Global Legal Process Outsourcing Market 2014 -2010 – India Dominates as Europe Opens up

According to a NASSCOM-CRISIL study, India is a dominant player in the Global Legal Process Outsourcing industry and is expected to continue its growth at an average rate of 25%-30% annually. NASSCOM highlights that the Indian LPO sector has engaged more than 18,000 professionals currently with annual revenue of USD 960 million and is expected to grow to USD 1.3 billion by 2015. The global market is expected to grow to $8.56 billion in 2020, from $1.39 billion at the end of 2013, according to estimates from Grand View Research. The market is growing at over 25% on a consolidated annual growth rate basis. The US is the dominant market for the legal process outsourcing industry and Indian LPO players are seeing opportunities in Europe as financial services firms and companies on the continent look to cut costs. "Europe is opening up to legal process outsourcing and we see a lot of interest from India-based LPOs. Within a year or two we will start to see definite momentum in them setting up delivery locations on the continent," Andrew Burgess, director at UK-based outsourcing advisory Source said in an interview to Economic Times. "We have just seen demand from European banks which are facing regulatory pressures. We already have one European bank as a customer, another deal is just in closing and more deals are in the pipeline," Mohan Ayyangar, chief operating officer of LPO firm Pangea3, told Economic Times.

Indian LPOs have significantly moved up the value chain wherein initially legal research assignments related to finding case laws, statutes, rules and regulations were outsourced but  more work is now being outsourced related to preparing preliminary drafts of legal documents for use in foreign courts. Further tasks such as contract management, patent drafting, prior-art searches, due diligence and even litigation support, in the form of document review, are also being outsourced to Indian LPOs. Most of the LPO work done in India is outsourced by financial Services firms but other industry segments are also looking to outsource legal work to India particularly MNCs that operates in many countries need to maintain different legal documents and requirements as per the local jurisdiction requirements. "We are seeing an increased demand from Europe from global Fortune 500 companies that have operations in Europe and from the ones that are headquartered there. It's a very important market for us and we are expanding our existing operations," Pavan Vaish, global chief operating officer for UnitedLex Corp told Economic Times.

Europe presents a big challenge for Indian LPO players both in terms of Language and legal systems. “LPO services started in document review and the discovery space and the main pick up was seen in common law countries. We will have to look at LPO in Europe differently and look at more process-oriented services like intellectual properly, compliance and contract management," Kunal Purohit, country head for private equity-backed Integreon, told to Economic Times. Indian LPO is smaller in size but gradually increasing its size and is expected to continue its growth in the near future. Competition from countries like Vietnam, China, Hungary, Czech Republic and the Philippines is increasing but Indian companies will continue to dominate due to the quality of work and talent Indian LPOs offer, rather than their lower costs.

Legal Process Outsourcing Industry in India targeting to reach US$ 1 billion by 2015

Legal Process Outsourcing Industry often termed as LPO industry is targeting to reach US$ 1 billion in revenues in the next two years from the present levels of US$ 440 million. Of course this seems to be an extremely ambitious target as India is no longer the only preferred destination for outsourcing and countries like Philippines, etc. too have emerged as the best alternative destination for outsourcing. More and more business organizations across the globe are looking to outsource to only those countries that not only offer low prices but also have the necessary infrastructure in terms of qualified human resources, information technology and government support. But India is still considered to be the first choice for the Law firms in US and UK that wish to outsource legal services as India has more than 950 law schools that train approximately 60,000 law graduates and qualify them to join the legal profession who will join the 1.2 million registered advocates in the country. Many of the new law graduates prefer to join the LPO firms and the corporate sector rather than opt for judicial clerkship or litigation practice. The number of LPO firms has increased to 140 from around 50 in 2005 and this has led to increased opportunities for law graduates and these firms offer very good salaries. Litigation and judicial clerkship requires a lot of struggle to establish reputation which students today prefer to avoid, but many industry experts and seasoned lawyers believe that finally all the law graduates have to at some point go to courtroom and practice.

Indian LPO firms offer services like reviewing documents and basic due diligence, to automation and process efficiency, review contracts, process loans, provide expert witness advice on data-collection, draft patent applications and conduct litigation-readiness assessment, etc. One of the major challenges for the LPO industry is that every country has a different legal system and the LPO firm employees have to be trained accordingly and Indian law is mostly based on the British Legal system so there is a basic understanding of the British law and they can also easily understand the American Law too which is major competitive advantage for Indian Lawyers.  Another crucial factor is the low cost and subsequent low pricing that Indian firms offer, for example for drafting contracts and legal memos a US Lawyer can charge somewhere between US$ 300-400 per hour but in India same work can be done with US$ 10-30 per hour. This is a major cost advantage for the US and UK law firms and corporate legal departments in business organizations who need to cut costs constantly to survive. The availability of skilled lawyers along with the government support the LPO industry is hoping to cross the billion dollar revenue mark in the next couple of years. Most of the private Universities and big educational groups in India are offering dual degree programs like BBA-LLB, BA-LLB and are also offering Masters Programs in Law with specialization focused on Intellectual property rights, financial and Business laws, etc. which will also help the LPO firms to offer even more specialized services to their clients. Many law students are coming from middle class families who take educational loans for studies and Indian Law firms are majority family owned Law firms which do not provide much opportunity for fresh graduates and everyone cannot enter into Judicial services, corporate legal departments and practice litigation, the only option they have is Legal Process outsourcing firms.