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“Legal process outsourcing is a $4 billion industry,” according to Xerox’s general counsel

That quote comes from Don Liu, general counsel of Xerox, in David Galbenski, Unbound: How Entrepreneurship is Dramatically Transforming Legal Services Today (2009) at 37. His estimate seems high, but perhaps spending from the UK is included (See my post of Feb. 7, 2009: maybe 2% of companies send legal work offshore.). Perhaps Liu uses the term “outsourcing” more broadly than I understand it.

Test Liu’s claim against one scenario. If 10,000 offshore workers log an average of 1,000 hours each at $30 an hour, the annual total reaches only $3 billion, a billion less than Liu’s figure. Yet I think the LPO headcount of the largest players – UnitedLex, Pangea3, Integreon, CPA Global, to name a few of the largest groups – number more in the hundreds than the thousands, so the 10,000-person scenario is likely much too high. One thousand hours each of legal process work during the year as well as thirty dollar charges are also likely to be high. In sum, Liu’s sum may be wrong.

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5 responses to ““Legal process outsourcing is a $4 billion industry,” according to Xerox’s general counsel”

  1. Jeny says:

    Whatever the correct figure or estimate is I still think that Legal Process Outsourcing is a booming industry which is good news for us who are into outsourcing.

  2. thinker says:

    Liu might have miscalculated the amount.But then, its a good number, it meant that LPO is growing and lucrative.

  3. Rammon says:

    It has to be so, if not accurate. Obama policies are adding to it.
    Read a link below from an Indian blog on Legal Process Outsourcing

  4. I agree that the number seems high for outsourcing, but he could be referring to firms that do not do any substantial ediscovery in-house. Perhaps they’re referring to work offloaded to processing vendors?

  5. Rahul Jindal says:

    That may be an overestimation of the market size in 2015. I have been an LPO observer since 2004 and have also been running a blog on the same –
    I estimated the size of LPO to be about 600 to 800 attorneys in October 2007. This was published in the ABA Journal piece “Manhattan work at Mumbai prices” – see
    My big issue with all of the estimates floating around is that a vast majority of those estimates are based on a set of reports produced by Valuenotes. In my opinion, Valuenotes does not have adequate understanding of the definition of LPO and the only explanation I can think of for their super-bloated estimates is that they are considering anything done for law firms and corporate legal departments as LPO. This includes IT work, secretarial services, etc – all of which is work done by non-lawyers.
    I don’t think the number of Indian attorneys presently employed by LPOs is more than 1200-1500 and this number should grow to about 2000-2200 by end 2010 and probably to about 8000-10,000 by 2015. Another key demographic performing work which gets clubbed into LPO is that of engineers/scientists performing Intellectual Property work. Again my estimate for 2009 of such engineers/scientists is about 1000 and this should grow to about 1400 by end 2010. For 2015, this number should be 5000-7000. The third component would be non-attorneys performing legal support work such as paralegal support, document review (yes many LPO vendors employ non-attorneys to do that work), docket management, etc should presently be about 1000-1200. By 2010, this should be 2000-2500 and by 2015 about 10,000.
    Another major error in estimations is assuming a $ rate per hour say $30, then multiplying it with high number of hours billed per year i.e. 1800 with the assumption that every LPO employee is generating billable work every working hour of his full year. Couple of points here:
    1. Most LPOs have about 1650 hours maximum that could be billable – after all, people will go on leaves or will have public holidays (say an average of 25 leaves+holidays in a year), time needs to be spent on training, company events etc.
    2. I would be suprised to learn about utilization northwards of 80% over an entire year
    @$30/hour, 80% utilization, and 1650 hours the industry is probably between $125mil and $150 mil.
    LPO is a complex business. Unlike other services which have benefited from offshoring, cost alone is seldom the factor behind any law firm or corporate legal department choosing to go offshore. Lawyers are by nature risk averse and very articulate. The first reaction for most lawyers to offshoring is that it can’t be done. Though successful LPO vendors do prove them wrong but it takes much longer than for the more easily understood offshore-ready areas such as IT or even BPO.
    The driver for offshoring of legal support services has been the budget pressures for corporate law departments. LPOs that enable the legal departments get a much greater visibility of the process followed by the LPO’s staff, the training imparted, the review done by senior attorneys, the policies for employee care and retention. All of this renders operations management much more scientific and scalable that it traditionally has been.
    Law firms have not been the key driver and I don’t expect that to change in the next 1 year. Law firms are not entirely to blame for that. The ABA ethics opinion states that the responsibility of review of work done offshore lies with the law firm commissioning such work. However, the cost benefits from such offshoring need to passed on to the end clients. This is not a very lucrative scenario for the law firms to offshore and therefore they usually resist. It is only the progressive GCs or Managing Partners who are seeing the inevitable – the moving of lower complexity bulk work to lower cost locations – that are the real drivers of LPO as it stands now.
    Disclaimer: The views expressed above are entirely my own and do not knowingly represent my employer’s positions, strategies or opinions.