A breif about the changing dynamics which are set to impact the legal outsourcing industry in the coming year. “We see 2011 as a pivotal year for legal outsourcing as the industry continues its development from a niche practice to a truly global industry.” –Fronterion Managing Principal, Michael D. Bell. Following a breakthrough year of big deals and industry buyouts 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.
Ripples from the rapidly growing legal outsourcing industry are shaping professional ethics, altering long-standing law firm-client relationship dynamics and challenging the general notion of how legal services are procured, delivered and consumed. “The coming year presents a number of new and exciting opportunities for the LPO industry, and a fair share of challenges, as well. The firms that will be the most successful will be those with the ability to recognize and respond to change.” – Ten for 2011: Top 10 Trends in Legal Outsourcing for 2011.
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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
