India remains the top LPO destination: Michael Sonsteng, Practice Head, LPO, Infosys

Legal Process Outsourcing (LPO) is a multi-billion dollar industry today and is growing at an impressive rate of 20% YoY Sisir Pradhan | @TheDollarBiz   Michael Sonsteng heads the Legal Process Outsourcing (LPO) division for Infosys BPO. In an exclusive interview with The Dollar Business, Sonsteng says that India remains the favoured destination for LPO not just due to cost advantage but also because of the process driven heritage in the country. Excerpts: TDB: What is the size of the market for legal services and what are the new trends from a business perspective? Michael Sonsteng (MS): It is around $500-750 million (this largely excludes the large amount of eDiscovery players and revenue in the market). Of this, a large part or around 40-50% is outsourced. There is a growing trend to outsource more complex work now. Legal departments of large enterprises now find value in LPOs consulting on not just how to reduce their overall legal spend but also to manage their overall risk and add process to their existing methodologies. Then there is “Predictive coding” or adopting technology-assisted/machine-learning solutions. We also see more alignment of legal and procurement departments, and total solutions in contract management (tools and services) as emerging trends.

Michael Sonsteng, Strategic Practice Head, LPO, Infosys

TDB: What is the overall revenue growth of the LPO sector? What are the reasons for the growth? MS: The LPO sector is witnessing a 20% Y-o-Y industry growth. From our perspective, we have seen this sector grow because of several factors including: an increase in push back against large legal bills by corporates and law firms; transformation of clients’ in-house legal department by outsourcing and considering LPOs as strategic partners; and LPO providers moving up the value chain and taking complex work. TDB: Is it true that legal services outsourcing is limited to administrative and para-legal work? MS: We have seen enterprises looking to leverage LPO expertise by outsourcing more complex processes such as contract negotiation, monitoring supplier performance, and creating standard/ clause libraries and playbooks. They also seek LPO partners with end-to-end technology expertise in the legal domain. TDB: What are the major outsourcing destinations for LPO? MS: India, Philippines, South Africa, and to a lesser extent Eastern Europe. This excludes any outsourcing done onshore. TDB: Is India still the preferred destination for LPO? MS: Yes. India is still the main destination for LPO, not just because it provides the most labour arbitrage, but also because of its process driven heritage that lends itself well to LPO. This is especially true for large scale projects. Other destinations are considered for other types of projects. TDB: Is it true that regulations governing legal services have restricted the supply and increased the cost of employing qualified lawyers in USA in recent years? MS: We don’t see bar qualifications as having changed so drastically that it becomes more difficult to become a lawyer in USA. Perhaps the economic environment and job prospects have made that more of a challenge to those considering entering and graduating from a US law school. TDB: LPO poses several ethical challenges, related to confidentiality, disclosure, and billing for the outsourced work. How do law firms and corporations who outsource tackle these challenges? MS: Many bar associations and even the American Bar Association have said that it is ethical to outsource legal work. Much of this relates to transparency and putting proper controls in place to govern the flow of data. Perhaps the most helpful guidance can be found in the American Bar association ABA Committee on Ethics and Professional Responsibility Formal Opinion 08-451 (2008). TDB: What are the main factors that help a LPO provider succeed? MS: It is important, when considering to use LPO, that one consider a provider that is able to offer services from multiple locations globally and has the stability to ensure continuity in service delivery. Further, it is important for the LPO provider to have very robust physical and IT security measures in place, as well as a robust quality control methodology, to safeguard client data and deliver outcomes as per client requirements. TDB: How will General Agreement on Trade in Services (GATS) impact LPO in future? MS: GATS is not relevant per se, since LPOs do not render legal advice, but rather offer process driven legal services under the supervision of actual practicing lawyers. This may change in the future as different countries legal regimes liberalise.   Read our exclusive feature on LPO: At your service, legally