Outsourcing solutions apply to every company from virtually any industry that uses systematic processes, from finance and accounting to healthcare and even legal services. Law firms are not exempt from reaping the benefits of outsourcing.
Entrusting legal processes to offshore service providers is not a novel concept. Legal process outsourcing (LPO) has been a common practice for quite some time.
According to market research company Grand View Research, the practice is predicted to have a compound annual growth rate (CAGR) of 30% from 2022 to 2030.
If you’re in the legal sector and want to increase your firm’s efficiency without compromising your bottom line, legal process outsourcing may just be the answer.
Read on to learn more about this practice and how exactly law firms benefit from outsourcing legal processes.
What is legal process outsourcing?
Legal process outsourcing is the practice of delegating some of the work from law firms to third-party service providers. Typically, these service providers are business process outsourcing (BPO) companies.
Rather than spending resources on internal employees, law firms can hand over non-core functions to BPOs with experience in legal process outsourcing.
These functions can include:
- Legal research
- Legal contract management
- Document preparation
- Billing support
Legal process outsourcing is also a cost-effective way for law firms to access specialized expertise they lack in-house.
Legal process outsourcing vs. Offshoring
Outsourcing is often confused – and sometimes used interchangeably – with offshoring. While the two practices are similar, there are key differences between them.
Outsourcing is the process of delegating work to third-party service providers. These third-party companies can be from the same country, a neighboring one, or even from halfway across the world.
Businesses that outsource their processes to service providers within the same country are practicing onshore outsourcing.
Offshoring is the opposite of onshore outsourcing. Instead of handing over processes to service providers within the same country, businesses turn to more distant “offshore” locations.
An example of offshoring is when a law firm in the US outsources its legal research processes to a BPO company in the Philippines.
How do law firms benefit from legal process outsourcing?
Outsourcing legal processes to BPO companies gives law firms various advantages. Among other things, they gain more flexibility, become more productive, and improve their process’s turnaround time.
Below are just a few of the benefits law firms gain through legal process outsourcing:
Cost reductions
Reducing operational costs is one of the primary benefits of legal process outsourcing. In particular, outsourcing legal processes to offshore BPOs can help law firms save as much as 70% on costs.
The lower living costs in many BPO hubs like the Philippines translate to comparatively lower salaries for outsourced staff. Through legal process outsourcing, law firms can often hire skilled workers for a fraction of their onshore rate.
Additionally, they can save overhead expenses from recruitment, training, and employee equipment, as BPOs usually shoulder these costs.
Greater flexibility
Legal process outsourcing gives law firms more flexibility when it comes to scaling operations. Through LPO, they can quickly ramp up operations as demand increases.
Inversely, they can easily let go of excess staff once cases or projects have been completed to save money on overstaffing.
Fewer errors
Like law firms, BPOs have their reputations to protect to ensure a steady flow of clients. Thus, BPOs make sure to keep their staff upskilled and motivated to provide the best services for their clients.
BPOs use leading industry technologies (e.g., CRMs and automation software) to reduce – if not eliminate – the chances of errors in operations.
Faster turnaround times
A law firm’s outsourced staff are responsible only for their assigned tasks. They can focus entirely on finishing their work without getting distracted by other duties, enabling them to finish these tasks faster.
Conversely, the law firm’s in-house employees have reduced workloads through legal process outsourcing. This means they’ll have more time to do their remaining work and get them done earlier.
Turning to LPO also gives law firms access to a pool of specialists and experienced staff that can execute tasks faster and more efficiently.
Is it advisable to outsource legal processes to BPOs from other countries?
Safety concerns are expected and natural when it comes to offshore outsourcing. After all, you’ll hand over processes to an overseas service provider with whom you may not have any previous dealings.
This is even more true for law firms. Because they deal with complex legal issues, law firms may hesitate to outsource to service providers from foreign countries with different legal procedures.
However, BPOs that provide legal process outsourcing services are often well-versed in the legal technicalities of the countries they cater to.
For instance, LPO providers in the Philippines catering to law firms in the US familiarize their agents with the country’s state and federal laws and regulations.
Despite this, law firms must still conduct due diligence and verify the track record and reliability of their potential partner BPO before signing any agreements.
