partner. There are number of points that an outsourcer has to keep in mind and foremost among them is the legal experience of the partner. We should look closely at the management team and if they can offer people who are good in offering legal solutions and have experience in dealing with wide variety of matters. It becomes imperative that people who handle the cases have some requisite number of experiences in that particular field. Moreover, are they crisp in jotting down and delivering solutions that are required by your customer? Do they need constant supervision or can they work independently. The integrity of Management team is another important aspect that need a bit of probing. What is the track record of people on the helm of affairs in the outsourcing entity? Are they committed in delivering solutions on time? An outsourcing partner should also go beyond the educational background of the team that supports it. A country like India could also have people come from the educational background that looks very attractive, but because of poor quality of education they received, they will not be able to perform the requisite job. It is imperative to see on the job performance of the candidate before committing to a long term work. This also brings us to the point of having easy exit clauses with your Legal Process Outsourcing partner, so that you are able to exit the arrangement as easily as possible, if required.

The other legal challenge that seems to have arisen in outsourcing high technology patent applications have arisen due the recent USPTO circular that says it has become aware of the outsourcing of patent prosecution and therefore published a notice (Fed. Reg. July 23, 2008, Vol. 73, Number 124, Page 42781) in the Federal Register, reminding patent applicants to comply with the existing laws. The two primary sets of export control laws are the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR). While outsourcing has become somewhat of a national trend, outsourcing patent work has the potential for severe criminal and civil penalties and the responsibility falls upon the exporter to determine if an export license is required under either ITAR or EAR. Disclosing sensitive technology to any foreigner, even if within the United States, may violate federal law. A counsel experienced in export control matters can help avoid inadvertent violation and the possibility of criminal and civil sanctions. The Patent Outsourcing work (consider a big part of Legal Process Outsourcing) thus may be subject to U.S. Export Control laws and has to be adjudged on a case to case basis.

One of the reasons, several customers / law firms are moving towards engaging law firms as their outsourcing partner is because it provides for privilege communications. If there happens to be clients/ customer data that needs to be shipped to an outside country and it has potential of containing self incriminating information, it gets protected under the Attorney-Client Privilege laws of most of the countries. Similarly, the Attorneys and law firms need not be bound specially by Non Disclosure Agreements (NDAs). There is a greater presumption of outsourcer’s data remaining protected and not leaking out of the networks in case of law firms being your outsourcing partner.

In terms of Legal Process Outsourcing, immense opportunities and wide variety exists for solutions and cannot be enumerated in this article. However, we will attempt to jot down certain important segments where already we find commercial activities taking place. The following are some of the segments in Legal Process Outsourcing (LPO) to watch for:

1. Intellectual Property Outsourcing: Drafting, Preparation & Filing of Patent Applications for USPTO; Preparation, Filing of Trademark Applications; Patent & Trademark searches; Preparation of Figures & Drawings using advance commercial software; Preparation of Design Patent Application; Infringement Opinions; Patent proof reading.

2. Litigation Support: Drafting legal suits, motions, pleadings, reply to motions, legal notices, C&D’s, recovery and mortgage related notices, Deposition and other transcriptions and E-Discovery and Document Review processes.

3. Contract Management: Corporate and Personal contract drafting, vetting and negotiations. The end products are perfectly formatted to suit the needs of customers.

4. Paralegal Support: Document /Record Archival & Retrieval, Summary writing, Case Management, Lawyer’s calendar management, billing services, data entry.

Again to re-emphasize, the above list is not an exhaustive one. Various new opportunities exist frequently. For example, one of the premier law firms based in New Delhi, India recently got an opportunity to do a Real Estate/ property due-diligence work. They were trained online on how they could do a property due-diligence based on 10 points on various Government databases available online. They started with a modest headcount of 2 employees. The contract now envisages a headcount of 50 experience lawyers over a period of 1 year. This shows the faith in the quality of output being generated by Indian lawyers.