Legal process outsourcing (LPO) has seen tremendous growth in recent years. In the past five years, the growth of LPO in finance sector has been at an annual rate of more than 30%. In the present economic scenario, the LPO industry is one among the fastest growing fields in the services sector. Increase in cost-effectiveness is one of the major reasons behind the widespread application of LPO.
The growth of LPO in finance sector was initially driven by the North American market. However, this field has gained wide acceptance in the United Kingdom, partly owing to its cost-effectiveness, in the past two years. Some UK firms have now stepped into this scenario by collaborating with third-party suppliers in the LPO sector. Other firms have started operating their own captive centers for LPO. For instance, the Royal Bank of Scotland has now set up a separate panel for suppliers with regard to alternatives for legal services.
The legal services scenario has indeed undergone major changes in the 21st century as detailed in the book Avoiding Extinction: Reimagining Legal Services for the 21st Century by Mitch Kowalski. The author who works as an adjunct professor at the University of Ottawa echoes this opinion as the legal sector is finding new ways to survive and expand among the thriving competition.
LPO in finance sector: The future
In the future, law firms are expected to have more elements of a corporate structure sans partnerships, which will be focused on cost-effectiveness and efficiency. The monopoly enjoyed by law firms in the legal sector is fast diminishing. Hence firms are looking to follow examples set by the corporate world. That is, they have to accomplish more with the least number of resources. This has increased the significance for LPO in finance sector.
While cost-effectiveness is a major benefit provided by LPO, there are concerns about this field. Confidentiality is one of the primary causes for concern. In addition, the quality level is another major issue that has to be dealt with. LPO in finance sector comes with different levels of quality and law firms have to be aware of the standards of work they are outsourcing before signing a deal.
It is commonplace for LPO providers to base operations in countries where wages are comparatively lower. India is a preferred destination for LPO in finance sector. The Indian market is crowded with a large number of LPOs who provide services at different levels of quality. One of the major LPO enterprises based in India is Pangea3, which, at present, is the largest employer of lawyers in the private sector. For ensuring the quality of legal services, the company hires only the best candidates from the top law schools in the country.
The de-construction of legal services by LPO companies serves to make the process easy, simple and cost-effective. In the legal sector, LPO has come a long way and it appears that the future will see an entire legal structure built around this industry.