Legal Process Outsourcing (LPO) is the process of hiring a third-party legal firm to manage law-related tasks while saving money and working with better talent. LPO is a part of the process of outsourcing any business operation.
But legal process outsourcing, a type of business process outsourcing (BPO), can be risky as it involves transferring important legal tasks to an external agency. And a poor legal outsourcing partnership could lead to the loss of revenue and intellectual property.
A business owner who isn’t aware of the basic outsourcing mistakes is more likely to find it difficult to successfully outsource operations.
In this article, we’ll explain the 10 common mistakes to avoid with legal process outsourcing. We’ll also look into the four leading benefits of legal process outsourcing and its six popular services.
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10 common mistakes to avoid with legal process outsourcing
Here’s a comprehensive guide on BPO, including its seven latest trends.
Here are the 10 popular mistakes to avoid while outsourcing a legal process:
1. Vague explanation of goals
A newly hired LPO company may take extra time to understand your business process and requirements. This is especially true as long-distance communication can become complicated due to time zone differences.
To avoid this, ensure you explain business goals and the legal task clearly to your outsourcing partner.
For example, you can conduct a meeting with your legal process outsourcing company in China to explain your objectives and expectations regarding the outsourced legal issue. This can give them a clearer understanding of the task.
Outsource the task in advance after accommodating time for feedback, the number of working days, etc., to ensure on-time submission.
Additionally, clarify expectations, like minimum service quality, minimum payment, contract validity, etc., when you partner with an LPO firm. This way, the LPO firm may get an idea of your expectations and devise a clear agenda.
2. Poor evaluation of loyalty
You may end up with a legal process outsourcing company or lawyer who doesn’t value the relationship. They could bail out on you when a better paying client shows up.
To avoid this, ensure that the potential LPO firm values you as a client. Look for any signs they may not be putting in the effort, like the lack of research on your industry or the laws in your country.
Let’s say you realize that the legal process outsourcing firm didn’t start working on a significant task you gave a week ago. This could indicate that they prioritize other tasks above yours and lead to a delayed submission.
3. Insufficient research on partners
Although there are many legal support companies in the market, it could be hard to conduct thorough research on each of them.
An easy way to gain reliable information on an LPO firm is by going through its customer reviews in Clutch, UpCity, and other trustworthy platforms. You can also go through case studies from the LPO’s website.
An LPO company with poor skills would mostly have below-average customer reviews, whereas a good firm with talented lawyers would have average or above-average reviews.
Check for credentials like ISO (International Organization for Standardization) to make sure the LPO company is skilled enough to handle your legal process.
Additionally, hire only an experienced legal process outsourcing firm for your industry as they’re more likely to have the exposure required to complete complex tasks skillfully.
For instance, an experienced LPO provider specializing in real estate will be better than a contract lawyer since they may know how to create the necessary legal documents without missing any required field.
4. Disregarding the LPO’s financial condition
Companies usually hire LPO services for the long term as frequently shifting outsourcing partnerships could ruin the workflow.
That’s because the in-house and newly outsourced team may take time to build a rapport, effective communication strategy, etc. This can delay the completion of the outsourced tasks.
But if your legal process outsourcing company isn’t financially stable, it may shut down during a difficult period – forcing you to look for a new partner. This could disrupt all your legal work and affect client relationships.
Let’s say your LPO provider stopped its services all of a sudden and didn’t submit a research task for an urgent case. This could affect your lawyer’s performance and lead to a negative outcome.
Bottom line, you need to outsource to a financially stable LPO service provider who can support you even during a crisis.
5. Choosing an LPO partner with inflexible work hours
A legal process outsourcing company with strict work hours will not be able to help during an emergency. And you may have to look for a new LPO provider or freelancer at the last minute. Hunting for a service provider could not only be stressful but also delay the work.
Additionally, the outsourcing company may not tend to your clients during non-working hours. This could cost your law firm its clients and ruin your reputation in the legal industry.
So it’s best to specify your expectations regarding working hours clearly in the outsourcing agreement to avoid any issues.
6. Absence of exit strategy and limited liability clause
Outsourcing relationships could end abruptly and lead to monetary and IP losses. To control that, you need to devise an exit strategy before you begin the outsourcing relationship.
For example, the legal process outsourcing firm could retain important files or leak confidential information.
To avoid such problems after the outsourcing relationship ends, you should conduct a contract negotiation stating the procedure to be followed. This may include when to hand over documents, compensation (if any), termination period, etc.
You also need to clearly state that the legal process outsourcing firm will be responsible if it mishandles sensitive information and is accountable for returning all your documents.
Additionally, include a limited liability clause to control the amount you may have to pay if your company suffers a loss due to the breach of contract.
7. Not involving the in-house team in outsourcing decisions
Your in-house team may feel unvalued if you don’t provide the reasons and benefits of hiring an LPO. Additionally, they may refuse to cooperate with the LPO team, decreasing the efficiency of the process.
To avoid this, you need to inform them of the benefits of outsourcing to the company and the employees. You also need to tell why you think outsourcing is a great decision.
Make sure your in-house employees see hiring an LPO firm as a vital requirement and work towards making the outsourcing process successful.
Additionally, help your in-house team understand the LPO company. This can help smoothen the outsourcing relationship.
For example, you should brief your in-house team on the outsourced team’s culture to avoid misunderstandings between them.
Additionally, you can ask the in-house team to explain your company’s quality standards, procedures, and other internal information to the outsourcing team.
8. Lack of communication
Clear communication is a key to successful outsourcing relationships. Without communication, the LPO provider and your in-house team may not be able to collaborate effectively.
Here are a few steps to take to streamline the communication process:
- Conveying the expectations for communication.
- Developing and deploying a control plan.
- Building a framework for more frequent and effective communication.
Even with a well-developed plan, the teams may face difficulties communicating due to language constraints. To overcome this, choose a language they’re both comfortable with. You can also ask the teams to find representatives from both sides to take charge of conveying messages proactively.
Your in-house and outsourced teams should get on regular face-to-face video calls and have dedicated platforms for messaging. If the LPO partner is in a different time zone, fix a time for meetings and messaging. If not, the in-house team may end up working post their working hours and burn out.
They can also send messages via social media platforms like Facebook, Instagram, LinkedIn, etc., for informal communication. To differentiate urgent messages from casual ones, ask them to set notifications.
9. Considering only cost-effectiveness
If you hire an LPO firm considering only cost savings, you may end up with low-quality projects and services.
You should also consider work quality, scaling potential, reliability, etc., along with cost-effectiveness while outsourcing. Look for LPO firms that use the latest features like cloud computing and automation.
This is so because legal outsourcing partnerships are usually long-term, and having a legal process outsourcing partner with such benefits can be profitable in the long run.
10. Not using productivity monitoring software
Due to the remote nature of some outsourcing partnerships, you should ensure that the legal professionals are working productively. It’ll help you pay only for the time they have worked.
You can do this by using an efficient time tracking tool like Time Doctor.
Time Doctor is an employee time tracking and productivity management software used by small businesses, like Thrive Market, as well as large businesses, like Ericsson.
It can help you record the time the legal process outsourcing employee spends on a particular task with a silent and interactive time tracker.
The tool also offers a payroll feature that lets you pay the legal process outsourcing firm or freelance lawyer via popular payment gateways like Gusto, ADP, Paypal, and Wise.
Learn more about Time Doctor’s powerful features from here.
If you avoid these mistakes, you can experience the benefits of legal process outsourcing. Now, let’s look at the major advantages of outsourcing legal services.
4 key benefits of legal process outsourcing
Here are the four main pros of legal process outsourcing:
1. Offers advanced technology
Latest technologies like automation, AI (Artificial Intelligence), IoT (Internet of Things), etc., play a major role in the legal industry. They can reduce errors, manage complex legal operations, and give more insight into a case.
For example, computer simulation can help employees in the legal profession determine the scope and impact of a particular scenario, like a car accident.
However, these modern technologies are expensive and need to be frequently updated or maintained.
A legal process outsourcing firm may have such cutting-edge tools because they manage various legal tasks in large volumes. As a result, outsourcing legal work to an LPO firm may give you a clearer idea of the case.
2. Saves time
Outsourcing tedious and time-consuming legal work like document review, legal research, etc., can help your employees focus on core competencies and scale the business effectively.
For example, the LPO lawyer can attend an unpaid parking ticket case while you work on researching for your next product.
3. Inexpensive services
Legal services in countries like the US, UK, and Switzerland are less cost-effective when compared to countries like the Philippines, India, or China.
For example, the hourly wage of a lawyer in India is INR 360 (approximately USD 5), whereas the same for a US lawyer is USD 92.
So it’s profitable to hire a legal process outsourcing company rather than employ a fully-fledged in-house corporate legal department.
4. Provides on-demand staffing
If your law firm needs litigation support for a certain case, you can hire a legal process outsourcing company located nearby.
You can choose a suitable lawyer or paralegal with the required expertise in the case. The outsourcing attorney can join the in-house team until the case is closed.
Additionally, you can hire a virtual legal assistant for extra support on time-consuming tasks like document management and legal research. Hiring a virtual legal assistant can not only save time but also increase profitability due to the low hourly wages.
Now let’s look into the popular legal process outsourcing services.
6 major legal process outsourcing services
Here are the six important legal process outsourcing services:
- Case management: It’s the process of managing documents and processes for service requests, e-discovery, and other cases. It involves raising tickets, investigating events, collaborating with internal teams, etc.
- Legal research: This is the process of searching and finding the statutes, regulations, and court opinions on cases. The lawyer can develop the case based on the legal process outsourcing firm’s findings.
- Medical records review: This legal service involves reading, organizing, highlighting, analyzing, and summarizing the medical records to share with the lawyer. Based on this, the lawyer can establish liabilities to get compensation in court.
- Billing management: In this outsourcing service, the legal process outsourcing firm manages financial services like creating bills and invoices for a law firm’s clients.
- Contract management: It’s the practice of managing and organizing contracts like licensing contracts and sale agreements. This helps the contract attorney to easily maintain and find any document when required.
- Patent service: This task involves everything related to patents, including applying for copyright and trademark, infringement, etc., for a client.
Wrapping up
Legal process outsourcing can help a business owner access the expertise of skilled lawyers without employing an in-house legal department.
But for the process to be successful, you need to know the common mistakes of legal process outsourcing and avoid making them.
You can go through the list of the top mistakes of legal process outsourcing and ways to avoid them from this article.
Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.