Top 3 Trends to Watch in Legal Outsourcing

07/07/2016 09:40 am ET Updated Jul 08, 2017

Hard to believe, but we're already halfway through 2016. Many organizations use this point on the calendar to kick off strategic planning for the next year and decide what course corrections may be appropriate for a strong finish in the current year. So it's important to understand the key industry trends.

As the CEO of an outsourcing company, I often think about where our industry is going--particularly in the legal process outsourcing (LPO) space, which is a major focus for Integreon. LPO is a growing field: One research firm estimates that by 2020, the LPO market could be worth $8.6 billion and another firm, Raconteur, calls LPO a success already in its just-published 2016 Legal Innovation report. We've certainly come a long way since the days when many in the legal profession did not even know what LPO stood for. A couple of months back, I reflected in a blog post on how LPO has been influencing the trajectory of the legal profession and legal education, but what about the trajectory of LPO itself? Here are a few of the top trends I see:

• Outsourcing continues to grow--and its stigma is shrinking. Outsourcing has long had a bad rap from misperceptions about quality, security, and of course, that ever-popular political football: jobs. But in business management circles, its benefits are more fully appreciated, and can include opening up new markets, increasing efficiency, reducing costs and gaining comparative advantage. In the legal field, we see tasks that used to fall to junior associates working in those proverbial law firm basements--doing document review, for example--now being done more efficiently and cost-effectively through outsourcing, and not just from offshore locations like India and the Philippines, but onshore in the US and UK, or as a hybrid onshore/offshore model, or even onsite. It comes down to what clients need and want. And those young lawyers can still gain valuable career-launching experience by working for an LPO - many of these bright and talented people choose to work for Integreon.

Furthermore, the American Bar Association acknowledges and officially supports legal outsourcing--with, of course, the understanding that the outsourcing of legal work does not excuse lawyers from their ethical obligations. LPO firms understand these expectations, as well as the growing support of outsourcing in the legal profession and are making significant investments in infrastructure needed to meet growing demand; in the last 18 months, Integreon has opened or expanded nine facilities to help us attract even more top-tier talent from across the legal profession.

• Lean and mean legal operations are a priority. The scope of legal operations (or the management of legal departments) has ballooned over the last decade, while at that same time the pressure is rising to contain and reduce waste and inefficiency--and this shows no signs of slowing. The Association of Corporate Counsel estimates that at least a third of Fortune 500 general counsels have hired legal operations managers in the last ten years. Corporate Legal Operations Consortium (CLOC) co-founders Connie Brenton and Stephanie Corey recently told Bloomberg BNA that these legal operations managers have been "gaining significantly more clout" inside corporate legal departments, including reporting directly to general counsels and earning senior management titles within their companies. They have an important job, one that often includes deconstructing legal processes and determining which tasks to keep in-house and which can be better supported through the use of legal outsourcing.

• Hybrid onshore/offshore outsourcing is increasingly popular. While many people still think of outsourcing as "sending jobs overseas," this is really not an accurate characterization of how outsourcing takes place today. The focus is no longer solely on reducing overhead. It now includes a holistic examination of processes with the goal of devising the most efficient workflows to get work done. Resourcing becomes part of this new equation, and a hybrid outsourcing model combining elements of both onshore and offshore has gained in popularity. A key reason is that it allows work to take place 24 hours a day, a workflow referred to as "follow the sun." So as one delivery center completes its portion of work for the day, that work can be handed off to another delivery center to continue it. Often this will go from onshore to offshore and back again. Another reason for the rise in popularity for this model is that the onshore option allows clients with data subject to export control regulation or data privacy requirements to still make use of the efficiencies and cost savings that LPO firms can provide.

Integreon was among the first LPO firms to offer a hybrid onshore-offshore model. In fact, we opened the LPO industry's first multilingual LPO delivery center in the United Kingdom.

The ACC's Chief Legal Officers 2016 Survey finds that more than three-quarters of CLOs believe the amount of work they send to outside providers such as LPO firms will either stay the same or increase over the next year, so it's clear that the adoption of legal outsourcing will continue.

What other trends in the legal outsourcing space do you see? Let me hear what you think in the comments.