Lawyers Paying $50-90m Too Much For LPO Services

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Buyers of Legal Process Outsourcing services are at risk from paying above-market prices. The lack of benchmark data is costing the legal profession $50-90m a year, The LPO Program announced today. Even prices for transactional legal services can vary by up to 48% between suppliers.

LPO, Legal Outsourcing, Legal Process Outsourcing,

Edward Brooks, The LPO Program

Edward Brooks said “Law Firms, General Counsel, and Procurement Departments have been flying blind when it comes to getting full value from LPO."

Buyers of Legal Process Outsourcing services are at risk from paying above-market prices. The lack of benchmark data is costing the legal profession $50-90m a year, The LPO Program announced today. Even prices for transactional legal services can vary by up to 48% between suppliers.

These startling findings are the result of an analysis of bid documents from 20 different LPO projects. Using almost 1500 different data points, The LPO Program has created The LPO Value Checker™, a benchmarking tool that allows Law Firms and General Counsel the opportunity to compare their costs with those available in the market place.

Announcing the launch of The LPO Value Checker™, Edward Brooks said “Law Firms, General Counsel, and Procurement Departments have been flying blind when it comes to getting full value from LPO. The LPO Value Checker will enable new or existing LPO users to compare their current costs with the costs available in the LPO market.”

Edward Brooks continued, “LPO has been one of the most profitable areas of outsourcing, despite the fact that many of the services are highly transactional and very low risk. Buyers seem willing to pay for a level of risk that just does not exist.”

Analysis of the database shows wide ranges in pricing, with some suppliers charging up to 49% more than the lowest cost options, and 28% more than the average price level. This supports the 2010 PricewaterhouseCoopers study that showed LPO suppliers achieving 29% profit margins, significantly in excess of other areas of outsourcing.

It is expected that price pressure on the LPO Suppliers will emerge during 2012 as more capacity comes into the market, product commoditization occurs, and access to benchmark data becomes more widespread. LPOs will react by offering higher value services, maintaining strong profit levels.

The The LPO Value Checker™ gives Law Firms, General Counsel, and Procurement Departments the ability to benchmark their costs with the exact service they are buying. Inputs are matched to key variables such as Service Levels, Technology, Quality, Delivery Times, and Skills Mixes.

It is built on almost 1500 LPO bid data points from the last 24 months. It covers areas such as Intellectual Property, M&A, Document Review, Discovery, Litigation Support, Contract Management, Transcription, and Legal Research. Sectors supported include Pharmaceuticals, Banking, Technology, Telecoms, Healthcare, Manufacturing, and Retail.

About The LPO Program
As the world’s largest online LPO Data and Advisory Source, The LPO Program has a unique view of the Legal Outsourcing market and emerging outsourcing trends. It is committed to enabling Law Firms, General Counsel, and Procurement Departments to make the correct decisions about LPO.

About The LPO Value Checker™
Data from 20 LPO bids with a total of over 150 supplier prices, containing almost 1500 data points, has been anonymized and cleaned to protect all commercial confidentiality. No supplier-specific information of any kind is recorded in the database. No customer information of any kind is stored in the database. No personal data of any kind is captured in the database.

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Edward Brooks

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