Legal Process Outsourcing – A GC’s Perspective

I read with interest an interview with BT Global Services’ GC David Eveleigh (Q&A: David Eveleigh, BT Global Services, Outsource Magazine, April 2012) who shares his thoughts and experiences on BT’s use of legal process outsourcing (LPO). I highlight here several of David’s key points along with some of my own observations.

Value of LPO

David’s interview begins with the explanation that the BT legal team’s utilization of LPO has helped him to keep internal headcount relatively flat and to reduce costs, but he stresses that:

“The mistake I think that a number of people make when thinking about an LPO provider is to assume they’re a body shop, and they’re not. They focus around process, technology, and then people (in that order because that’s where their focus is).”

I believe David hits the nail on the head. LPO providers should certainly not be confused with staffing companies, which often lack an LPO’s well-defined processes for the consistent delivery of legal services. Of course, LPOs do provide talent, but they also make significant investments in infrastructure and often follow six sigma and other best practices that continually refine and improve upon their processes, enabling them to ensure greater efficiency and higher quality results.

(For more about the differences between an LPO provider and a staffing company, see our white paper on Best Practices in Managed Document Review, which includes a comparison of an LPO’s managed review approach against a traditional staffing-only model.)

Maturity of LPO

Another good point David makes is about the maturity of the LPO market today, including the level of experienced management now entering the industry:

“I just see it changing in terms of the management of the people going into some of the providers; you’re getting people from good senior roles in law firms joining these practices, and that to me indicates that there’s a level of maturity that maybe wasn’t there beforehand. There’s a real attempt to put a differentiator into the legal market and I think that is quite telling.”

I agree wholeheartedly that the industry is maturing and that leading LPOs are playing an integral role in the evolution of the legal profession. Over the last two to three years, the influx to LPO of highly skilled talent with deep legal domain expertise has been considerable. For example, at Integreon, we now have on staff decades of experience in managing or practicing inside large law firms and at corporations in the U.S. and U.K. (I write from a position of personal experience, having spent ten years at Clifford Chance LLP.) I believe a similar trend is taking place at Pangea3, United Lex, and other major LPO providers, which suggests to me that many in the legal profession now view LPO as a legitimate, albeit alternative career path.

Importance of Collaboration

David also believes that law firms should work more collaboratively with LPO providers for the benefit of their corporate clients:

“They [law firms] may be doing it for their own back office, but we’re not necessarily seeing them tie up the LPO provider and say ‘this is where we add value, here’s where they [LPO providers] add value, this is a combined service.’ I haven’t seen that yet.”

While in a historical sense it may be appropriate to characterize the legal profession as being slow to embrace change, I think it is fair to say that a number of leading law firms are now beginning to truly collaborate with their chosen or preferred LPO providers. Up until relatively recently, law firms commonly viewed relationships with LPO providers as a “check box exercise” so that they could respond in the affirmative, when quizzed by corporate clients on whether they had a relationship with any LPO providers.  But this view seems to be changing, as a number of major firms have upped the ante by publicly announcing their relationships with LPO providers. These firms are now also working closely with their chosen LPO providers to bring about truly innovative, groundbreaking change in how legal services are delivered. This embrace of LPO highlights the value that these firms believe LPO brings to the table.

(Consider a recent article from Integreon’s Mark Ross who writes that 2012 could be a tipping point year in LPO adoption if the recent trend continues for law firms to publicly embrace relationships with LPO providers.  See Legal Process Outsourcing: Has it reached a tipping point?, Outsource Magazine, April 2012.)

Over the last six months we’ve seen Nixon Peabody publicly acknowledge their relationship with Pangea3, King & Wood Mallesons openly discuss the benefits to their clients that their relationship with Integreon brings, and most recently Corrs Chambers Westgarth embrace a two LPO provider panel approach with Integreon and Exigent. Other firms that have strategic relationships with LPO providers include Allen & Overy, Blake Dawson, Seyfarth Shaw, CMS in the U.K., Osborne Clarke, Pillsbury Winthrop Shaw and Pittman, and there are many more.

Firms like these know that value-creating change occurs when law firms, corporate legal departments, and LPO providers work together in a streamlined and cost-effective operating model. The combination of law firm legal expertise, the reassurance corporate clients have from ongoing relationships with these firms, and the LPO provider’s expertise in process-based development, transition and delivery often yields a service that is far greater than the sum of its parts.

(Further recommended reading is an article by Integreon’s CEO Bob Gogel who writes that a legal eco-system where different parties collaborate to deliver better practice solutions for clients is now closer than ever.  See All in it Together, Global Legal Post, April 2012.)

A Game Changer

One of David’s final points addresses the need for onshore LPO capabilities in the U.K.:

“I think the thing that will be a game-changer for me in this space will be someone who is able to do this on an onshore basis at scale in the UK.”

As it turns out, Integreon has done exactly this. We recently announced the opening of an LPO delivery centre in Bristol (U.K.) and are now the only LPO provider with a physical, onshore delivery capability in the U.K. Our delivery centre in Bristol and another one in London currently boast a client roster that includes Magic Circle and Top 10 U.S. law firms and Fortune 500 corporations.

We also recently announced the launch of a new on-site legal resource staffing service for U.K. law firms and corporate legal departments to help our clients meet fluctuations in demand while minimizing management overhead costs and risk.

The U.S. market has seen its share of onshore developments too. Pangea3 recently opened a review centre in Dallas while United Lex opened a similar centre in New York. Integreon has expanded its own operations too, with the opening of a document review centre in Washington, D.C. and an electronic evidence lab in Atlanta, GA.

As the delivery of legal services evolves, it’s clear to us that LPO clients require a blend of onshore and offshore support. Although cost is a driver in determining the choice of location, there are many other forces at play, which include ethical and legislative restrictions, complexity of the task at hand, familiarity with a client’s particular legal system, amount and type of communication required, project duration, client comfort with a location, time zone preference and language skills.

Wrapping up

To sum up, the experience BT has had with LPO and its GC’s own willingness to be interviewed about it are very telling about the perceived value of LPO. And BT is not alone in this thinking. Another recent article published in the Australasian Legal Business magazine quotes Brian Salter, the General Counsel of AMP, a leading Australian financial services company, as stating that if a law firm does not have an LPO offering they will “not be eligible” to run litigation for their corporation. What we are seeing is that, increasingly, corporate legal departments and law firms are becoming much more out spoken in not only advocating the advantages of LPO, but also in viewing LPO as a necessary element for the modernization of legal services delivery.

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