Legal process outsourcing (LPO) is the practice of transferring legal work to external service providers, often located in countries where it can be done at a lower cost and with similar quality. LPO has become more common among US corporations and law firms, especially after the global financial crisis and the COVID-19 pandemic, which have increased the pressure on legal budgets and operations.

LPO can offer several advantages to US clients, such as:

Cost savings: LPO can cut legal costs by up to 50% or more, depending on the type and complexity of the work transferred. LPO providers usually charge by the hour or by the project, rather than by the billable hour, which can lead to more consistent and transparent pricing.

Efficiency and scalability:

LPO can help US clients improve their legal processes and workflows, as well as handle changes in demand and volume. LPO providers often use technology and automation tools to boost productivity and accuracy, as well as quality control and compliance mechanisms to ensure standards and deadlines are met.

Access to talent and expertise:

LPO can enable US clients to access a pool of qualified and experienced legal professionals, who can provide specialized skills and knowledge in various areas of law. LPO providers often recruit and train their staff from reputable law schools and firms, and keep them updated on the latest developments and best practices in their fields.

Focus on core competencies:

LPO can free up time and resources for US clients to focus on their core business activities and strategic objectives, rather than on routine or non-core legal tasks. LPO can also allow US clients to use their in-house legal teams for more value-added and complex work, such as litigation, advisory, and regulatory matters.
However, LPO also involves some challenges and risks for US clients, such as:

Challenges and risks for US clients Quality and security concerns:

LPO may raise questions about the quality and security of the legal work done by external providers, especially when it involves sensitive or confidential information. US clients need to ensure that their LPO providers follow high standards of quality, ethics, confidentiality, data protection, and cyber security, as well as comply with relevant laws and regulations in both the US and the host country.

Communication and coordination issues:

LPO may create communication and coordination difficulties between US clients and their LPO providers, due to factors such as time zone differences, language barriers, cultural differences, and technological compatibility. US clients need to establish clear and frequent communication channels with their LPO providers, as well as monitor and manage their performance and expectations.

Legal liability and responsibility issues:

LPO may pose legal liability and responsibility issues for US clients, especially when it involves the practice of law or the provision of legal advice. US clients need to ensure that their LPO providers do not engage in the unauthorized practice of law (as defined by applicable state bar rules of professional ethics), and that they retain ultimate control and oversight over the legal work transferred.

LPO is not a one-size-fits-all solution for US clients.

It requires careful planning, due diligence, contracting, implementation, and evaluation. US clients need to assess their legal needs and objectives, identify the types of work that are suitable for outsourcing, select the right LPO provider for their specific requirements, negotiate the terms and conditions of the outsourcing agreement, implement the transition plan and governance structure, measure the outcomes and benefits of the outsourcing relationship, and make adjustments as needed.

LPO is a growing trend in the US legal market that offers both opportunities and challenges for US clients. By adopting a strategic approach to LPO, US clients can reap its benefits while mitigating its risks.