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It is the industry in which in house legal departments or organizations outsource their legal work from areas where it is costly to perform such as, US and UK to areas where it can be performed at a significantly decreased cost. The process of outsourcing formalizes the description of the non-core operation in to a contractual relationship between the client and the supplier. The decision to outsource is often made in the interest of lowering firm costs redirecting or conserving energy directed at the competencies of a particular business or to make more efficient use of labor, capital, technology and resources.
Source: U.S. Department of Labor, Bureau of Labor Statistics (2006)
Outsourcing is the contracting out of a company’s non core ,non economic producing activities to specialists .It is a strategic management tool that involves restructuring of an organization around what it does best –its core competencies .Three common type of outsourcing are Information technology (IT) outsourcing ,Business Process Outsourcing and Legal Process Outsourcing. BPO includes outsourcing related to accounting, human resources, benefits, payrolls and finance functions and activities .All these categories fall under broad categories of knowledge process outsourcing. LPO is a kind of high value added BPO service involving legal work that industry vendors or in house departments of organizations outsource from offshore areas where it is costly to perform. India is an attractive destination for outsourced legal work and this is because of a number of reasons:
· TIME FACTOR
India is blessed in many ways as far as the LPO industry is concerned, the beautiful twelve hour gap between India and the US provides 24 hours working day for US companies those who has Indian operation. US-India partnerships are able to effectively double the productivity of a typical working day.
· AVAILABILITY OF ENGLISH SPEAKING LAWYERS
The typical Indian students spend three to five years in acquiring a post secondary education in law in English .Teaching at all of the major law schools of our country is in the English medium ,and a large percentage of all Indian law students have also been taught in English when they were in school. This leads to the fact that India has a vast pool of smart, English Speaking lawyers, who are able to take on work from source countries.
· COMMON LEGAL SYSTEMS
India, US and UK follows the Common Law system .Adapting to the nuances and peculiarities of the US and UK legal systems are far smoother and simpler for an Indian Lawyer than it is for a lawyer from a country where the civil law system prevails.
· QUALITY OUTPUT
The final work in a LPO will be finally subjected to double checks, scrutiny and approval of the US and UK attorneys, but if you execute the work to such quality of high standard, the attorney need not spend too much time reviewing it personally.
· COST FACTOR
While the lawyers in US charge $50 to $500 per hour, the same work can be done in India at the cost of $1 per hour .This obviously constitutes the main reason why India is the greatest outsourcing hub.
The nature of work that is outsourced to India can currently be classified in three broad categories.
1. Low Skilled Tasks
It consist of the following sorts of tasks
· Indexing and objective coding
· Data base creation and maintenance
· Legal transcription
· Document conversion and review
· Para legal services and
2. Medium skilled tasks
It consist of tasks such as the following
· Legal Research (often involving the use of sophisticated research data base such as LexisNexis )
· Head notes
· Writing memos
· Contract review and drafting
3. High skilled tasks
At the top end of the spectrum of LPO tasks, one finds the following
· Prior art searches
· Patent research
· Proof reading
· Trade mark searches
· Due diligence report
The structure of LPO
The LPO could be typically divided into three main categories: the management, the middle management, and the legal professionals .While the Managing Director may play the invaluable role of coordinating the overall affairs of the LPO, the top management takes on the responsibility of separate functions of the LPO. The vice president, for example, ensures the maintenance, continued supply, smooth functioning and quality development of what may be considered the core product of the LPO, the legal services.
At the middle level in this function, separate managers take on the responsibility of ensuring the same for separate practice area, such as litigation support services, or IPR support services. Separate teams in each practice area actually execute the services that the LPO provides to customers .The vice President business development takes on the responsibility of marketing the product, that is, taking the product to persons who demand it, in an effective manner and sales, that is, actually convincing such persons that the product is what they are looking for and they should invest in it .The Vice President –support plays an important role and ensures that the other functions can actually work in as effective as possible. With the support team, neither of the other functions can actually exist.
A Typical Project in a LPO
A typical project in a LPO involves three parts,
1. The client is the source of the work and must have its demand met.
2. The project is the actual work that needs to be executed.
3. The vendor is the organization which provides the LPO services, and must ensure the clients satisfaction.
Outsourcing involves the transfer not only of certain business process, it also involves, to a large extent the transfer of responsibilities and decision making .Your final work as a LPO will be finally subjected to double checks, scrutiny and approval of the US and UK attorneys.
Documents related to a LPO firm
A typical LPO relationship is established through the following documents
· The Request For proposal is a short brief or a high level description of the work that needs to be done. It is issued by the client organization and sets out what may be termed as a job description that vendor organizations can respond to.
· The statement of work is a more detailed description of actual work in hand and it covers the following points
1. The overall scope of the project provides a clear description of the project or service that is to be outsourced.
2. The details of the work assignment would indicate break down of each of the components in the overall scope in more details.
3. The service level agreements really sets the bar as far as the quality of work performed .They again break down each of the work described in statement of work.
4. The roles and responsibilities specify how the work shall be conducted.
These documents are known in different names in different segments of industry and they can be referred to as Incorporation Documents .It is required to create a relationship between a client and vendor in an outsourcing scenario
· The response to statement of work– the purpose of the response is to give the client organization a clear idea of how and why the vendor organization is executing the project and what are the costs incurred in doing it
· Contracts- once the response is finalized and submitted to the client ,and assuming that the client is satisfied with the response the two parties then sit together to negotiate the actual LPO contract between themselves .This is a highly negotiation– driven process
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