Legal Outsourcing- Breaking the Business Barrier

The indiscipline rise in a law firm’s operational and administrative costs in the past few years has logically caused major law firms to outsource their legal and paralegal work offshore. For the simple reason that the compensation desired and expected by a fresh law school graduate is much higher in the United States. With the ever rising operational costs, it is no wonder that law firms find it economically difficult to hire and sustain these fresh and experienced attorneys who are required for high end legal work such as, complex mergers and acquisitions, patent prosecution, contract drafting and litigation, when it has become possible for them to offshore their work to countries like India with massive human and intellectual resource.

The possibility of outsourcing of legal work has turned out to be a boon for these Law Firms and Corporate America, thereby bringing down the ever growing legal and litigation cost. Although, conceptually in a nascent stage and despite the current worldwide recession, legal process outsourcing has become a more viable business option for its existing and prospective buyers and is slated to grow further. The exponential cost increase in performing legal and litigation work has made it more reasonable for the law firms to look up to offshore their work to professional workforce--skilled but relatively cheap—for performing the similar tasks for both simple as well as complex legal work. India has an extraordinary edge there as serious service provider.

Though, many companies have found their business comfort by offshoring the high-end and the low end services, the companies and firms are cautious about the client related confidentiality issues and any possible liability and error damage that they might be held responsible for on account of outsourcing the work and above all that work is being performed offshore. The attorney-client confidentiality plays a very significant role in this entire process. And this has been an obvious concern for the growth of LPO in India as well as other countries. But looking around, increasing number of US law firms are now convinced about the safety and precautionary standards being adopted by these LPO. Lower litigation cost is another wildcard for the growth of LPO.

The LPO industry in India is growing at a remarkable velocity. When other KPO verticals are growing at a rate of 30 to 35 per cent per annum, the growth of legal service is pegged at 40 per cent annually. Just within few years of its takeoff, the LPO industry has moved, innovating new business models and displays matured results. Apart from the traditional business player in the LPO spectrum, the industry also sees a sudden investment interest from the venture capitalists and the established private equity funds:

• Pangea3 has accomplished US$7 million in Series C funding by Sequoia Capital India. The company has declared to use the fund towards development, recruitment and marketing.Mindcrest also received funding from a Chicago based company, Talon Asset Management in December 2006.
• SDD Global Solutions went for a comprehensive endowment agreement with SFP Priority Co. Ltd.
• Clutch Group, the Bangalore-based LPO backed by Jerry Rao, (formerly known as JuriMatrix) has accomplished a funding from Angel funding. The company is on its way of increasing its employee strength as it is getting regular projects.
  
• Unitedlex based in Gurgaon is another LPO which has drawn investments from Helion Ventures. The company is in the hiring mode adding additional work force of almost 500 employees, managers and associates.
• Recently, Sanshadow Consultants, an LPO firm located in Delhi received strong investment from the Band of Angels, a group of successful entrepreneurs who invest in start up or early stage ventures and provides services to overseas market like US and Europe.
• The Mumbai-based LPO firm Inventurus Knowledge Solutions received investments from Rakesh Jhunjhunwala, a leading PE investor in the country to the tune of $5.5 million. The company focuses on IP, litigation support and financial transactions.

The high potentiality of this business has indeed lured important BPO players, like Infosys and Wipro towards LPO. While the legal outsourcing industry is fighting with challenges like rising wage, depreciating dollar value, billions of dollars worth legal business is waiting at the other side.