Offshore providers target legal outsourcing market

23rd November 2006
By Staff Writer
www.cbronline.com


Much of the hype surrounding the initial wave of offshore business process outsourcing is now focused on what many suppliers call knowledge process outsourcing, or KPO. These services are typically higher value processes based around more analytical and professional functions, such as research services for a specific industry.
In the past several years, several companies offering offshore legal services outsourcing have entered this KPO market, offering a range of low- to mid-level services. These firms, such as Office Tiger, Pangea3, and Lexadigm, serve both large corporations wishing to unload some of their in-house counsel work, such as contract drafting, document management and review, or due diligence, as well as law firms themselves seeking to cut costs in these areas. Many of these companies also offer intellectual property services such as patent and trademark work.


AdvertisementThe global legal services market stands at some $260bn, and about $160bn of it is in the US, said Lexadigm president Puneet Mohey, citing recent figures from Forrester Research. Between 60% and 70% of this work can technically be offshored, and 70% of this offshorable work is likely to go to India, Mohey said.

Forrester figures that 12,000 jobs were in India by 2004 and that number should grow to a whopping 79,000 positions by 2015.

India is the top destination due to its many English speakers, large pool of attorneys graduating each year, and the similarity of its legal system to the US model. Plus there's the obvious cost advantage of these offshore suppliers that often charge below $50 an hour for services that US law firms will typically bill $150 an hour or higher. Yet the legal outsourcing market is still young. It was only in the hundreds of millions last year, Mohey said, and most of this went to corporations' captive shops offshore.

Indian trade group Nasscom last year also published similarly rosy projections for legal outsourcing. It estimated that $3bn to $4bn of legal work in the US alone could be outsourced, although only 2% to 3% of this market has actually been outsourced.

Not all forecasts are so bullish. Evalueserve, an analyst group that also provides IP outsourcing services, pegs the current legal outsourcing market for Indian suppliers at just $56m, rising to $300m in 2011. And it estimates that only 1,300 full-time attorneys are now working in India in an outsourcing capacity, and that this number should reach 16,000 by 2015, or only 1.2% of all US lawyers.

Regardless of the analyst disagreements over the size and shape of future business opportunities, the market is clearly growing, judging from both client interest and the increase in offshore legal services companies, Mohey said.

He explained that when Lexadigm was founded in early 2004, there were only a few players in the field, offering mainly low-level legal work. In 2005 the market picked up, more competitors entered the picture and freelance attorneys in India began looking for outsourcing work.

This year interest on the client side has also increased, as large corporations and law firms consider their outsourcing options. In fact, Mohey doubted that there is one major US law firm that has not at least looked into the issue.

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