April to June 2013 SKJ JURIS NEWSLETTER VOL# 03 ISSUE # 02 SKJ Juris Contents Editorial THE COLLECTIVE. your LPO acquaintance 1) Are UK personal injury law firms facing closure?...1 2) Latest trends in LPO Industry....3 3) LPO 2013: The new Indian watchword in outsourcing......6 4) Law Firms and Legal Process Outsourcing (LPO) should go hand in hand.......8 5) Last word....9
Editorial Legal Process Outsourcing has got the much needed handholding in India. It is ready to take off now. With the new reforms coming to force lately in UK, legal process outsourcing looks to have a stranglehold on UK law firms. Similarly the US law firms' have felt in the past few years that outsourcing helps them in effectively managing the core legal activities. As such they are looking more eagerly beyond its border at Indian service provider. A good quality is the undisputed haul mark of any legal support services company, and SKJ Juris is totally dedicated to maintain its quality at all times. Our experience shows that we can attain a sustainable growth in the legal outsourcing industry by moving up the value chain, provide quality service, and earn clients' trust.
1] Are UK personal injury law firms facing closure? Lord Justice Jackson's reforms introduced w.e.f. April 1, 2013, have a profound effect on costs in UK court cases, as they seek to make them more proportionate to the case. The reviews stated that under a No win no fee agreement, the success fee cannot be recovered from the losing party. To offset this measure, a 10% increase in general damages has been introduced, and the lawyers will instead be able to take a cut from any damages won by the claimant. Further the review stated that only a claimant can recover his/ her costs in personal injury cases. Conversely, it means that if a defendant wins a personal injury case, such defendant cannot recover the litigation costs from the claimant. Implementing the recommendations of Lord Justice Jackson's Review of Civil Litigation Costs w.e.f. April 1, 2013, the UK Government has introduced a ban on payment and receipt of referral fees in personal injury cases under Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), making such payment and receipt, a regulatory offence. The ban applies to all the main businesses involved solicitors, claim management companies and insurers. Any breaches of the ban would be subject to appropriate regulatory action by the relevant regulators, the Solicitors Regulation Authority (SRA), Financial Services Authority (FSA), the Bar Council and the Claims Management Regulator. A current survey of managing partners of UK based personal injury law firms show that, being hit by LASPO, nearly a one-fifth of specialist personal injury law firms in the northwest of England are considering closing down. According to the said survey, 71 per cent of personal injury law firms are actively trying to restructure referral arrangements so that cases are self-referred by potential claimants on the recommendation of the referrer, in the hope that this will avoid the ban. Just over half of the personal injury law firms are planning to increase their own direct marketing spend to attract new clients, rather than buying them. The pressure on the personal injury sector has been compounded by the reduction in road traffic accident (RTA) portal fixed fee rates. Ninety-one per cent of the personal injury law firms surveyed, handle portal work and virtually all of them believe that the new legislative changes 1
in LASPO, will reduce the profitability in the personal injury cases. The anticipated fall in a personal injury law firm's profitability is inducing such law firms to have relationships with third parties /non-lawyers. Going forward, the personal injury law firms are in no mood to bring referrers into their business. It is the most opportune time for such personal injury law firms standing on the brink of closure to kindle a professional legal outsourcing relationship with a proficient service provider such as SKJ Juris which will reduce their costs furthermore will increase their profitability. SKJ Juris can provide a low cost legal support solution to such personal injury law firms and help them regroup and withstand recent LASPO amendments impacting their personal injury law business. 2
2] Latest trends in LPO Industry: A. Technology Technology developments in document and data management over the last few years combined with things like analytical coding and concept search are being used by law firms and LPOs to evaluate and trim down volumes of documents for litigation review. Technology and its advancement are primary to the delivery of LPO and its future development. B. LPO Providers will move up the value chain Client organizations will progressively source work that has medium complexity and medium criticality, to offshore LPO providers via major law firms, or to offshore LPO providers directly. The initial driver of LPO has been lower costs available through labor arbitrage. Clients at the outset feel most contented sending discrete work with low complexity and low criticality offshore. As clients and providers build long-term relationships based on trust, transparency, and collaboration, clients will likely engage providers for more end-to-end solutions. C. Market Oversupply There is a stage where supply is likely to go beyond demand and the market will need to trim down itself at some stage through mergers, takeovers, etc. Whether prospective suppliers believe the extreme forecasts or genuinely believe they can compete, there is, and there will continue to be, a pour of new entrants flooding the market. 3
D. LPO mergers, acquisitions, and strategic alliances LPO is a moving area to watch over the next few years as the industry grows and matures. The question is: how well will the supply of services meet the demand. If supply exceeds demand that will mean cheaper services and greater choice for client organizations, but may also mean in a number of areas, poorer quality of service from providers who are not able to compete effectively. In such situation, growth for larger providers may occur inorganically, that is, by mergers and acquisitions. Inorganic growth has many benefits including, improved suite of services and rapid market expansion, lower operating costs, elimination of competition and access to human and intellectual capital. E. Engagement models will mature and evolve In addition to extending services and moving up the value chain, the methods and paths enterprises utilize to engage LPO providers will develop and mature. Currently, enterprises engage LPO providers directly or indirectly from their legal firms. Law firms are developing or will gain core capabilities in managing offshore LPO providers, where they can replicate a model across a range of clients. LPO relationships are generally built using one to half a dozen engagement/pricing models: Ÿ Manpower a dedicated number of experts are on call to manage the requested work. Ÿ Virtual Captive a certain amount of resources in terms of staff, resources and management are allocated and/or kept in reserve to handle the work load. Ÿ Per hour an hourly rate is paid for each expert employed to handle the work Ÿ Transaction engagement and pricing is calculated by the number of transactions completed Ÿ Project One fixed price for a project with a particular start and finish date Ÿ By Unit pricing per document reviewed or transcription completed. 4
LPO contract and relationship can use one or more of the above engagement models. As the relationships become more strategic and value add driven, the less likely they are of using the per hour engagement model. They only way a provider can increase their margins in this engagement model are to reduce their costs rather than add value to the services they provide. 5
3] LPO 2013: The new Indian watchword in outsourcing Outsourcing has now become the norm for the smooth conduct of business operations. Like any other service, legal process outsourcing has also stepped into Indian soil. Considering Indian expertise in law, LPO 2013 has great potential for creating a flourishing market. In addition to transcription, the automation of legal services is available in India. The market is wide open in the year 2013. Major clients like UK, USA, and Europe are utilizing the Indian experience in the field up to the maximum extent, in order to manage time and cost. The demand for LPO 2013 is required to be met by impeccable services. Within the country limits, maintaining the quality of service is a strict requirement that cannot be compromised in any way owing to the sensitive nature of legal services. Keeping a consistent relationship with clients is a necessity as in any other outsourcing field. Providing LPO services entail a strong financial base and infrastructure in combination with the capability of technological innovation, failing which, outsourcing companies would be at a great disadvantage. A. Range of services delivered The services can be categorized according to the need of expertise and skill. Taking this into consideration, they are mainly partitioned into high-end and low-end services. Transcription, data entry, documentation, coding etc. come under the whole array of low-end services, while high-end services cover areas of research, management, analysis, review etc. in the operation of legal activities. Apart from traditional legal support services provided by the Indian LPOs, specialized legal support services which cater to specific areas of law are also provided by LPOs having expertise in such legal subjects. 6
Apart from the multiple features, certain prerequisites arise with LPO 2013. Legal services need to be impeccable in all elements of operation. The differences in code and format of Indian law from other countries need to be taken into account. The right expertise is needed in foreign laws and legislation that would help outsourcing companies embrace effectively the activities required for fulfilling service requirements. In LPO, confidential data are transferred from one country to the other; as such, any kind of breach would be unacceptable. Prescribed or company formulated ethics need to be followed, which is to be mutually accepted by both the parties involved. B. The future of LPO The increasing acceptability of legal outsourcing compels many associations of LPO to conduct exhibitions and conferences in India, not only to promote the idea but also to spread legal awareness among the players. According to the Global Outsourcing Association of Lawyers, these kinds of promotional activities attract LPO 2013 providers from all over the world. Tremendous amount of research is being conducted in the field of law, reviewing bills and changing policies being some of them. Statistics unveiled in The Economic Survey 2012 13 reveal that legal services have mustered an annual growth of 8.2% percent from the period 2005 06 to 2011 12. Many firms have in place separate research teams to ensure the quality of services rendered. For the aspirants, an immense number of job opportunities are awaiting in the field of legal process outsourcing. Those who are ready to accept the complexities and challenges in this field can turn this venture into a success. It has to be underscored that the year 2013 will ensure the expansion and success of this industry. 7
4] Law Firms and Legal Process Outsourcing (LPO) should go hand in hand The question that is most likely to be asked is, what will be the impact on traditional law firm structure as acceptance of LPO as an alternative legal service delivery model continues to grow? According to Mark Ross and one of his articles on Why Law Firms Should Embrace Legal Process Outsourcing (LPO), we consider that true and valuecreating change within the legal profession will be when LPO itself replaces the base of the law firm pyramid. It will not be completely right to say that the only benefit LPO brings to the table is labour arbitrage, where expensive junior associates are simply substituted on a like for like basis by less expensive Indian lawyers. Nor it is true to suggest that the rise of LPO somehow equates to a win-win-lose scenario, namely win for the corporate client, win for the LPO provider yet lose for the law firm. This in itself presupposes the adequacy of two hypotheses that we counter do not hold water, namely the zero-sum game i.e. the more the client loses, the more the law firm wins and that every penny of revenue generated by an LPO provider is a penny of revenue lost by the law firm. The actual message to convey here is that, today, LPO represents an operating model built on best practices, with process efficiency, quality control and enabling technology at its core. By moving hand-in-hand law firms can truly remain competitive, and both survive and thrive in a legal marketplace where their corporate clients are increasingly demanding more for less. 8
5] Last word The capability of an LPO arrangement to offer real benefit to a client company depends significantly on two major aspects. First one is a sober evaluation of the client's legal requirements and necessities; and the second one is a practical willpower of whether the appropriate legal services and tasks can be outsourced without giving up important qualitative contemplations. Compromising with quality will certainly be counterproductive, which shall result in additional cost and elevating client risk. To cope up with rising demand for LPO, many service providers have entered the market, offering alternative services and promoting unusual trends towards the outsourcing of certain legal tasks and procedures. As a result, the LPO model that only a few years ago, was viewed with significant uncertainty is now widely perceived as a practicable alternative means of addressing companies' legal needs. 9
Outsourcing as an idea is not novice; it has been for over a thousand years now, the only difference being that it's gaining lot more popularity since a decade for whatever reasons. Proper planning and research is necessary before choosing an outsourcing partner whether it is on shore or offshore. But by outsourcing to a third party, your business can focus on what it does best and gain a competitive edge in the marketplace. Tom Peter Contact Address Corporate Office: SKJ Juris Services (P) Ltd. 2nd Floor, Kundan Chambers, Thube Park, Shivajinagar, Pune - 411005, Maharashtra, India. Tel: +91 (0) 20-30223654 Fax: +91 (0) 20-25536661 Email: info@skjjuris.com Website: 10