As LPOs establish themselves globally, a clear group of leaders has emerged. India Business Law Journal profiles the winners and their tough competition

This year was a watershed for the expanding legal process outsourcing (LPO) industry, at least by one measure. Pune-based consultancy ValueNotes Database estimates that the annual global market in outsourcing legal processes passed the US$1 billion mark in annual revenues during 2012.

The position of LPOs in the global marketplace is looking more secure as each year passes and 2012 saw a number of important events. The industry received a confidence boost in August when the commission on ethics of the American Bar Association (ABA) changed its Model Rules of Professional Conduct to clarify lawyers’ obligations when outsourcing legal work.

The revisions set out for the first time certain practices involving LPOs. For example, lawyers should obtain informed consent from a client before retaining outside lawyers. “The … proposals respond to the existence and continuing growth of these practices and are intended to clarify a lawyer’s obligations in this context,” the ABA said in a statement.

The industry was gratified. “We are pleased to see that the ABA has restated and broadened its position … that when supervised correctly, outsourcing is a valuable, ethical and safe part of the legal services ecosystem,” Jonathan Goldstein, vice-president and managing director of Pangea3, said in response to the revisions.

Similarly, the Solicitors Regulation Authority in England and Wales recently provided guidance on acceptable practices for firms that wish to ethically utilize outsourcing strategies.

There is no doubt that tough economic times are helping to fuel LPO growth. The troubled Royal Bank of Scotland recently announced it would seek to tender much of its routine legal matters to LPOs. “Matters such as management of large due diligence exercises and document production work can be handled by alternative service providers who have both scale and enhanced project management capacity,” Rushad Abadan, the banking group’s London-based corporate mergers and acquisition general counsel, said recently.

In Australia, large insurer AMP – which recently merged with AXA Asia-Pacific – mandated its legal panel firms to outsource certain work to LPOs “particularly around litigation and discovery … as we seek for them to be able to develop greater efficiencies in their business and pass those efficiencies on to us over time”, general counsel Brian Salter said at the time.

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