Patent Baristas » Legal Business

Legal Process Offshore Outsourcing (LPO) and the Great Recession

Stephen Jenei — Thu, 03 Jun 2010 17:58:20 +0000

Evalueserve, a global research and analytics firm, conducted a study on the state of the Legal Process Offshore outsourcing (LPO) industry, forecasting the industry’s revenue and growth potential in its white paper titled “Legal Process Outsourcing – Hype vs. Reality”. They now have an update on the current landscape and the potential of the LPO industry, especially in light of the recent developments mentioned above.

The key findings of the present study are as follows:

The LPO industry is growing fast, and it is already the fastest growing sub-sector in the Knowledge Process Outsourcing (KPO) domain. Even during the Great Recession, the LPO sector grew by 40% each year. Revenue growth between 2010 and 2015 is expected to be approximately 26%. Currently, there are over 5,200 professionals in the LPO industry in India and the Philippines, contributing an annual revenue of USD 300 million, and this is expected to reach 18,000 professionals with an annual revenue of USD 960 million by December 2015.
Almost all of the offshore outsourcing work is being sent from the U.S. and the U.K. More than 90% of the LPO work is either being directly outsourced by Corporate Counsels or on behalf of Corporate Counsels (by their preferred law firms). So far, law firms have been hesitant to offshore outsourcing.
Due to the impact of the Great Recession, there will be pressure on law firms to reduce their overheads related to marketing and sales, general administration, Information Technology, accounting, clerical, paralegal, and knowledge management. These overhead expenses account for about 17% of the total overhead expenses (of approximately 41%) that a typical law firm with 20 or more lawyers incurs in the U.S. By moving most of this work, which is non billable, offshore, these firms can reduce this cost to approximately 7%. Currently, almost no law firm in the U.S. is considering this option.
The implementation of Clementi proposals in the UK is expected to boost the LPO industry because law firms are likely to be more efficient. In fact, many law firms have started implementing new models for pricing, designing, and managing better legal work processes; modifying and re-using existing work products and templates; partnering with other legal service providers to provide the entire array of services; and beginning to outsource functions (offshore) that include creating marketing and sales brochures, accounting, Information Technology, clerical, paralegal, knowledge management, secondary research, and legal and library information research.
Knowledge management (KM) will be a growth area for the LPO industry through which LPO firms can help their clients grow better and faster. In particular, LPO firms can help the in-house KM teams of law firms—especially those with dispersed offices—to consolidate and manage all the available resources into an electronic repository to save cost and increase efficiency.

The above is from the article, “LPO and the Great Recession,” and is used by permission. Evalueserve provides knowledge services to a global client base of Fortune 5000 companies. Evalueserve’s expertise covers areas such as Financial and Investment Research, Business Research, Market Research, Intellectual Property, Data Analytics and Knowledge Technology Services. The sole owner of copyright is Evalueserve and use of the protected material is by permission only.

Patent Law: Global Economic Slowdown Edition

Stephen Jenei — Tue, 27 Jan 2009 16:58:26 +0000

Patents Go International

International patent filings under WIPO’s Patent Cooperation Treaty (PCT) grew by 2.4% in 2008, to nearly 164,000 1 applications. While the rate of growth was modest, as compared to an average 9.3% rate of growth in the previous three years, the total number of applications for 2008 represents the highest number of applications received under the PCT in a single year. Continued use of the PCT, a cornerstone of the international patent system, indicates that companies recognize the importance of sustained investment in research, development and innovation to remain competitive even within challenging economic conditions.

Lawyers Get Right-Sized

Since last October, the legal community has seen a steady down-sizing of sizeable law firms across the country. According to an International Herald Tribune report, a number prominent national law firms have either laid-off employees or closed entirely. Since then, a variety of firms have also laid off hundreds of employees, according to an article in The Legal Intelligencer. The American Lawyer and its sibling publications are providing ongoing coverage of law firm layoffs and related news at The Layoff List. Will we now see more work sent to the (more affordable) Midwest?

Patent CLE Group Offers Loyalty Program

At a time when law firms and in-house legal departments are tightening their belts, Patent Resources Group (PRG) has introduced a new Loyalty Program to provide patent legal professionals the valuable Continuing Legal Education (CLE) credit they need to continue practicing. The new program offers exclusive pricing on any 2009 Advanced Courses for attendees of any one of Patent Resource Group’s 2008 Advanced Courses, Workshops, Seminars or Patent Bar Review courses. Additionally, attendees of any 2009 course will receive Loyalty Program pricing for any subsequent Advanced Courses in 2009, as well as in 2010.

Stimulus-Response

The Economic Strategy Institute (ESI) announces Smart Globalist, a new Web magazine providing daily coverage of news and analysis from around the world on globalization and related international affairs. In addition to syndicated content from newspapers, magazines, broadcast media, expert blogs, and academic journals, SmartGlobalist will also provide its own original articles and analysis. Readers will be able to cover the world of globalization from one easy to navigate page. In this first issue, the lead editorial focuses on the need for a U.S. stimulus package to be balanced by even bigger stimulus in countries like Germany and China that have large export surpluses.

Let’s Make a Deal

Corporate mergers fell on economic hard times. According to a survey by Thomson Reuters, the $2.9 trillion in worldwide announced mergers and acquisitions recorded during 2008 was down 29.6 percent from 2007. Fourth quarter totals were down 32.6 percent from the previous quarter and 37.6 percent from the fourth quarter of 2007. Have things changed? Thomson reported that 1,194 transactions had been canceled during 2008. On the other hand, we may start to see an increase in deals that are not optional, i.e., the sale of distressed assets and the acquisition of distressed companies. We could see an increase in foreign acquisitions of U.S. companies and assets. Will it include law firms? (via Law.com)

Will Lawyers Bike to Work?

You can now get a Bicycle Tax Credit (BTC) if you bike to work. Passed as part of that $700 billion bailout plan, the BTC allows employers to reimburse employees up to $20 per month for bicycle-commuting related expenses; the employer can then claim a tax deduction for the reimbursements. The law went into effect on January 1, 2009. The problem, of course, is not there there are not enough tax incentives but that there are too many barriers to bike commuting. Like lack of safe pathways. Only four tenths of 1 percent of Americans get to work on a bicycle. Seventy-seven percent drive — by themselves! The EPA blog asks why people are or aren’t biking to work, and safety concerns, distance, and smelliness(?) were the key barriers. Of course, you could always try creating your own bike lane. (via World of Work)

How Do You Think the Recession will Affect the Legal Profession?

Stephen Jenei — Tue, 18 Nov 2008 16:29:44 +0000

Now that it appears that we are in a recession — and there’s no good way to nuance that anymore — what does is mean for the legal profession? The legal area was once considered recession-proof with some areas even going up as companies focus on competitors. Now, the demand for legal services is certainly going to change.

Bruce MacEwan, over at Adam Smith, Esq., compares the current legal business to Motown’s Big Three. Citing reader Brent Jeffcoat, of McGuire Woods’ Charlotte office, he questions if law firms need a bailout:

After all, think of all the people we affect: our young associates marry and live in condominiums in urban centers. We probably support Starbucks. Allen Edmonds is toast. … Think of all those poor guys in Scotland who will not be able to sell their single malt whiskeys. It would be a global crisis of unimaginable proportions if one or two of the AmLaw 100 were to fail.

Now, the ABA Journal is surveying lawyers about the job market and the current state of the economy. Specifically, they want to know how you think the recession will affect the legal profession.

Please click below to take the two-minute survey. The survey results will be published in the January issue of the ABA Journal. Your answers will be kept confidential, and used only in combination with all other responses received.

Take the quick survey here.

Note to non-lawyers: No, entering law school is not a smart way to deal with the terrible job market, as you and the other 100,000 students graduate en masse in three years creating a glut of new associates in the market.