LPO refers to the process of procuring legal services from an
external provider. There is nothing new about outsourcing legal
services – companies have been outsourcing legal services to
external law firms for ages. So why all the recent discussion about
What is new is that, today, we see the outsourcing of legal
services across the globe. Technology has enabled access to
offshore, low-cost pools of labour and has allowed efficient
disaggregation of routine legal work which can be performed by
these low-cost pools of labour. A familiar form of offshore LPO is
the e-discovery service provider, who might have teams of lawyers
working in India or the Philippines to perform relevance review of
a major document collection for production in Canadian
LPOs began to emerge in the past decade as global corporations
starting offshoring work to captive centres with large pools of
skilled, low-cost labour. We now see company-owned captive centres,
captive centres of law firms, and third-party providers. Some LPOs
are niche players and some provide many different kinds of
services, including document review services, contract drafting,
transaction due diligence and legal research and analysis. The
major players also offer onshore and near-shore alternatives at
different price points in additional to offshore services. For
example, you might have a first-pass review of documents occurring
in India, with a higher level quality control review being
performed by more costly Canadian lawyers in the LPO provider's
The major benefit of LPO is the ability to substitute high cost
labour for a combination of lower cost labour, superior technology
and process maturity. The idea is to get the work to the most
cost-effective provider of the service. LPO provides scalable
services so that the work force dedicated to your project can
increase or decrease as needed. LPO can also increase the speed of
delivery of legal services, especially if staff is working across
different time zones for 24-hour service. Finally, some in-house
lawyers find that, by engaging an LPO provider, they can offload
the standardized work and focus on more strategic work.
Bear in mind before engaging an LPO that, unlike an external
local law firm, most of the lawyers that work for the LPO provider
are junior foreign-trained lawyers. This staffing can be very
efficient and keep costs down, but it also means that the client
has to invest time and energy in training and nurturing the pool of
junior lawyers who will perform the work.
Security and confidentiality
If you outsource legal services, your data will likely be
travelling across the globe and become accessible to a variety of
LPO employees and potential hackers. It is extremely important to
perform due diligence on the LPO provider to ensure that its
security infrastructure is up to standard and confidentiality
agreements are signed.
When legal services are outsourced to a non-lawyer or a
non-local lawyer, there are ethical implications related to the
unauthorized practice of law. In order to not run afoul of rules of
professional conduct governing the legal profession, it is crucial
to have licensed lawyers supervising those performing the work.
Further, it is wise to obtain prior consent from the client (or
business leads, if you are in-house counsel) to use supervised
Conflicts of interest
Make sure the proposed LPO provider performs a conflict search
to ensure that its duties and obligations to you will not conflict
with its duties and obligations to other clients.
LPO Best Practices
Here are some additional best practices for ensuring a
successful LPO relationship:
Be sure to consider the overall value proposition, not just the
Assign a high level point person to manage the LPO
Ensure that the contract holds the LPO provider to a particular
standard of quality or service level.
Test the LPO provider with a small, short-term project.
Consider pricing alternatives, such as fixed fee for full-time
equivalents or unit pricing for volume work.
For each project, build a playbook and/or checklists so that
there is always a reference for how the work should be done.
Assign work through portals, as opposed to relationships, to
ensure the work goes to the most cost-effective employee of the
For long-term contracts, mandate annual productivity
improvements and incentivize innovation by sharing the benefits of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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