GCs don't prioritise LPO when choosing a law firm, survey reveals

A surge of interest among law firms in low-cost legal centres has yet to be mirrored by the in-house community, with many general counsel still to be convinced of the benefits of legal process outsourcing (LPO).

The availability of LPO – including outsourcing to external providers and the use of own service centres – was deemed to be the least important factor when selecting a law firm, according to Legal Week Intelligence's annual Client Satisfaction Report, which polled more than 1,400 in-house lawyers. 

GCs gave an average rating of just 4.4 out of 10 when asked to grade the importance of low-cost centres. However, despite this apparent apathy, satisfaction levels with LPO centres scored an average of 5.7 out of 10 – one of only a few areas in the report where contentment with service levels outstripped the relative importance they were given.

Baker & McKenzie's own low-cost centre in the Philippines was the most highly rated of the services on offer, scoring 6.6 out of 10. Bakers' Manila centre offers clients support with intellectual property (IP), employment, competition and compliance projects, along with several other services.

Bakers TMT partner Steve Holmes, who works closely with the firm's Manila base, commented: "It's almost rare to get a request for a proposal where there isn't a question on offshore or outsourcing capabilities. It is a major factor for clients to know you are running your firm efficiently, and that any work that can be done at the same quality in a cheaper jurisdiction is done there. The external LPO providers aren't necessarily cheaper on this.

"There are two groups of clients that are best placed to move into LPO work. There are the big IT suppliers with significant outsourcing in their own businesses and who come to us looking for it, and then there are the smaller corporates looking to grow internationally, who look for their volume legal services to be handled from one point, rather than employing lawyers in all of the new jurisdictions."

Commenting on the reasons why clients may be reticent to use LPO services, Libby Jackson, director of Herbert Smith Freehill's low-cost Belfast base, said: "There is concern about communication and a fear that costs will be hidden, and possible project management issues arise. That's why our integrated offering at HSF Belfast, offering value for money for document review and transactional legal services, while taking responsibility for the whole process, which is led by a partner in London or internationally, has been such a success. In-house lawyers also have concerns about security of data, which may be highly sensitive, being reviewed out of the jurisdiction."

Wim Dejonghe, senior partner at Allen & Overy (A&O), added: "Generally, more are realising that the cheaper someone goes, the more they lose out on quality. While LPO offerings are definitely useful in certain circumstances, I don't think they will kill the model of classical firms." 

A&O has a low-cost base in Belfast, which opened in 2011.

However, BT Global Services GC David Eveleigh (pictured) believes clients' attitudes with regards to LPO will change: "There aren't many areas the LPO model is not capable of supporting. Every legal task can be broken down into smaller components; over the course of a year, a big firm might do 1,000 corporate deals, consistently starting from scratch. I estimate at least 700 of them will have elements that can be directly replicated."

Eveleigh added that certain areas of work, such as competition, "can involve a huge amount of data review, which can in many cases be done more efficiently and for less cost" through an LPO model.

The report also looks at law firms' performance across several other areas including cost and quality of service. Clients rated RPC as the best firm overall, with an average satisfaction rating of 8.1. The best performing international firm was Taylor Wessing (7.7), while Shoosmiths topped the national rankings with a score of 8.0.

RPC managing partner Jonathan Watmough said: "Many law firms talk a lot of rubbish; what it comes down to is investing in the right people and giving them the best possible opportunities to serve clients as best they can. It's not based around a particular IT system, or presenting people with new thinking about how the world works. We just get very close to our clients and find out exactly what they want."

For more information on the Client Satisfaction Report contact Jeremy Hill on +44(0)2033715210.