Legal Process Outsourcing and the Technological Revolution in Legal Services Delivery

Mark Ross, SVP Legal Process Outsourcing, Integreon

Mark Ross, SVP Legal Process Outsourcing, Integreon

Even before the onset of the global financial crisis in 2008, in-house legal departments and their outside counsel were under considerable pressure to do more with less. The great recession exacerbated this pressure and led to a surge in the exploration of innovative legal services delivery models, as well as changes in the sourcing and deployment of legal resources.

A new legal ecosystem emerged in which, alongside outside counsel and the corporate legal department, legal process outsourcing (LPO) began to play a crucial role in the reengineering and cost effective delivery of legal services. While initially the focus was on the labor arbitrage benefits available from outsourcing certain routine legal tasks to lower cost locations, such as India and the Philippines, the LPO industry has matured and transformed itself over the last few years.

Today LPO is no longer a pure labor arbitrage play. It is an operating model combining a best-practices framework, with process efficiency, quality control and enabling technology at its core. It is the LPO industry that continues to push the envelope and redefine the art of possible in the legal field providing expert consultants who can weave together advanced technologies.

It is indisputable that developments in technology-assisted document review, automated contract meta-data abstraction, deal rooms, e-billing software, data analytics, knowledge management, and document assembly technologies are speeding up or significantly reducing the need for manual labor in legal services. The following examples demonstrate how advances in technology and LPO are closely aligned as the demand for innovative solutions continue to heat up in the legal services market.

E-Discovery and Document Review

Some industry commentators would have you believe that there is an “us versus them” battle for supremacy between advocates of inefficient, overly costly manual document review and the knights in shining armor that are technology-assisted review (TAR) and predictive coding.

Not only do these LPO providers invest significantly in developing cutting-edge proprietary technology in support of TAR, they also have an understanding that these tools are not appropriate for every scenario and, in recognition of this, they maintain close relationships with best-of-breed third-party developers.

The LPO industry, being both expert and technology agnostic, is best placed to provide the insights their clients need.

The LPO Industry, Being Both Expert And Technology Agnostic, Is Best Placed To Provide The Insights Their Clients Need

In the corporate transactional world, the first port of call in any engagement involving the location, and then review and extraction of information, from a volume of contracts should be to determine whether technology can assist. After contracts are made text-searchable, automated meta-data extraction and categorization technology can be used to speed up the process and reduce the costs associated with traditional manual contract review. The technology does this by effectively auto-triaging contracts based on certain business rules (e.g. exclusion of expired, duplicate, unsigned or immaterial contracts), grouping like-contracts together and prioritizing the most critical contracts for review. Once the contracts have been categorized, the software can then automatically extract information or metadata. However, it is the combination of legally trained human resources and technology that provides the most effective end-to-end solution. Frequently, the software in and of itself cannot extract every single piece of data that is important to the business and for the data that it does extract, instituting a manual quality control process ensures the work product is of the highest quality.

Legal Spend Analytics

The area of legal spend analytics is another example where technology can be utilized to support a more cost-effective and reengineered delivery of legal services. By leveraging best-in-class data analytics technology and specialized visual techniques, one can analyze and then present historical e-billing data to help a corporate legal department achieve overall legal spend reduction. By digesting, analyzing and then presenting in dashboard format the intelligence gleaned from legal invoices, it is possible to benchmark outside counsel and vendor performance. With access to the right data, one can create online dashboards and business intelligence reporting that provides in-house legal and finance teams with updates on outside counsel spend, , savings opportunities, performance against budgets, benchmarking amongst other key metrics.

By utilizing software-enabled data analytics and dashboard reporting, corporate legal departments are empowered to revisit the entire gamut – the identification, selection, retention, management, cost and evaluation – of their relationship with outside counsel and other legal services providers. The end-game is one where resource allocation planning is optimized, ensuring that the right technologies and the right legal professionals, based on a combination of expertise, cost and availability are assigned to the delivery of the requested legal services, given the type and complexity of the matters at hand.

What’s Next?

A corporation’s need for outside legal services is based on a number of factors such as the geographic location of the work in question, the strengths and weaknesses of various legal services providers in handling different practice areas, whether the provider has a local, regional or national footprint, the complexity of the work in question, and of course the ability to automate, among other things.

Out of all of the different stakeholders providing legal services within the new legal ecosystem, it is the LPO providers that have the deepest experience deconstructing and reengineering legal processes using Lean and Six Sigma techniques, applying best practices and flexible resources, and optimizing the mix and utilization of technology. It is the LPO providers that have the demonstrated expertise to analyze which aspects of the work done by lawyers, paralegals and support staff adds value and which should be eliminated, automated or delivered by alternative resources. As the rollercoaster of legal services innovation and technological advances continues to pick up pace, not only will LPO providers be along for the ride, they’ll have front row seats.