Ever thought of handing off your routine work to someone else? If so, then you might want to look at legal process outsourcing (LPO), which is gaining ground among Canadian law firms and in-house legal departments.
LPO is changing how firms and legal teams get their work done. Instead of handling every document themselves, they can send administrative tasks to trusted external partners and focus on higher‑value files.
In this guide, we'll look at how LPO arrangements work, their advantages and disadvantages, including insights from lawyers who have experience using LPO.
What is legal process outsourcing?
Legal process outsourcing, or LPO, is an arrangement where lawyers, firms, or in-house corporate legal departments delegate specific tasks to external service providers or vendors. These providers can either be onshore (in Canada) or offshore (overseas).
In other words, LPO shifts a large part of the legal workload from in-house to external providers.
The core function of LPO is to support firms and legal teams with time-consuming work and other process‑heavy activities. These include litigation support and other administrative tasks, such as:
- conducting legal research
- drafting of contracts and pleadings
- electronic discovery (e-discovery)
- gathering and digesting data
- legal due diligence (e.g., for M&As)
- review and coding of legal documents
Here's a short video explaining why law firms are now looking into LPO to assist them in their daily tasks:
Check out Lexpert's Legal Insights page for more articles on supporting law firms and in-house legal departments.
How does legal process outsourcing work?
Legal process outsourcing starts with a simple step: a law firm or an in-house legal department identifies tasks that do not require its own lawyers' direct involvement. It then assigns these tasks to an external provider.
Choosing the right LPO provider
There are several providers that firms and legal teams can choose from. Here are some points to help you find one that fits your firm's needs:
- select based on capacity and competence: LPO providers now use several technologies to expedite their services, such as document automation, AI tools, e‑discovery, and other software
- the provider must know your business: LPO providers must understand how your firm runs, the people behind it, and the legal practice areas you are involved in
- check for specific laws and regulations: both LPO providers and clients must be aware of the Canadian laws that may affect the outsourced tasks (e.g., laws on jurisdiction, data privacy laws)
As the relationship between the legal team and the LPO provider grows, the two parties can enter into long-term contracts or agreements. The LPO provider can then cover more tasks or gain access to the firm's workflows to improve the way they work together.
Engaging with the LPO provider
Entering a black-and-white agreement is one option that law firms and legal teams should consider when engaging with an LPO provider. In this type of agreement, the performance expectations on the LPO are specified. These should match the firm's needs and objectives.
Term of the LPO contract
Agreements between the LPO provider and the contracting firm can be short-term or ongoing:
- short-term LPO contracts: some firms and corporate legal teams bring in an LPO provider for a single project, such as conducting due diligence for a real estate deal or a managed review for a large investigation
- long-term LPO contracts: there are also those that work with LPO firms as long‑term partners across many legal practice areas, with a wide range of services expected from the LPO provider
Tasks to be outsourced
The next step is to choose the specific tasks for outsourcing. While most work handled by LPO providers is process‑oriented, some niche LPOs can also handle higher‑level tasks. Outsourced tasks can start with high‑volume, process‑oriented work. Firms often start with high‑volume, process‑driven work and, over time, add more complex tasks.
Aside from those mentioned above, there are different types of tasks that your firm or legal team can outsource to an LPO provider:
- repetitive or time-consuming work
- support and minor tasks
- tasks that involve several documents
"In the legal profession, technology has allowed us to really fragment tasks into smaller and smaller bits," says Kelly Friedman, Chief Legal Data Intelligence Officer at Heuristica Discovery Counsel LLP. She adds that LPO really made inroads with e-discovery and diversified into:
- corporate compliance
- trademark management
- property lease review
- M&A due diligence
- intellectual property searching
- secretarial services
"It is important to build a playbook regardless of the kind of work the LPO is doing for you," Friedman adds. "For example, when you're doing a patent or trademark application, 'these are the steps you go through, these are the forms to use and these are the portals used to create the attachment,' so the in-house counsel don't have to worry so much about people leaving your team."
Here's a video from an LPO provider that gives an overview on the services that LPO providers can offer:
Visit Lexpert's Special Edition on Technology Law for more stories on new technologies for your firm or legal team.
What are the pros and cons of legal process outsourcing?
There are several risks and issues to consider before your firm or legal team enters an LPO arrangement, and as your relationship with your LPO provider continues. You should weigh these against the advantages that LPO gives your firm or legal team.
Below are some of the pros and cons of LPO.
Pro: Cost-efficient support for firms
Using LPO has become a cost‑effective option for many law firms and legal teams. One of the biggest advantages is that it speeds up tasks that firms and legal teams need to complete again and again.
Matthew Peters, a partner with McCarthy Tétrault LLP in Vancouver, says that there's a "growing number who are finding ways to work with clients and LPOs in a three-way partnership to re-engineer how certain things are done."
Peters says he's seeing more instances where the process is being re-engineered for doing M&A deals. "We're saying 'let's change the talent model we're going to use for our due diligence. Let's bring in an LPO, let's get them up to speed on what we're looking for,' so when the next 10 acquisitions come around, the due diligence goes to the LPO, and they're using a precedent that you've collectively put together.
"What you come out with is a much more efficient process, costs less, and can be faster."
Pro: Bringing in lawyers with vast experience
Thomas Sutton, a partner at McCarthy Tétrault LLP's Toronto office, says that the real challenge "is going to be the creative use of lawyers at the next level, determining ways in which it is possible to bring other legal providers in the equation as part of a whole value package to help general counsel manage their spend effectively."
For example, he says, "tapping into the expertise of subject-matter experts and litigation experts, perhaps lawyers 20 or 30 years out who are not part of a firm but are happy to work on a contract basis or through an LPO."
Con: Quality of outsourced tasks
One challenge when using LPOs is maintaining quality work at often very low fees, says Susan Wortzman, a partner at McCarthy Tétrault LLP.
"A diligent quality control is necessary to confirm that work product is of the quality expected," she says. "In many cases, this may involve lawyers, while we often use technical tools and processes to complete the quality control."
Con: Client concerns on data privacy
Sandra Forbes, a partner at Davies Ward Phillips & Vineberg LLP, says there's "no question that sophisticated clients involved in document-intensive litigation are clear that they are not interested in bearing the cost associated with their law firm doing all aspects of document review."
In a few situations, there are some clients, especially privately held companies, who have significant privacy concerns and choose to have Davies perform all document review work, even on document-intensive files. Forbes says it's rare, but it still happens.
Legal process outsourcing: Finding the right fit for your practice
For firms that feel buried in repetitive work, legal process outsourcing offers a way to shift document review, contract drafting, and other standard tasks to experienced providers. This allows the core team to focus on strategy and client relationships.
Because LPO is not a one‑size‑fits‑all solution, your law firm or in-house legal team should weigh capacity, competence, and client expectations when deciding what to keep in‑house and what to send to an LPO team.
Subscribe to the free Lexpert newsletter to get more articles on Canadian law firms and in-house legal teams, including features on legal process outsourcing.