December 19, 2011: The situation is difficult in the Legal world these days, with even the offshore outsourcing service providers likely to experience cut in their profits, according to the 2021 outlook released by Fronterion, a firm that conducts study for law firms.
An important reason as identified by the report is the increasing wage in developing countries such as India. But in the case of developed countries such as the United States and the United Kingdom, there hasn’t been much rise in the wages. The increase in wages in the developing countries could severely affect the Legal Process Outsourcing (LPO) sector as a whole.
With the increase in wages, the price gap has shortened between offshore legal processing service providers and the domestic service providers. In the case of offshore service providers, the price is in the range of USD 25 to 35 for an hour of basic legal services such as document review. The price range in the case of domestic service providers is also similar for the same services provided.
The excess of law school graduates in 2012 is likely to pose a threat to the offshore legal service providers. The study report has observed that most of the legal professionals like to keep legal work domestically. In order to tackle the situation, some of the offshore service providers have started to open up delivery centers in the United States, so that they can exploit the domestic market.
The report says that near future is not going to be bad for the offshore outsourcing service providers. The report forecast that as the law firms become comfortable with the use of outsourcing, the service providers will get more projects for offering legal support and other services such as contract management and mergers and acquisition transaction support.
It is predicted that competition will pick up as legal process outsourcing becomes more accepted. According to law firms they can seek the service of contract attorneys in the United States for nothing, but the problem is that such attorneys cannot scale their services to the range of an LPO. They added that with legal centers inside the country and internal law firm staffs, they can charge whatever they want to.
They complete predictions made in the report may or may not come true, but it is for sure that the Legal Process Outsourcing industry will have difficult times ahead in the year 2012.