Page 142 - MASTER COPY LEADERS BOOK 9editedJKK (24)_Neat
P. 142
Leaders in Legal Business
delivery model is a true symbiotic ecosystem in which law firms and LPO providers both play crucial roles. LPO
providers do not practice law and so are not true alternatives to law firms. Neither LPO providers nor law firms
can individually deliver the holistic, end-to-end services corporate clients are now demanding. While one could
argue that those law firms with captive LPO units can do so, there are limits to the capabilities of even the world’s
largest law firms and their captive operations. A common misconception held by proponents of captives is that
working with a third party LPO provider means loss of control. This is not the case. Control is more about
governance than ownership. For example, some captives are out of control because they have not been properly
set up with service level agreements (SLAs) and rigorous metrics. Conversely, a proper SLA and governance
structure can give the law firm more control over a third party LPO provider than they might typically have over
their own staff. Running a captive center, especially offshore, requires a scale that only the largest law firms
possess. LPO typically offers several other advantages over a captive. These include better capacity utilization
by aggregating demand across many clients; conversion of fixed to variable costs; ongoing investments in
technology and continuous improvement; and, of course, business continuity assurance with multiple delivery
locations.
Under strategic collaboration, however, law firms can work with LPO providers to expand their offerings
and deliver a complete, end-to-end approach, efficiently providing the appropriate level of legal services required
for each type of work product.
Bifurcated Ownership
Unrelenting cost pressure, deregulation, disaggregation, globalization, and technological advances have
been the genesis of LPO. Over the next three to five years, the challenge and the opportunity is for LPO providers
and our law firm clients to develop new service delivery models that will drive even greater innovation. One can
either shape the change or be shaped by it. It is incumbent upon all the key constituent stakeholders in the legal
services industry to find better ways of working together.
In coming years there is no doubt we will see even closer collaboration between law firms and LPOs, with
the lines of ownership of the legal services delivery model becoming increasingly blurred as these stakeholders
invest in and enter into joint ventures with one another. This can be called the “bifurcated ownership” phase. How
long will it be before an LPO provider acquires a major law firm in the U.K. now that external investment in law
firms is permitted via the Legal Services Act 2007? Hardly a week goes by without the rumor mill spinning a
story about this law firm or that law firm seeking to monetize either their captive LPO operation or their high-
volume practice group. For many of the reasons cited above, it is likely that the majority of those law firms with
captive LPOs today will look to divest these operations in the coming years. Global LPO providers are the most
logical acquirers of these entities.
As time progresses there is a growing optimism about and enthusiasm for reshaping the way legal services
are delivered. The new bifurcated model is inevitable. The end result of the journey to this final fourth phase is a
seamlessly integrated delivery model, with both corporate and lay clients benefiting from better, faster, more
readily accessible, and cheaper legal services.
What’s Next?
Five years ago hardly a day passed without an article being published by the legal media extolling the
benefits of LPO and predicting this nascent industry’s transformative impact on the legal profession. Perhaps the
news mill is simply tiring of the story, but much of what has been written recently in the legal press has been
prophesizing the demise of LPO, referencing survey results that appear to show law firms overwhelmingly now
engaging in captive operations or that advances in technology are obviating the need for LPO services. However,
when those surveyed come from within private practice, asking them whether their clients prefer captive law firm
operations or third party LPO providers is a bit like asking the turkey objectively to cast a vote for the Christmas
feast. As discussed above, given that it is the LPOs that have so readily embraced technology over and above any
135
delivery model is a true symbiotic ecosystem in which law firms and LPO providers both play crucial roles. LPO
providers do not practice law and so are not true alternatives to law firms. Neither LPO providers nor law firms
can individually deliver the holistic, end-to-end services corporate clients are now demanding. While one could
argue that those law firms with captive LPO units can do so, there are limits to the capabilities of even the world’s
largest law firms and their captive operations. A common misconception held by proponents of captives is that
working with a third party LPO provider means loss of control. This is not the case. Control is more about
governance than ownership. For example, some captives are out of control because they have not been properly
set up with service level agreements (SLAs) and rigorous metrics. Conversely, a proper SLA and governance
structure can give the law firm more control over a third party LPO provider than they might typically have over
their own staff. Running a captive center, especially offshore, requires a scale that only the largest law firms
possess. LPO typically offers several other advantages over a captive. These include better capacity utilization
by aggregating demand across many clients; conversion of fixed to variable costs; ongoing investments in
technology and continuous improvement; and, of course, business continuity assurance with multiple delivery
locations.
Under strategic collaboration, however, law firms can work with LPO providers to expand their offerings
and deliver a complete, end-to-end approach, efficiently providing the appropriate level of legal services required
for each type of work product.
Bifurcated Ownership
Unrelenting cost pressure, deregulation, disaggregation, globalization, and technological advances have
been the genesis of LPO. Over the next three to five years, the challenge and the opportunity is for LPO providers
and our law firm clients to develop new service delivery models that will drive even greater innovation. One can
either shape the change or be shaped by it. It is incumbent upon all the key constituent stakeholders in the legal
services industry to find better ways of working together.
In coming years there is no doubt we will see even closer collaboration between law firms and LPOs, with
the lines of ownership of the legal services delivery model becoming increasingly blurred as these stakeholders
invest in and enter into joint ventures with one another. This can be called the “bifurcated ownership” phase. How
long will it be before an LPO provider acquires a major law firm in the U.K. now that external investment in law
firms is permitted via the Legal Services Act 2007? Hardly a week goes by without the rumor mill spinning a
story about this law firm or that law firm seeking to monetize either their captive LPO operation or their high-
volume practice group. For many of the reasons cited above, it is likely that the majority of those law firms with
captive LPOs today will look to divest these operations in the coming years. Global LPO providers are the most
logical acquirers of these entities.
As time progresses there is a growing optimism about and enthusiasm for reshaping the way legal services
are delivered. The new bifurcated model is inevitable. The end result of the journey to this final fourth phase is a
seamlessly integrated delivery model, with both corporate and lay clients benefiting from better, faster, more
readily accessible, and cheaper legal services.
What’s Next?
Five years ago hardly a day passed without an article being published by the legal media extolling the
benefits of LPO and predicting this nascent industry’s transformative impact on the legal profession. Perhaps the
news mill is simply tiring of the story, but much of what has been written recently in the legal press has been
prophesizing the demise of LPO, referencing survey results that appear to show law firms overwhelmingly now
engaging in captive operations or that advances in technology are obviating the need for LPO services. However,
when those surveyed come from within private practice, asking them whether their clients prefer captive law firm
operations or third party LPO providers is a bit like asking the turkey objectively to cast a vote for the Christmas
feast. As discussed above, given that it is the LPOs that have so readily embraced technology over and above any
135
