Half of top 30 now using LPO or low-cost bases as BLP and SJ Berwin consider options

Fifteen of the UK's top 30 law firms by revenue have either set up their own low-cost legal centre or are sending routine legal work to legal process outsourcing (LPO) providers, according to research conducted by Legal Week.

Several other leading firms are reviewing their options, including Norton Rose Fulbright and SJ Berwin, which is in early stage talks to outsource its document production team.

Berwin Leighton Paisner is also looking into its own low-cost centre, as well as the option of referring some legal work to its Lawyers on Demand service.

The survey underlines the extent to which the use of LPO and low-cost legal centres has taken hold among the UK's top law firms as pressure grows from clients, including Royal Bank of Scotland, Deutsche Bank, JP Morgan, BT and Land Securities, for law firms to show LPO-type capabilities.

Last month, Ashurst announced that it was taking advantage of a government grant of up to £2.4m to open a low-cost base in Glasgow later this year, making it the fifth top 30 firm to set up a legal services centre, alongside Clifford Chance (New Delhi), Addleshaw Goddard (Manchester), Allen & Overy (Belfast) and Herbert Smith Freehills (Belfast).

Adrian de Souza, general counsel of Land Securities, said: "We wouldn't make it a requirement, but our preference is for the same firm to manage all aspects of an individual asset portfolio throughout its life cycle, so they are more likely to get instructions if they have access to a lower cost base elsewhere."

Allen & Overy global managing partner Wim Dejonghe (pictured) added: "Clients are putting more pressure on the traditional model. Just as they are identifying efficiencies in their own businesses, so we have to look at alternative arrangements and that is an opportunity that will allow firms to grow market share as a result."

Legal Week's research highlights how law firms are adopting a variety of models to cut the cost of conducting low-value legal work such as document review and M&A due diligence.

Olswang operates a panel of LPO providers and also sends some City legal work to its Thames Valley office, while Simmons & Simmons has a Bristol office staffed by partner-led legal teams conducting high-value City-sourced work more economically. Elsewhere, Hogan Lovells has relationships with LPO providers Integreon and Exigent alongside its own 'Mexican wave' scheme, which sees it farm out the routine elements of transactions to a panel of regional law firms.

David Ellis, managing partner of OMC Partners, which advised Ashurst and Addleshaws on the establishment of their low-cost centres, said firms that carried out all elements of legal work efficiently could typically reduce their costs by 20%, thereby allowing them to improve their margins and deliver better value to clients. "This is a huge opportunity for law firms," he added.