Legal process outsourcing (LPO) is the practice where an organisation or corporation obtains legal support services from an external law firm or legal support services company. The Legal process outsourcing market is segmented by type – file management, intellectual property services and legal research service – and application which includes law firms, enterprises, governments, etc. While LPO services include bookkeeping and billing, IP technical support, legal research, e-discovery, litigation support, contract drafting, compliance assistance, patent support, analysis of data and much more, the end users for such services are mainly BFSI (Banking, Financial Services, and Insurance), government, automotive and healthcare.

One of the biggest reasons among various other factors for organisations – small and medium to large firms – to seek the help of third party legal service providers is to cut down costs. Outsourcing not only helps them to procure specialised legal assistance at affordable prices but also allows them to function round the clock because of the difference in the time zones. And the demand for precise and high-quality legal services to ensure compliance with changing laws and regulations is only going to grow and drive the industry further.

In fact, according to various studies and reports, legal process outsourcing market size is estimated to cross $30 billion by 2027. With the LPO market expected to grow at over 22% CAGR (Compound Annual Growth Rate) from 2021 to 2027, India is likely to play a major role in the industry. The country’s legal services are considered to be extremely skilled, efficient and, more importantly, affordable. So we see more and more organisations routing their jobs related to legal process outsourcing to India.

However, there are other countries too who are jostling for space in the LPO market and there are plenty of reasons for it. We take a look at why the LPO market is booming and why every country wants to have a share of the pie:

Legal Process Outsourcing is Cost Effective

An attorney in the US is likely to charge anything between $150-$500 per hour for his services while LPO companies would charge only a fraction of that amount. With such a substantial difference, many companies as well as law firms in countries like the UK and US have started to outsource their legal work to LPO service providers in offshore firms in countries such as India, South Africa and Philippines.

Time Optimization

You need dedicated and skilled individuals to handle legal affairs. The use of external and third-party experts helps companies in expanding the internal bandwidth and reducing the turnaround time for demanding legal projects significantly.

Availability of Resources

Apart from legal professionals, students in countries like India are also studying international corporate law, further aiding the LPO market growth. LPO service providers keep hiring these students to cater to the needs of foreign companies as well as MNCs who are establishing offices in the country so that they comply with regional laws. The availability of skilled resources coupled with the expanding corporate sector has made a huge impact in the demand for LPO services.

Digitization and Advent of Technology

LPO companies are focusing on using advanced digital technologies to offer enhanced and accurate legal service offerings. Law firms are incorporating electronic discovery or e-discovery in legal proceedings such as litigation, government investigations, or Freedom of Information Act requests, where the information sought is in electronic format and most commonly referred to as electronically stored information (ESI). And the e-discovery market in the US is likely to increase at more than 25% CAGR through 2027. Companies are also setting up AI and machine learning to create faster and precise results. Focus on digital data has resulted in high demand for e-discovery services which the LPO firms are providing.

SMEs in Europe Driving Growth and Increasing Demand

By 2027, it is estimated that the legal process outsourcing market size in Europe will grow at more than 16% CAGR. It’s because of the sharp spike in the number of small and medium-sized enterprises (SMEs) which are aided by government initiatives. SMEs constitute 99.8% of all non-financial companies in the EU, generating 56.4% of the added value and providing 66.6% of the jobs. With SMEs needing to comply with EU’s strict regulatory landscape, the LPO market will witness a burgeoning demand for LPO services. The budgetary constraints of the SMEs will force them to outsource their legal work to avoid heavy fines as well as unnecessary litigations.

Bouncing Back from Covid

Since the onset of the pandemic, the law industry has taken a The legalhrough layoffs, budget cuts and unavailability of proper equipment. As a result, growth was stunted in the industry compared to the past few years. However, LPO services have helped the industry to bounce back. With innovations in technology, several LPO companies have updated their infrastructure to bounce back.

Legal process outsourcing to India

For legal process outsourcing to India, an American firm has to pay only one-fourth or one-fifth of what it has to compensate a legal rote in the US for the same work. This is why the India legal process outsourcing market size is set to achieve growth of around 27% through 2027 and also why many US and UK companies are opting for India. An increasing number of qualified lawyers specializing in different legal aspects and possessing fluent English-speaking skills have also boosted the revenue.

Summary

Legal process outsourcing market is set to grow manifold in the next five years due to the increasing preference of companies to utilize the expertise of an external law firm based in developing countries. The motive behind these companies’ moves is to lower their costs significantly apart from getting their job done by skilled and dedicated professionals. These factors are helping to drive the growth of the LPO market which is estimated to cross $30 billion by 2027. India is seen as one of the top countries to offer LPO services as resources are plentiful and available at significantly lower pay rates compared to developed countries.

Moreover, the country’s lawyers are fluent in English and competent outsourcing firms can assist in boosting client relationships and increasing accurate results.