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Increased activity in the LPO industry |
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Wednesday, 21 April 2010 |
While the downturn is reshaping the legal services landscape; the LPO industry is witnessing increased activity. Revenues from the offshore legal services industry were $320 million for 2008 and are expected to reach $440 million by end 2010. The industry seems to be picking up pace much faster as the global economy recovers.
Increasing level of interest
While contracts in the LPO segment are not largely publicized, our discussions with buyers and LPO service providers indicate the growing awareness and interest level of law firms and corporations with respect to outsourcing and offshoring legal services.
- Recently, Microsoft signed a contract with Integreon for legal support services. Integreon will provide contract review and offshore document review services to the software giant from its India and Fargo centers.
- Early this year, Microsoft also announced its plan to send routine legal work to CPA Global.
- British Telecom recently announced its decision to shift work from its captive legal services center (located in India) to UnitedLex.
The established service providers have witnessed long term contracts in the last six to eight months. Last year, Rio Tinto, a leading international mining group based in the UK awarded a contract to CPA Global. Rio Tinto offshored contract review and drafting, legal research and document review to CPA Global. Similarly, Integreon won a seven year contract worth £50 million from UK based law firm Osborne Clarke. Integreon will provide knowledge and information management; technology and business intelligence services; transcription, secretarial, and word processing services to the law firm.
On the supply side…service providers gearing up
On the supply side, the growing interest levels are pushing LPOs to focus on building expertise and scaling up their onshore and offshore presence (by way of organic and inorganic growth and strategic partnerships).
Acquisition is a relatively easy way to build scale. Tie-ups are simpler than acquisitions (or mergers) as they can be put into action without the operational and legal complexities of takeovers. Moreover, they are short-term and can serve as a testing ground for certain types of markets or services. Some of the larger companies prefer to grow through acquisitions while there are others who are exploring possibilities of a strategic tie-up or partnership.
Several LPO service providers have formed partnerships to complement their capabilities in technology, platforms and strengthen their onshore presence. For instance,
- LawScribe entered into a strategic partnership with IQWEST (an e-discovery support company)
- Bodhi Global partnered with a US based document review service provider
- Tricom entered a strategic partnership with Hobs Legal Docs, a UK based reprographics service provider.
In the long run, service providers are likely to focus not only on specialized skills but also on scale. The established players already employ more than 200 people and expect to add capacity in the next two years. While the objectives might vary - acquiring domain specific capabilities, expanding or strengthening their service offerings, getting access to new markets and technology to building scale - there is more action in store for the LPO industry in the near future.
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