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Legal Process Outsourcing May or May Not Be Growing

By William Peacock, Esq. on February 07, 2014 | Last updated on March 21, 2019

Have you outsourced your document review, due diligence, compliance paperwork, or other repetitive tasks that make you want to slam your face through a plate glass window?

Depending on who you ask, legal process outsourcing (LPO) is either growing, or stagnating. A survey late last year claimed that LPO growth had slowed, and while LPO revenues exceeded $1 billion in 2012, that was far less than the $2.4 billion that had been expected.

Yesterday, a different survey was released, and it painted a slightly sunnier picture for LPO providers, with 80 percent of in-house counsel respondents saying that they expected the LPO industry to expand and improve its services over the next five years.

LPO is Stalling

The Dewey B. Strategic blog, last October, related the findings of an American Lawyer Media (ALM) survey that showed waning interest in outsourcing amongst GCs. Amongst the notable findings were:

    • Sixty-four percent of GCs spend less than ten percent of their budget on LPO;
    • Sixty-eight percent don't believe the savings from LPOs are worth the trouble;
    • Law firms aren't threatened by LPOs -- they encourage the use of LPOs for work that they have no interest in; (Think doc. review.)
    • LPOs are used for cost and speed, with only 21 percent using LPOs for improving quality;
    • Cost savings from LPOs are shrinking due to increased labor costs;
    • Big one: 90%  those who had not yet outsourced had no interest in doing so in the next 3 years.

Dewey B. Strategic calls it the "tidal wave that wasn't."

LPO is Growing

Compare those findings with a Legal Business/Clutch Group survey, released yesterday, which made these findings:

    • Eighty-seven percent of surveyed in-house counsel say it is more difficult to manage legal risks related to company data compared to five years ago;
    • Eighty percent say they expect to see the LPO industry expand and improve its services over the next five years;
    • Fifty-eight percent say that LPOs and law firms need to work together on compliance and risk matters;
    • Thirty-seven percent say that LPOs are better equipped than law firms to use advanced technology and to use data and risk analytics.

Together, the findings present a much rosier picture for LPO demand than the ALM survey.

Whose Survey is it Anyway?

The differences in the studies are interesting. ALM's findings point to an industry that peaked, and is used as a source of cheap doc. review and ediscovery, when quality isn't a priority. The Legal Business/Clutch survey points to a booming market.

How does one explain the difference? We're not quite sure, but it is interesting to note that Clutch is a "team of legal, technology and process experts," while ALM is a legal media company.

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