LEGAL PROCESS OUTSOURCING: An Introduction

LPOs Enabling Clients to Meet Challenges of the Modern Legal Industry

For years, corporate law departments have turned to Legal Process Outsourcing companies (also called Alternative Legal Service Providers) and other similar legal services providers (collectively referred to here as 'LPOs') to deliver legal tasks at a lower cost while controlling risk. For routine tasks, LPOs meet these expectations by leveraging highly proficient, cost-effective resources and making incremental process improvements. However, changes in today’s legal and regulatory landscape have made these 'routine tasks' less and less common, while also making it difficult for resource-constrained corporate law departments to keep up with requirements and to continue to deliver results for their businesses. For these more complex tasks, LPOs do more than simply rely on better processes and people. They build and manage truly bespoke, technology-enabled solutions. This type of holistic support is not readily found at traditional legal service providers.

To start, legal matters are more complex than ever. Companies are trying to understand and comply with new regulations and requirements around the globe, particularly in the data privacy and security space (e.g., GDPR). Heavily regulated industries like financial services are facing even tougher challenges, dealing with the impact of Brexit, MiFID and a host of other looming changes. A 'smaller,' more interconnected world means litigations and transactions often span more countries than before, adding another layer of complexity. New forms of data, communication, and social media have increased the difficulty of analysing evidence. There are no established programmes or guidelines for companies to easily execute against or turnkey solutions to solve these challenges. Instead processes are being built from scratch, starting with a good amount of uncertainty. LPOs are ideally suited for this task, using their process expertise to lead upfront consulting efforts to design workflows and unbundle component workstreams, and their operational expertise to then execute on these requirements in a way traditional consultants might not be able to. LPOs also come to the table with a full roster of technologists, statisticians, data scientists, business process experts, and privacy and security experts. These are disciplines that have been engrained in LPOs for years and are critical for designing and building the right solution. This means LPOs can step in to solve problems more quickly and on a more comprehensive level.

Handling such complex engagements also requires a deep level of legal subject matter expertise. LPOs are well equipped to handle this challenge. Their teams already have high-powered lawyers and subject matter experts. In some cases, they have even spun out law firms of their own or partnered with external law firms. These experts can decomplexify guidance and train resources to ensure that concepts are interpreted in the correct way across documents and across review teams. Having these sophisticated resources takes pressure off the in-house legal team to respond to escalation items and clarifications, keeping projects on track and on-time to meet pressing deadlines.

As companies work toward deadlines they also face continually evolving legal and business strategies, often balancing the risk of non-compliance against the cost of compliance. This means that legal teams have to remain flexible to respond to changes in instructions. Dealing with change is nothing new for LPOs. At the execution level, LPOs maintain a flexible staffing model to support changing resource requirements based on project needs, and are capable of deploying and redeploying teams of hundreds of resources within a matter of days. At an organisational level, LPOs are often more agile than traditional legal service providers, so leadership can quickly implement improvements in their business models to anticipate and stay ahead of market demands, such as building technology to drive automation or training larger pools of resources on emerging legal concepts.

Legal workstreams also now come at a larger scale, with higher data volumes, and more time and cost pressures, leading many to look to technology for efficiency gains. At the same time the legal space has been flooded with new cutting-edge technologies that are hard to distinguish. Artificial Intelligence tools and 'push button' solutions are being touted for everything from automated contract abstractions and assessments to automated coding of documents in eDiscovery. LPOs have already made investments in integrating, developing and customising these technologies into their own service offerings to fit the needs of their clients. As a result, using an LPO means a company will already be properly leveraging technology in its process and doesn’t have to separately spend time comparing and selecting tools or modifying its requirements to suit a technology that it doesn’t fully understand, an exercise in change management for lawyers that otherwise might stall or derail a project.

Instead, LPOs have already hired and trained a workforce that can expertly manage, employ and customise these technologies in-house. Where a technology tool is so 'bleeding edge' that it has not been adequately tested, LPOs and their technologists serve as innovation labs for their clients, finding, testing and comparing these new tools. Doing so helps provide structure to a technology selection process, validating functionality and return on investment (ROI) to ensure the right tool is selected and implemented based on a client’s specific requirements.

Finally, with many legal departments growing in size and operating on a more global basis, new challenges have emerged to centrally maintain control of decisions and to effectuate change. This is not only important where law departments are looking to drive savings through technology but also where they want to deliver consistent and measurable results across the enterprise, or centrally assess and manage risk. Again, LPOs drive value in this area by offering a more holistic solution. They help create standardised processes that can be deployed from one project to the next, regardless of location, time zone, or external vendors. Similar data points are collected, providing clients transparency into the processes and allowing companies to more objectively compare results, monitor success, and ultimately make better business decisions. For example, in the M&A due diligence space, LPOs can build technology-enabled solutions that can be redeployed across transactions, regardless of the law firm used or the in-house deal team working on the transaction. For each deal this means that companies do not have to rethink the LPO firm it is using to manage the review, the process that will be followed, or the technology to deploy. Aligning on data that is required to be pulled from each target company’s agreements and on how the data will be analysed, gives a purchaser insight into the obligations it is absorbing so it can better evaluate, value and compare one deal with the next.

In building and managing these solutions, LPOs are uniquely positioned to enable clients to continue to meet the challenges of the new legal and regulatory landscape. Doing so requires the right mix of efficient resources, cross-functional subject matter expertise, agile and scalable processes, and integrated technology, a unique combination of traits that is readily available at leading LPOs. With this in mind, it is no surprise the past year has been ripe with growth across the industry, a trend that we expect to continue as these skills become even more critical.