How Is Legal Outsourcing Working Out?

Corporate Counsel magazine recently published its first-ever 2013 Legal Process Outsourcing Survey, which polled law departments to ascertain their views on legal process outsourcing (LPO). The non-scientific survey asked if in-house counsel were outsourcing, and if so, where they are sending work, what kind of work they outsource, what motivated them, and how they feel about the results.

There are some interesting – and surprising results:

• 54 percent of the respondents have outsourced legal work at some point.
• Of the respondents who have outsourced legal work, with two-thirds reporting that they are "satisfied" or "very satisfied" with the experience. Another 29 percent indicated they were "somewhat satisfied," and only 3 percent said that they were "not at all satisfied."
• 65 percent of the respondents who have outsourced legal work have only done so within the US, while 35 percent have outsourced overseas (64 percent of those have sent work to India).
• Asked why they outsourced legal work, "lowering costs" and "reducing the time required to complete the work" were the two most common reasons, while 35 percent said "to test the idea."
• When asked why their companies were outsourcing, 68 percent responded that the reason was to reduce costs, and most began outsourcing after the economic downturn.
• As for the type of work outsourced, litigation was one of the most commonly cited areas where companies outsourced work. Document review and electronic discovery were each chosen by 48 percent of the respondents as the type of work their companies outsource. A third answered "contract work" and 30 percent said IP research or portfolio management, or legal research and writing.
• Many responding companies viewed outsourcing as an experiment, and 46 percent said they haven't outsourced. Of those you have not tried outsourcing, 91 percent say that they haven't seriously considered outsourcing, and the same percent said that they don't expect to try it in the future.
• The main reasons for not outsourcing at 58 percent each were: "we're worried about quality control" and "we don't think the savings will justify the trouble." Security was the third most popular answer, while nearly a quarter checked "other," and several included comments that explained that their work isn't conducive to outsourcing.
• When asked what other cost-saving measures the company has initiated, “taking more work in-house” was the most popular response at 74 percent, compared to 64 percent who said they were seeking discounted rates.
• The number one complaint (44 percent) of those who offshore was "the workers are not familiar with our business."
• The research suggests that larger companies are most likely to have outsourced.
• Of those who do outsource, the largest percentage by far (29) said that they expect to be doing about the same amount in three years. The next highest (18 percent) said that they just don't know.

So, in the end LPO does seem to be growing, perhaps at a slower pace than predicted. The good news is that the majority of those who have outsourced are satisfied with the experience, which could mean that LPO will begin to overcome some of its negative connotations and build a reputation based on trust and accountability. Time will tell.

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