Legal Outsourcing and the Global Financial Crisis

The phenomenon of legal outsourcing, strictly speaking, took its first hesitant steps in the 1950s when it all started with the patent process. Over the years, there was slow but steady growth, and countries that had taken an early lead in Business Process Outsourcing (BPO) primarily dominated the bulk of legal process outsourcing (LPO). This included the United States, Canada, India, the Philippines, and Israel. However, LPO really took off during the global financial crisis simply because cost-cutting measures dominated the thinking of major law firms around the world, and outsourcing became the god-sent opportunity to achieve this objective.

But before going into this angle, it will be relevant to know the different aspects of LPO. A law firm or company can outsource to two different categories – within the country and offshore. In the first scenario, outsourced tasks encompass legal research, writing, document preparation, drafting briefs, patent services, and sometimes even physical court appearances. When offshore agencies handle Legal Process Outsourcing (LPO), court appearances are typically not included, and other tasks take precedence. It’s worth noting that LPO companies have highly skilled legal professionals who are well-versed in the legal landscape and laws of the outsourcing countries.

Studies have shown that Legal Process Outsourcing has really taken off after the global financial meltdown:

1. Coping with added work pressure –

The global meltdown brought major financial institutions to their knees, and filing for bankruptcy became more common than not. This was especially true for those financing real estate deals. Even countries defaulted on interest payments to international agencies and had to take drastic measures to stabilize their tottering economies. In the middle of this crisis, there was an exponential boom in the filing of legal cases that existing law firms were unable to handle on their own. It thus made sense to outsource the back office work such as research, documentation, and writing briefs based on the laws of the country while keeping the core activity of court appearances with in-house experts.

2. The rise of specialist services –

There have always been agencies who have specialized in legal outsourcing work in definite areas, but they really kick-started their operations on a massive scale on the back of highly increased workload levels after the global financial crisis. This was because outsourcing law firms preferred multi-sourcing to take advantage of each provider’s expertise in a specific field, such as jurisdiction and merits. This, in turn, led to an overall improvement and growth of LPO as a crucial part of the outsourcing industry.

3. Cost-cutting measures –

The global financial crisis had also hit hard the law and solicitor firms around the world, which had a difficult time retaining their existing charges, which bankrupt litigants could ill afford. On the other hand, legal outsourcing services, especially to offshore countries, were done at a lower fee structure, and this savings benefit was passed on to litigants in the form of competitive pricing of legal services.

Thus, we can observe that the worldwide financial crisis indirectly contributed to the growth and stabilization of the LPO industry.

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