Off-shore legal outsourcing / LPO providers are becoming a vital part of cost-saving initiatives in the modern legal industry, according to yet another expert report on the subject. Leading financial strategy consultant company Citi Private Bank has analyzed mid-year survey data from 187 US-headquartered law firms for this report.
According to the report’s authors, Citi Law Firm Group chairman Dan DiPietro and senior client adviser Gretta Rusanow, the survey reveals a legal services market in which demand is low and competition is high. This situation has resulted in ongoing pressure from clients for law firms to provide greater value at lower cost.
As a result, according to the report general counsel increasingly are willing to expand their portfolios of legal service vendors and add alternatives to traditional large law firms. One of their top three choices, besides smaller firms and virtual firms, is now offshore legal outsourcing / legal process outsourcing / LPO.
From the report: ‘While some firms call the entry of low-cost service providers a threat to their market share, we have heard others describe these lower-cost alternatives as an opportunity to reduce their own cost structures by outsourcing some of their work to these providers."
The authors add: "Some argue that the market really hasn’t changed at all, and once demand picks up again, firms will simply revert to their traditional business model. Indeed, that’s what happened after the recession in the early 1990s." However, "thanks to technology and globalisation, the legal services market in 2010 doesn’t resemble the market in 1991 in any way, shape, or form. Even if overall demand picks up, the entry of new, lower-cost service providers and the willingness of clients to diversify their service-provider portfolios have caused an unprecedented shift in the market."