JANUARY 2009 79
DARE.CO.IN
sector
/
lpo
The market size ofLPOs in 2006 was $146million and by 2010, theindustry would be worth$640 million.
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Abhi Shah
Co-founder and CEO of Clutch Group
their legal expenditure by almost 50 to80 percent, Indian lawyers employed with the LPOs earn much more thanthey would if they practice in Indiancourts on their own. What has helped the cause is thatlegal systems of both the US and Indiahave their origin in the UK legal sys-tem. Most of the LPOs do employ or work in association with British and American lawyers. They are the ones who provide additional training, mostoften in legal writing style, to the law- yers employed by the LPOs. For seniorlawyers from the US, this associationhas come as a huge relief from thegrueling task schedule, ensuring bet-ter remuneration at the same time.Most of the legal outsourcing takesplace from the US and the UK, thoughother European countries and Japanhave also stated doing the same. Indiahas managed to emerge as the big-gest destination of legal outsourcing,but countries like the Philippines andSouth Africa are also trying to take apie out of the business, thanks to theircomfort with the English language andthe similarity of their legal systems with American and British ones.The market size of the LPO businessis anyone’s guess. Estimates vary from$40 million to $150 million. However,there seems a perfect consensus aboutone aspect — bullishness of the indus-try. By 2010 it is expected to reach any-thing between $640 million and $1.5billion. Some enthusiasts say that by 2015 the size of the industry could beas big as $15 billion.
Reasons for increase in business
Recession and the desire on the part of legal firms and multinational corpora-tions, particularly based in the US, tocut costs has turned legal outsourcing into an industry. It was encouragedby resolutions passed by some of thestate bar councils in the US supporting such outsourcing. Abhi Shah, co-founder and CEO of Clutch Group — the company namedas the number one among LPOs in the2008 version of The Black Book of Out-sourcing – says recession has openednew vistas for LPOs in four differentareas — litigation, compliance, bank-ruptcy, and foreclosure. For instance,bankruptcy of Lehman Brothers alonehas led to litigation worth $1 billion.Indian LPO companies have man-aged to impress outsourcing compa-nies by embracing professional man-agement skills and providing servicesmatching American standards. Sanjay Kamlani, Co-CEO, Pangea3, says, “Legaltalents in India have learned to imple-ment Six Sigma tools and other meth-ods to ensure consistent quality deliv-ered in the most efficient manner.”and senior lawyers charge close to$1,000 an hour in the US. LPOs, oncontrary, charge anything from $32to $100 an hour. Outsourcing to Indiaprovides higher savings as one movesup the value chain in the type of work outsourced, Chopra reveals. For sec-retarial type transcription or data en-try work, savings are around 30 per-cent, she says, but as you move intolitigation, corporate, and intellectualproperty support work like documentand contract review, drafting, patentsearches, illustrations, and applica-tions, the savings increase from 50 to70 percent.Tremendous saving opportunitiesfor legal firms showcase how LPOscan cash on these. For Pangea3 thelast three months have been the larg-est revenue generators ever and thelast six months have seen a 100 per-cent growth in business as comparedto the same period last year, Kamlanireveals. Abhi Shah’s Clutch Group ex-pects a year-on-year increase of 100percent in business this year com-pared to last year.
The size of the LPO sector
Various estimates have been madeabout the size of the LPO sector by experts. While Shah says the marketsize in 2006 was $146 million, PoorviChothani of LawQuest puts the figurerelatively low at $40 million, and Kam-lani estimates it at $750 million. Shahestimates that, by 2010, the indus-try would be worth $640 million, andKamlani puts the figure at $1.5 billion.Despite all optimism, the fact isthat LPO business is in its infancy, un-like the BPO and ITO sectors. In com-parison with the BPO and ITO indus-tries, the revenues generated by LPO atpresent are much lower. According to Chopra, “In the fourthquarter of 2007, there were in excess of 45 BPO contracts with contract valuein excess of $25 million. To date, to my knowledge, there hasn’t been a singleLPO deal of this value.”Signs of maturity are visible in theLPO industry, as Chopra says, “Thedeals are moving from project tofull-time employee team based, andCorporate clients seem to be inthe process of adopting backend legaloutsourcing into their business mod-els, as Kunoor Chopra of Law Scribesays, “What I found very interesting is that corporate clients are not in-troducing us to their panel counselbecause they want the law firms toseriously build offshoring into theirbusiness model.”Outsourcing of lowend legal tasksis reducing the costs of LPOs by asmuch as 50 to 90 percent. Shah saysthe top 200 associates charge morethan $300 an hour, whereas partners
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