LPO, a Band Aid or an Innovative Solution?

The posse list blog reports today on an interview provided by Tess Blair, head of the e-data group at Morgan Lewis discussing LPO in the context of the e-discovery arena. She is quoted as saying:

“We’ve heard; for example, talk over the last several years of off-shoring or legal process outsourcing. That addresses the labor issue. Do we want to pay domestic contract attorneys, or law firm associates versus, perhaps, lower cost legal professionals and others offshore - India, the Philippines, where have you, to do this work? I think that only gets us part of the way there …………….My firm, for one, is moving away from hourly billing. We’re doing all-in pricing for our discovery work so that they get one bill and they’re told upfront what it’s going to be when a discovery project is launched. Those two pieces are much more important than some of these other band-aid type approaches like l.p.o”

According to Blair the real problem is that of volume. If you pay a lower hourly rate, but the size of the document set is still excessive, ultimately the cost sustained will remain significant. She advocates solutions including new technologies, new approaches and a move away from the traditional billable hour. Makes sense, no?

Of course it does. However, to label LPO as solely concerned with exploiting the labor arbitrage benefits, available through leveraging talent in India or the Philippines, is both untrue, and evidence of a lack of recognition of the innovation that LPO has brought to the table.

Blair comments that her own firm is moving away from traditional hourly billing for document review, and providing all in pricing for e-discovery projects. Now I don’t want to be accused of “blowing my own trumpet”, however, having been involved in LPO, long before the acronym itself existed, I reference the opening paragraph of my article, Time to Stop Time Recording, first published over three years ago.

“Clients are demanding greater transparency of charges, pushing law firms to change their old ways and move to fixed fees and offshoring. In the future, the success of your firm will depend on how you embrace new technology and how you approach offshore legal services, shared knowledge and fixed fee charging.”

I’m sorry, but who led the cavalry charge on innovative e-discovery and document review pricing models, from a practical perspective? It was the LPO industry. Well over a year ago, in February 2008, LawScribe launched synerge (a revolutionary, per document, end-to-end e-discovery and document review service). Integreon followed shortly thereafter with their doctane service offering. Pangea3, Mindcrest, Clutch, American Discovery and other leading LPOs all offer per document pricing.

Furthermore the “O” in LPO stands for “outsourcing” not “offshoring”. None of the aforementioned LPOs are restricted to just the Phillipines or India. Whether through wholly owned subsidiaries, dedicated delivery centers, joint ventures, or strategic partnerships, all are capable of providing a “best shore” or “blended shore” solution. Yes, the labor cost in India and the Philippines is lower; however, to intimate that this is all that LPO brings to the table is to be sorely mistaken. Cutting edge technologies, stringent security (above and beyond what is prevalent in the vast majority of domestic based law firms), and innovative solutions including non linear review, multi-shore operations, and fixed pricing, are all commonplace within the leading LPOs.

I am always happy to entertain discussion on the merits of offshore vs onshore, hourly vs fixed price. While I’m delighted that increasingly I am stumbling on articles from progressive figures within the AmLaw 200 corridors of power, discussing alternative fee arrangements, make no mistake about it, LPO opened the door for these firms to walk through.