Legal Outsourcing Widely Accepted but Not All that Popular
In a forthcoming article on legal process outsourcing, I conclude that LPO “is just one of many alternatives to large law firms… just a small part of a new legal landscape.” Since I submitted it for publication, Altman Weil released its 2013 Law Firms in Transition, which provides insight into legal outsourcing in the US market.
Altman Weil sent surveys to 791 US managing partners and chairs in March and April 2013, receiving responses from 238 firms (30%), including 37% of the 250 largest US law firms.
Just under 50% of firm leaders believe that outsourcing legal work is now a “permanent trend”, up from just over 10% in 2009. That seems a huge shift until we see what firms are actually doing. When asked “Is your firm currently pursuing any of the following alternative staffing strategies?”, only 7.7% of leaders listed legal outsourcing.
The 7.7% answer, however, conceals a big difference between large and small firms. In firms of 250+ lawyers, almost 20% are are “currently pursuing” legal outsourcing (up from about 6% in 2010). The increase for legal process outsourcing (LPO) does not seem that big when we consider other alternatives to associates and partners. Specifically, in large firms, the jump in pursuing the use of contract lawyers is even higher. In 2010, 57% of firms were “currently pursuing” the use of contract lawyers; now, 87% are, a jump of 30 points. The survey does not ask about staff attorneys but anecdotal evidence suggests significant growth in that category among large law firms.
In thinking about the role of LPO, we also must consider the client side, which this survey does not cover. Many law and compliance departments use a broad range of alternatives to BigLaw such as staffing companies, managed review services, and substitutes for law firms such as the Big 4.
From the LPO provider perspective, the good news is that the market increasingly accepts LPO as a permanent trend. The bad news is that LPO faces competition from numerous other alternatives.
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