The LPO trend and new business models for law firms

Recently the trend with legal process outsourcing (LPO) has increased substantially and has now even been embraced by a magic law firm  Allen & Overy (see article). PrimsLegal has summarised some of the comments recently regarding LPOs.

This increase is most likely due to the economic downturn and the need for firms to improve their efficiency levels and reduce overhead costs to maintain profitability. But how will this affect the business models of the firms and the associate-to-partner ratio?

When efficiency is the key, the traditional business model based on hourly billing rate and the pyramidal structure with many associates and fewer partners will have to be revaluated. If many of the tasks carried out today by junior associates are outsourced, inevitably the need for associates will be lessened. But how do you ensure that the junior associates you have get the necessary experience and can become trusted advisors to the clients in the long run?

How about replacing outsourcing with more efficient tools, automated processes and an increased level of self-service wihtin the firm instead? (Like for example document assembly tools.) Could this be a better way of keeping the experience and intellectual capital within the firm and providing training opportunities for associates while still improving efficiency levels and maintaining profitability?




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