Date: April 12, 2013 Topic: The Shrinking ... - Georgetown Law

in the United States and Britain, a result of British colonization.
LPOs started out offering transcription and word processing, and other routine,
back-office paralegal tasks. Over time, they moved to include more substantive issues
such as patent applications and e-discovery. Increasingly, LPOs offer higher-level types
of work traditionally handled by junior associates for a fraction of the price of U.S.
lawyers. If the BPO development is any indicator for the LPO development, this is
unlikely to stop: services offered have become more technical and sophisticated over
time. Harmon understands that the first phase of offshoring involved company-owned
(captive) units where basic and repetitive “back-office” tasks were sent by companies.
During a second phase, non-captive service providers began to emerge, and as more and
more companies set up back offices in India, venture capitalists began to fund start-up
companies to provide similar services to third party clients. 70
While LPOs offer their services to law firms, GCs increasingly buy directly from
LPOs, cutting law firms out. However, while currently few law firms see LPOs as a
threat to the law firm’s core offering, the legal industry would not be the first to
mistakenly dismiss low-end competitors: In The Innovator's Dilemma: The Revolutionary
Book That Will Change the Way You Do Business Clayton Christensen warns that like
other industries before, incumbent suppliers (such as traditional law firms) run the risk to
be replaced, hurt or significantly changed by low-end competitors (such as LPOs).
“The new products were low-end, dumb, shoddy, and in almost every way inferior. But
the new products were usually cheaper and easier to use, and so people or companies who
were not rich or sophisticated enough for the old ones started buying the new ones, and
there were so many more of the regular people than there were of the rich, sophisticated
people that the companies making the new products prospered. Christensen called these
low-end products “disruptive technologies,” because, rather than sustaining technological
progress toward better performance, they disrupted it. After studying a few exceptions to
the pattern of disruption, Christensen concluded that the only way a big company could
avoid being disrupted was to set up a small spinoff company that would function as a
start-up, make the new low-end product, and be independent enough to ignore what
counted as sensible for the mother ship.” 71
This scenario becomes even more palpable since buyers who switch to LPO suppliers
“are unlikely to switch back to Law Firms to have that work done in the future,”
according to the 2012 Legal Outsourcing Market Global Study. 72 Despite the possible
threat, the Study noted that law firms have taken few steps to protect themselves against
their clients’ changing buying pattern. In fact, it remarks that “inaction by Law Firms is
one of the biggest threats.” 73
2. Procurement
Collaboration with procurement is a more recent development, taking part in
large corporations, particularly in Fortune 100 companies. Historically, procurement
70 Id.
71 Larissa MacFarquhar, Profiles, “When Giants Fail,” The New Yorker, May 14, 2012, p. 84
http://www.newyorker.com/reporting/2012/05/14/120514fa_fact_macfarquhar#ixzz2McKZaqSd; Clayton Christensen, The Innovator's Dilemma:
The Revolutionary Book That Will Change the Way You Do Business.
72 See Id. at 2.
73 Id.
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