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The global outsourcing market could reach $904.948 billion in market size by 2027. Indeed, more industries, such as legal services, are embracing business process outsourcing (BPO).
Outsourcing legal process services is becoming popular among law firms, legal counsels, and corporate executives worldwide to improve operational efficiency, profitability, and performance. The global legal process outsourcing (LPO) market could achieve a compound annual growth rate (CAGR) of 31.4% until 2030.
Keep reading to learn the top reasons that make outsourcing a prudent choice in legal services.
1. Cost savings from reduced overhead expenses
What is BPO? It’s subcontracting various business processes. LPO is a similar strategy that focuses explicitly on legal processes. By strategically leveraging LPO, organizations can achieve cost efficiency.
Outsourcing legal process services involves offloading time-consuming and resource-intensive tasks to external providers, such as document review, legal research, and contract management. This approach reduces overhead costs.
Despite the time zone differences, many BPO and LPO clients outsource to regions with significantly lower labor costs, such as the Asia Pacific. For example, a paralegal’s average annual salary in the Philippines is about $6,984, about ten times lower than in the United States.
Outsourcing firms cover employee compensation and recruitment and development. Client organizations only pay for the services rendered. This setup results in significant cost savings, which enable better financial planning and management.
2. Access to legal expertise globally
Legal outsourcing companies help businesses access a global talent pool, filling the gap within teams while enhancing the range and quality of services. This approach benefits small firms and growing businesses the most, which might find talent acquisition and skills development cost-prohibitive.
Whether handling complex litigation matters, conducting in-depth legal research, or managing regulatory compliance, specialized service providers can bring the expertise necessary to guarantee high-quality results in any type of work.
3. Access to advanced technologies and legal tools
LPO providers invest heavily in advanced technological solutions and innovative tools to boost operational efficiency. Outsourced legal services allow organizations to maximize the same cutting-edge resources without significant upfront investments or ongoing maintenance.
Here are some LPO tools for better data management, enhanced collaboration, and improved overall process management:
- Communication tools. For internal communication, Slack and Microsoft Teams offer instant messaging, file sharing, and video conferencing within a secure environment. Meanwhile, legal client relationship management (CRM) platforms such as Clio provide comprehensive solutions beyond basic communication.
- Project management software. Trello’s visual approach to task management helps legal teams organize projects into boards, lists, and cards, simplifying workflow and task tracking. Additionally, Nifty enhances productivity with milestone tracking, task assignment, and progress reporting for managing complex legal projects.
- Legal research and AI tools. WestLaw offers predictive research and KeyCite technology to ensure lawyers work with the proper law and jurisprudence. Meanwhile, Arguminer assists lawyers in formulating arguments, crafting comparative analyses between similar cases, and providing insights to devise effective litigation strategies.
- AI contract analysis Tools. Artificial intelligence (AI) contract analysis tools such as Latch and LawGeex can conduct reviews and due diligence to identify potential risks. AI also supports legal analytics, e-discovery, and predictive analytics to assess the likelihood of winning a case and determine optimal pricing models for legal services.
4. Scalability and flexibility in legal staffing
The ability to scale legal resources quickly is essential for managing fluctuating workloads and project demands. LPO offers unmatched flexibility in staffing. Companies can adapt to changing business needs without the burden of hiring and training new staff.
Organizations can quickly scale up during peak periods by hiring additional external support and reduce outsourcing expenses when workloads are lighter. This adaptability helps maintain operational performance and financial stability.
5. Focus on core legal functions and client services
Outsourcing non-core legal tasks allows internal teams to dedicate more time and energy to high-value activities, such as strategic legal counseling, risk management, and client relationship building. For example, during a merger, the in-house legal team focuses on closing the deal while the external staff performs the documentation.
This increased focus on core competencies can improve client satisfaction, strengthen business outcomes, and enhance the competitive advantage, positioning companies for success.
6. Efficiency in legal processes
Efficiency is among the primary benefits of legal process outsourcing. LPO firms deliver high-quality services by employing skilled professionals, adhering to rigorous standards, and implementing comprehensive quality control. By outsourcing, organizations can benefit from these capabilities to ensure consistent outcomes.
Outsourcing legal process services also streamlines operations and accelerates service delivery. LPO providers use advanced technologies and standardized processes to reduce turnaround times for document review, contract analysis, and e-discovery. All these lead to faster decisions and better execution.
7. Risk management and regulatory compliance
Outsourcing legal process services also mitigates data security, confidential information, and compliance risks. LPO firms adhere to strict industry standards and implement robust cybersecurity measures, such as secure data storage, encryption, and incident response plans.
Leveraging external risk management and compliance expertise helps organizations reduce costly errors and legal issues. LPO ensures companies meet legal standards and strengthen defenses against cyberattacks.
Case study: effective outsourcing of legal process services
Cindy Williams, senior vice president at a large American bank, was responsible for disputes and claims. She faced a complex situation involving a customer seeking a $365,000 refund for defective goods but lacking sufficient evidence.
Williams hired an LPO service provider to support the case. The LPO firm used its arbitration expertise and advanced technologies to investigate and gather the necessary documentation and legal references. It turned a seemingly losing case into a significant win for the bank and its client.
This case study underscores strategic outsourcing’s critical role in the success of legal teams.
The bottom line
Outsourcing legal process services offers compelling benefits for legal advisers and corporate executives. By carefully evaluating their specific needs and selecting the right outsourcing partner, organizations can unlock substantial cost savings, access specialized expertise, improve efficiency, and enhance their focus on core legal activities.
Let’s connect to further discuss how outsourcing can transform your legal operations and drive business success.
