Law, LPO, Law Firm, Strategy, Business, Outsourcing
This paper examines the costs, risks and benefits associated with law firms outsourcing some of their core business activities to legal process outsourcers (“LPOs”). Similar to other outsourcing operations, LPOs supply services for a fraction of the cost of what law firms charge for similar services. Common in manufacturing industries, the decision to outsource, or keep work in-house (also referred to as a “make or buy” decision), has become more prevalent in the area of business services, including client service industries such as consulting and financial management. With respect to legal services, recent and rapid changes to the legal profession, caused in part by macro-environmental and industry-level forces, have brought this common business dilemma to the doorstep of Ontario’s legal profession.
Clients are placing downward pressure on the price of legal services. Clients no longer want to pay lawyers by the hour to perform certain routinized legal work. In response, law firms can outsource the work to LPOs. LPOs are an option to reduce client costs and, in turn, deliver increased value to clients. This paper provides a strategic framework for assessing the relevant costs, risks and benefits associated with law firms’ contracting with outsourcing vendors. It is clear that engaging with LPOs is risky. Nevertheless, if firms are well prepared and understand how to manage the outsourcing relationship, outsourcing work to LPOs can be a profitable strategy. There are numerous available LPO vendors with which law firms can contract. Controlling costs, minimizing risks, capitalizing on benefits and engaging with the right LPO are keys to successful outsourcing for law firms.
Dr. Gerry Kerr
Dr. Francine Schlosser
Master of Business Administration
Major Research Paper