New draft guidelines on legal process outsourcing will help many organisations unlock the opportunities available. Greater clarity makes this an easier step to take.

Legal process outsourcing has been around for a several years now and has been used in Australia by some companies and law firms, particularly for document reviews, litigation and due diligence.  LPOs are part of the landscape in the UK and the USA, but in general there has been a nervousness about their role in Australia and how they might assist clients within the legal regulatory frameworks that exist here. 

In a first for this country the New South Wales office of Legal Services Commission has published Draft Guidelines on practice issues for lawyers regarding legal process outsourcing. The Commissioner's Draft Guidelines make it clear that lawyers, whether in-house or external, can use LPOs to assist them in delivering legal services to their clients.  Under the Draft Guidelines there are a number of matters that an in-house or external lawyer engaging in LPO will need to take into account, but none of them is surprising. They include confidentiality, client consent, conflict management and appropriate supervision.  In particular it is important to remember that the lawyer engaging the LPO remains responsible for the delivery of the legal services to the client. 

Corrs has been using LPOs in certain matters for some years now and we see the key to a successful LPO engagement is good project management.  Usually an LPO engagement will be a three way process between the law firm, the client and the outsourcer.  It’s important that time and thought is put into things such as training, selection of personnel, communication protocols, technology, security as well as clearly setting out the scope of the work that the LPO will do.  Locally you are also going to need to put in place a quality assurance program that will allow the local in-house and external lawyers to meet their obligations to their client.  That is one of the key points that follows from the Commission's Draft Guidelines. 

Recently we have started to see the LPO market in Australia expand from document review into other areas of legal process.  LPO providers are actively marketing to GCs and to procurement teams, offering lower cost solutions in areas such as bulk contract management, drafting for pro forma documents or correspondence or managing registrations and renewals.  Many LPOs also offer basic legal research and factual research, which can be useful for in-house teams operating with few resources. 

What the LPOs are offering is task focus work rather than matter focus work.  Disaggregation is the term that is used to refer to the process of breaking down matters into tasks and then assigning those tasks to their correct level.  So rather than having an internal team or an external law firm handle the entire matter, you might have an LPO conduct the basic research or fill in the precedent document in a low cost environment and then pass that work onto the in-house or external lawyers.  Disaggregating matters is already on many GCs radars as a way of lowering costs on high volume or high uniformity portfolios and matters.  Disaggregation already occurs within the in-house teams and within law firms.  It’s the making sure that the right people are doing the right work.  LPOs are simply offering a variation on that, and I think that is something we will increasingly see in in-house teams in particular taking advantage of. 

In the right matters legal process outsourcing offers cost savings in both the litigation and the transactional environment.  Many in-house and external lawyers have been cautious about how LPOs will fit into the regulatory framework and indeed how clients, courts or opponents might respond to the involvement of an LPO in a matter.  The Commissioners Draft Guideline is certainly a positive development that will help lawyers unlock some of the opportunities LPOs offer for their clients.

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