Note: This story has been updated to correctly characterize the JM Manufacturing suit.
Legal process outsourcing (LPO) is one of the most widely debated topics amongst general counsel. Despite all the concerns regarding information security, efficiency, etc., the outsourcing industry has witnessed an impressive growth of 28 percent this year, and is expected to continue to grow in the coming years.
Cost benefit is the most significant reason for companies to embrace LPO. An attorney in the United States charges around $530 per hour, whereas an attorney in India with similar experience charges around $248. Companies, in order to reap this cost benefit, increasingly offshore legal activities such as document review, patent search and e-discovery to low-cost destinations like India, the Philippines and China. Lately LPOs have continued to climb up the value chain by handling more critical tasks such as contract drafting and management, trademark searches and patent analytics.
While this was good news for the LPO industry, attorneys at several Fortune 500 companies and Am Law 200 firms in the U.S. started to question the security of the data for this high-level legal work when it is outsourced to a third party. Their doubts on outsourcing crept in with the famous litigation in which JM Manufacturing sued its law firm McDermott Will & Emery for failing to supervise LPOs. The LPO produced 3,900 of JM Manufacturing’s privileged documents to their opponent. This high-value litigation led other companies to question the credibility of the LPO model, to which many had been attracted by the huge cost savings.
