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The rise of LSO to change the shape of traditional law firms

4 March, 2014

. Law. LPO. Strategy

It’s now clear that the rise of LSO (legal services outsourcing) has the potential to change the shape and business model of the traditional law firm; a new book has predicted. And the same is true for in-house legal departments.The Rise of Legal Services Outsourcing predicts the structure of in-house legal teams and law firms will change from a pyramid to a diamond shape with much of the perceived low value, transaction work being outsourced to LSO providers.

Rise of LSODr Mary Lacity and Dr Leslie Willcocks of the outsourcing unit in the London School of Economics and Andrew Burgess, a director of outsourcing advisory firm Source, wrote The Rise of Legal Services Outsourcing. The authors’ message is that in-house legal teams and law firms cannot ignore the fundamental changes to the legal profession caused by globalisation, disruptive technologies and deregulation.

These trends, including the rise of LSO, and their implications have been explored by my partner Dr George Beaton is his recent post The Ides of maturity for professional services firms marks a modern day turning point.

The rise of LSO

The book draws from a detailed study of 27 LSO providers, interviews with clients, consulting assignments and lessons learned from prior information technology outsourcing and business process outsourcing research to address the transformation of legal work, LSO strategy, provider selection and contractual governance, as well as predicting the trends that will come to shape the LSO market.

LSO is growing as a result of larger market forces demanding leaner organisations.  Enterprise legal functions are seeking ways to reduce costs by erecting captives in low-cost areas, by pressuring major law firms to reduce fees and to be more efficient by off-shoring, and by engaging LSO providers directly.

The authors believe that if law firms are willing to understand how LSO providers can actually strengthen their capabilities in terms of superior technology, process standardisation, and even better project management from some full service providers, then the forces of globalisation may create value for all three parties – clients, LSO providers and law firms.

To prepare for life in the NewLaw (for an explanation of the concept of the NewLaw business model click here) world, The Rise of Legal Services Outsourcing is essential reading for law firms and in-house counsel.  As I see it there is no doubt that the rise of LSO will change the shape of traditional law firms.

Further reading

If you found this post of interest, then you should also read these on Bigger. Better. Both? | The Beaton Capital Blog:

+ BigLaw all at sea. Red Ocean or Blue Ocean?

+ Be one of the first to read NewLaw New Rules

+ Last days of the BigLaw business model

+ LPO and Newton’s third law of motion

David Goener, a partner in Beaton Capital based in Brisbane, wrote this post.

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