This story is the third in a four-part series. Read part one and part two. The fourth installment will discuss key considerations in evaluating LPO options.

When LPO first emerged more than a decade ago, LPO providers faced significant challenges in gaining marketplace acceptance.

Common concerns included:

  1. Security and confidentiality. Legal work is confidential by its very nature. Many general counsels worry about transferring data to outside parties, especially if the data is being sent across oceans.
  2. Quality. Corporate legal departments are accustomed to face-to-face interaction with the people performing legal tasks. Legal executives may fear that work performed remotely will not meet the department's quality standards. Additionally, legal executives may be unwilling to support the cost of deploying internal resources to provide quality control over LPO-provided services.
  3. Ethical implications. Risks related to the unauthorized practice of law made many general counsels uneasy about using LPO providers.
  4. Client and outside counsel relationship. Whether due to the perceived threat of an LPO provider's impact on the bottom line or a lack of trust in the quality of outsourced work, legal departments had a difficult time obtaining outside counsel's buy-in for the use of LPO.

However, these concerns are becoming increasingly outdated. Many LPO providers today have taken a number of steps to address the issues raised by the legal community.

In particular, some of the top players in the LPO space have made efforts to:

  1. Acquire certifications. In order to address security and confidentiality concerns, many LPO providers today have implemented globally recognized processes and certifications, such as Six Sigma, ISO 27001 and ISO 9001. Additionally, some LPO providers have taken a hands-on approach to training their staff on specific legal engagements, including involving corporate legal personnel to directly lead such learning initiatives.
  2. Build strong service-level agreements (SLAs). The practice of measuring a law department's performance is not common. However, LPO providers have been able to leverage the knowledge acquired in the business process and information technology outsourcing markets to create metrics that assess the quality of the work being provided. The increasing use of such performance metrics facilitates the development of SLAs that hold an LPO to a particular standard of quality. The use of metrics and SLAs can also facilitate a more formal governance relationship between an LPO and its client than may have existed in the past.
  3. Educate general counsels and the general public. Most LPO providers have collaborated with the American Bar Association (ABA) to clarify the role of LPO in legal work and to delineate an LPO provider's appropriate responsibilities. The ABA has also developed guidelines for engaging an LPO provider. In addition, some LPO providers have made efforts to educate the legal community on the ability of LPO providers to perform certain tasks more cost-effectively than outside counsel, and to serve as subject-matter specialists in non-core legal service areas. As a result, outside counsels are coming to recognize they still have an important role to play in providing oversight of the LPO provider and serving as the ultimate legal decision maker.
  4. Adopt a hybrid onshore/offshore model. Because many LPO providers have faced resistance to having legal work performed offshore, many are now offering combined onshore/offshore solutions to their clients. Some LPOs have expanded their operations in relatively low-wage “near-shore” locations so that work can be performed closer to a client's headquarters but still at a competitive price. With a hybrid approach, LPO providers increase their ability to provide seamless, around-the-clock service by coordinating their onshore and offshore resources' work schedules. They can also offer their clients adaptive pricing models for such resources to fit specific legal department needs.