Outsourcing legal work is not always the best option for legal departments and poses risk, according to various general counsels who responded to ALB’s In-house Survey 2010.
Although legal process outsourcing (LPO) has gained momentum in the last few years – Microsoft and Rio Tinto are the latest to choose to outsource their low-end legal work – very few respondents in the survey said they would consider following their lead.
Jane Niven, the Asia-Pacific head of compliance and general counsel for Jones Lang LaSalle, said that LPO may only benefit legal departments who work in a high-volume, single-service industry.
“If you are a bank and all you are doing is reviewing mortgage and lending documentation then it might be worthwhile considering,” she said. “But even then no two LPOs are the same. Not only are there quality and ethical considerations but there are very few providers, in my experience, who have the capacity to deal with documents and contracts in, say, Japanese and Chinese. Whether LPO takes off for the in-house profession is a question of appetite for risk and what one’s threshold for it is. Until such time that in-house lawyers are comfortable that LPOs will be able to mitigate perceived risks, then we are happy to bide our time.”
While issues such as risk are important, just as important is finding the economic justification for using LPO outfits. John Harrison, the general counsel for GE Capital in Australia and New Zealand, says that lawyers in some jurisdictions are such good value that establishing a business case for LPO may be difficult.
Further, he says that exposing in-house lawyers to the type of work that some companies would normally seek to send to LPOs is only beneficial for their professional development. “There is a lot to be said for making in-house counsel understand their company’s business holistically and this may not be achieved to a desirable level if some of the work, no matter how small, is sent to an LPO,” he said.
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Which statement best described your legal team’s use of Legal Process Outsourcing (LPO)?
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• Currently looking into the possibility of using LPO: 12%
• Currently use LPO: 30%
• Do not use LPO: 35%
• Not likely to use LPO in the foreseeable future: 25%
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The full results of the ALB In-house Survey 2010 will be featured in the April edition of ALB.
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