By Arie van Wijngaarden, University of Toronto Faculty of Law

Arie Article

Law students often talk excitedly about “joining the profession”.  What many do not realize is that law is also a business.  One of the most significant business trends in the past 20 years has been the development of Business Process Outsourcing (BPO).[1]  BPO transformed the way large enterprises work.  Instead of doing tasks such as payroll, call centre management or human resources management themselves, companies now rely on a network of suppliers across the globe.  These suppliers can be located anywhere – they might be down the street, on the other side of the country (nearshore) or the other side of the world (offshore).[2]  No matter where the supplier is located, dealing with an outside provider instead of an in-house team has led to major changes in how companies structure their business and the nature of the work they do.

Legal Process Outsourcing (LPO) has the potential to completely alter the legal services industry just like BPO transformed back-office processes for businesses. LPO is already a billion-dollar industry and is expected to grow to greater than US$13 billion globally by 2022.[3]  The most striking thing about LPO is the sheer range of legal services which can be outsourced.  For litigation files, things like Document Management, Discovery, and Case law research can all be outsourced.[4]  Corporate files can have things like due diligence, contract management, and compliance outsourced.  Even specialists are not immune.  One of the most interesting aspects of the LPO market is the growth of Patent Drafting and Intellectual Property Strategy outsourcing.

The LPO market has attracted significant investments from major players. This means that the scope and complexity of services which can be outsourced will rapidly increase.  In addition, the international reach of large firms that have been using LPO services implies a further globalization of the LPO market.  This will likely further decrease the cost of LPO services, making them even more attractive.  In-house counsel are taking notice.  A recent survey of Canadian lawyers found that more than 40% were using LPO services.[5]

Implications for Law Students

  1. Less Grunt Work: In the short term, LPO represents a significant win for law students. Many “grunt work” tasks which were traditionally done by students, such as document review or contractual due diligence, are now being outsourced by major firms.[6] This will allow students to focus on more complicated points of law which add more value for clients. The added bonus is that these issues are often more interesting to work on as well.
  2. Pressure to specialize: In the long run, the growth of LPO means there will be a decrease in the demand for law students. A firm might choose to expand its outsourcing rather than hire more students. As a result, students and junior associates need to demonstrate significant value earlier in their careers to be successful. One way they can do this is by specializing in order to become leaders in a particular industry or field more quickly. The trade-off is that with limited breadth of experience, a young lawyer is more dependent on market forces beyond their control. For example, a lawyer specializing in mortgage-backed securities would have done very well in the early 2000s, but would have been rendered redundant by the 2008 recession.
  3. Teamwork & International Cooperation: Just as the businesses changed following the widespread adoption of BPO, law firms are beginning to change as a result of LPO. Lawyers in North America and Europe are increasingly becoming service aggregators who package international solutions for their clients. A single file could involve document review being done in South Africa, a draft factum being put together in Vancouver and a closing argument being delivered in Montreal. Law students who work well in teams and have international experience and project management training are particularly well positioned to succeed in this environment.
  4. Be Informed: The best thing law students can do is pay attention to major trends in the legal industry. When interviewing with law firms, students should ask questions about how they plan to innovate and leverage outsourcing in the future. Students should also carefully vet firms for their ability to mentor junior lawyers and help them develop a practice which is specialized enough to land high value work, but diverse enough to survive market fluctuations. Being knowledgeable is the best choice.

 

[1] Leslie P Willcocks – The Outsourcing Enterprise: From Cost Management to Collaborative Innovation. Palgrave MacMillan 2011

[2] Ibid

[3] https://www.gminsights.com/industry-analysis/legal-process-outsourcing-lpo-market-size

[4] Deloitte Report – http://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-imo-sdt-corporate-legal-process-outsourcing-120513.pdf

[5] http://www.canadianlawyermag.com/legalfeeds/3432/report-indicates-lawyers-satisfied-with-legal-process-outsourcing.html

[6] http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/bay-streets-big-legal-firms-turn-to-outsourcing/article4570690/