SDD Global, Sanjay BhatiaStarting up a legal process outsourcing (LPO) business may be a perceived goldmine and en vogue these days but it takes more than just office, staff and website and most start-up LPOs are wasting their time, warns SDD Global Solutions' Sanjay Bhatia (pictured).

The legal process outsourcing (LPO) industry is over a decade old. Many still view it as nascent. While a few players have created a niche for themselves, several small players have closed their doors or are on the verge of doing so. Nonetheless the industry continues to expand as the West is looking to India for alternatives to otherwise expensive legal options.

As a result, there are many Indian corporate houses, solo attorneys, and law firms who still believe that setting up an LPO is a great business opportunity. Sadly, many only see the proverbial "pot at the end of the rainbow". They quickly jump on the LPO bandwagon while clueless as to what is required to succeed. In the process, they end up doing themselves and the industry more harm than good. In short, there exists a huge disparity between the perception of the LPO industry and the reality.

The most common mistake LPO entrepreneurs commit is believing that in order to succeed, all they need is a good office, infrastructure, internet connectivity, a well designed website, and a legal team. Many existing Indian companies, law firms, and solo attorneys already have most, if not all the "ingredients" above, which further encourages them to 'diversify' into providing outsourced or off-shored legal services.

But are these enough? Sadly no.

You need clients, and the old saying, "if you build it, they will come", does not apply. Indeed, it is not even enough to get Western attorneys, law firms and corporate counsel to think about shifting their work to India. You need to inspire and enable them to do so. To achieve this, you will at least need the following:
  • a management team that includes US or UK qualified lawyers;
  • competent staff on the India side;
  • a structured training program, in which training is imparted in-house; and
  • US or UK attorney/solicitor supervision of the work undertaken by the Indian team.

Mixing management

A management team that includes US or UK qualified lawyers is a sine qua non for an LPO's success.

The potential client could be a solo attorney, a law firm, or a corporation. Largely, it is the LPO's pedigree that inspires confidence in a client. Western clients turning to India for off-shored legal services need that extra reassurance and degree of comfort, at least during the initial period when they are exploring the LPO industry. The chances are that a US qualified lawyer is much better placed to offer such reassurance and comfort to gain the client's confidence.

Moreover, a US qualified lawyer can also relate better to the client's requirements, ensuring that there are no communication lapses during the initial stages. Having US qualified lawyers on board also goes a long way in assuring potential clients that the service provider is a serious player in the industry, and has the competence to deliver quality work.

Staffing headaches

A competent staff is crucial to an LPO's success as well. Failure to employ an adept staff can undermine first-class management and infrastructure. All said and done, it is the quality of the work product that determines an LPO's success. Only a competent staff can generate suitable results. Having a capable team is essential not just for an LPO's success, but even for its mere survival.

For the LPO industry, hiring competent lawyers has always been a stiff challenge. Reports suggest that 80,000 law graduates are churned out by over 900 law colleges/schools in India every year. This is a statistic which, arguably, no other country can match. The quality of Indian lawyers ranges from the shockingly incompetent to the simply brilliant.

However, a harsh reality regarding the available recruits is that most of the lawyers or law graduates who want to join the LPO industry are precisely the ones you should not be hiring! Sadly, a majority of the lawyers have never mastered English, even as a second language. Most of them have severely limited written and comprehension skills. Here are extracts from some of the job applications my company has received:

"I went thru yr ad in job portal and am very much interested in offering services to yr esteemed organ."

"Dear Responsible,
I heared as a vacancy in your Organization for the Legal Designation. The Organization may adobt me in yourself if I eligible as a Employee."

"Respected sir/madam
i am interesting to join lpo job for hike of my career in corporate legal firms..."

"sir,
Here attached my resume for your vision if you have any suitable job, please contact my mobile. "

"DEAR MADAM/SIR
KINDLY CHECK MY CV IN ATTACHMENT ALSO SUGGEST ME A LEGAL JOBBY WHICH I WILL LEARN LOT LEGAL ACT."

"Res. sir,
This application apply for above the subject matter of the E-mail.
other description attached on the file attached."

"...And it was while having the privilege to work for certain reputed corps. Of international fame, I got a well fermented atmosphere to process in search of reformative thesis to sooth the conduct of regulation of policy and legislations which minimized the disputes to considerable limits..."

The liberal use of "sms language" in emails or letters riddled with grammatical and sentence structure errors is a definite sign of the applicant's potential, or the lack of it. Sadly, the industry is teeming with employees whose writing skills are not much better than the authors of the above samples.

In the LPO industry, the quality of the work is reflected to a large extent in one's writing. Even potential employees exhibiting superb oral skills or an ability to understand the client's requests, will nonetheless fail to succeed if they lack the ability to write in excellent English.

Moreover, US legal writing is very, very precise. The standard of English writing for LPO clients is very exacting. Even lawyers with excellent English skills invariably need to be trained in micro aspects of legal writing. Our own clients have spent large sums of money on assignments in which they requested that we research the consequences of a misplaced comma in a contract. In short, the fastest way for an LPO to fail is to hire staff with sub-par writing skills.

There are hundreds of excellent lawyers who enter the legal industry every year as well. Many of them have pre-conceived notions that the LPO industry is the administrative back office for US attorneys. They would rather pursue their careers in law firms or corporate houses. Some of them have such strong negative beliefs about the LPO industry that they would rather remain unemployed than join an LPO. Such beliefs are sometimes misplaced.

Several LPOs do cutting edge legal work. Even the best Indian brains, who graduate from India's top law schools, invariably have only the potential, and not the expertise, to handle all of the high-end Western legal work that may fall an LPO's way.

Given their high standards, Western clients are shrewd and place a high premium on quality. They often ask pertinent questions about the staff before hiring a service provider. The big players often want to know beforehand the profile of the staff who will be working on the assignment. They want to know the process through which they were hired. They want to know which law schools the staff attended. Some of them specifically send representatives to visit the service provider's facility and interact with the staff to make a firsthand assessment of their capabilities. No matter how good your infrastructure is, if you cannot convince the client about your staff's quality beforehand, you have little chance of generating work.

Some of the newer entrants into the industry have problems even hiring staff with average skill sets. Yet, except at the most elite Indian law schools and law firms, there is a very common (and widespread) misconception that all work in an LPO is easy and high paying.

The lure of the lucre in particular makes many misguided lawyers and law graduates want to join the LPO bandwagon. Most of them who do join have an entitlement culture. Regular questions include: "How much will I earn?"; "What will be my working hours?"; "Do you offer semi-annual or annual bonuses?"; "What are the leaves I am entitled to?"; "What perks do you offer?"; "Do you provide "pick-and-drop" facility?"; and "When will I get my raise, and how much would it be?"

Once hired, many spend hours chatting on the internet or watching downloads on YouTube. Mysteriously, they develop a tummy ache or have an important wedding or funeral to attend, just when they are given a complex assignment. The "entitlement culture" employees are the bane of any organization. They are the ones who stop looking for work, the moment they get a job.

Having such staff on board, even in small numbers, can prove fatal to an LPO. Sadly, it is difficult to identify these traits during the interview process. If you have such staff – it is important to "press the delete button", before it is too late.

On the positive side, there is a growing trend among exceptionally talented lawyers and law graduates, including US qualified attorneys, who view the LPO industry as "the next big thing". Though they are still a minority, these lawyers recognise that off-shoring of legal work is here to stay, despite the never ending debate whether legal outsourcing of work to India is politically correct or not.

It is surprising, and indeed heartening, to learn that many Western lawyers are willing to give up well-paying jobs and relocate to India to be a part of the LPO revolution. With the infusion of such talent in the industry, the nay-sayers' lament about the lack of quality in the LPO industry may soon be disproved. Having a mix of exceptional Indian and Western attorneys, in a ratio of 10:1 or lower is almost certain to put your LPO on the road to success.

Learning on the job?

To my knowledge, no Indian law school teaches the intricacies of US law. In fact, no Indian law school teaches even the basics of US law. It is a fallacy to believe that hiring a work force with a good academic record will suffice to cater to the US legal market. It will not.

On a macro level, LPO employees, other than most document coders, need to have an in-depth knowledge of the US legal system, its court hierarchy, the procedural aspects involved, and the basics of US law, before even venturing into almost any type of work for US clientèle. Such knowledge can only be imparted through training.

At a micro level, training may also be required to cater to a specific client or project requirements. Many LPOs prefer the clients themselves to impart any client-specific training, at least initially. For an LPO to succeed, it needs a structured in-house training program.

Even the best employees need to be constantly trained, because invariably the best within a company are selected to handle additional responsibilities as the organization grows. An LPO that has a structured training program is also likely to attract top talent, because many career minded professionals, who are new to the profession, place a premium on learning.

Such candidates realise that law is a profession, and that a mere law degree is not enough to be a legal professional. Rather, the degree is only a passport for a journey in that direction. Those good candidates also realize that the intrinsic value of what they can learn during the formative stages of their career is more important than the monetary value. You are likely to get talented staff on board if they see the growth potential in your organisation.

Four eyes

Even the best lawyers need supervision. No matter how good the Indian team is, more often than not, there is still a gap to be bridged between the quality of work delivered, and the quality of work expected. If the LPO has US qualified lawyers supervising that goes a long way in ensuring quality. Having work reviewed by US qualified attorneys before it is sent to the client also inspires confidence on the part of clients, who are often circumspect (sometimes unjustifiably so) about the quality of off-shored legal work.

Setting up failure?

As stated earlier, US (and UK) clients are shrewd and place a high premium on quality. Merely having an impressive website and a well-designed office in a posh location will not attract such clients.

Be prepared for uncomfortable questions before being instructed: "What are your credentials in the LPO industry?"; "How many attorneys do you have?"; "Which law school did they attend?"; "How trained are they?"; "Does the senior management comprise of lawyers, or are they non-lawyers?"; "Is your staff adequately trained in U.S. laws, and if so, how?"; "What databases do you have access to?"; "Do you have client references?"; "Do you have writing samples?"; "How do you differentiate yourself from the rest in the LPO industry?"; "What quality control measures do you have in place?"; "Do you have US qualified attorneys training and supervising your team?"

These, and many other questions, are asked by almost any significant potential client before choosing an LPO service provider.

If you can equip yourself well enough to answer these questions convincingly, you might actually succeed.

If you cannot, you are probably wasting your time and resources.

Sanjay Bhatia is head of operations at SDD Global Solutions and is based in Mysore.
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Recommend! +1 Objection! -0 Anonymous guest 2010-07-23 05:37
Very well said Sanjay. Working in a LPO is no different from working in a proper law firm at junior levels. This means training for LPO's has to be at par with the training provided in large international law firms!

I had to navigate a steep learning curve on drafting and analysing (aprt from foreign laws!) when I moved overseas.

Hope LPO providers read this.
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Recommend! +0 Objection! -0 Anonymous guest 2010-07-23 05:44
liberalisation of the legal sector will help LPOs. balaji has asked for LPOs to be banned. that's hardly a surprise: some indian law firms are jealous of LPOs as they are started by ex law firm-ites
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Recommend! +0 Objection! -0 Anonymous guest 2010-07-23 06:52
Sanjay,
You raise excellent points in your article. I would, however, like to see another feature from you expanding on the opportunities that US qualified attorneys have in the LPO business. Many US attorneys that I am acquainted with are interested in the LPO industry. And many of them would not mind a pay cut in order to be part of an industry that has immeasurable potential (or at least appears so at this point). To these attorneys, the prospect of making a mark in their profession could be reason enough to leave their big law jobs and move to India. However, it might be helpful for these attorneys to have an understanding of how much of a pay cut they must endure for taking on the LPO opportunity. If you could do a feature on the entry/exit options for US qualified attorneys who would like to relocate to India (along with salary ranges etc), it might be helpful.
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Recommend! +0 Objection! -1 Anonymous guest 2010-07-23 09:36
Thanks Sanjay. After reading your four pointer i was satisfied that im in the right path of starting the LPO. (www.quantumlpo.com)
* a management team that includes US or UK qualified lawyers;
* competent staff on the India side;
* a structured training program, in which training is imparted in-house; and
* US or UK attorney/solicitor supervision of the work undertaken by the Indian team.

I have got the 2nd and 3rd point in place. Where i have competent staff on the India side and have a structured in-house training program

I am actually looking for a guidance to get the 1st and the 4th point right. I tried including a UK qualified lawyer in to the Management but i couldnt succeed. But im still trying to have US/Uk qualified lawyers for my top management. I am also trying hard to set up team of lawyers in US and UK to market as well as supervise the work undertaken. I hope to receive some guidance from you all. pls reach me at
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Recommend! +0 Objection! -0 Anonymous guest 2010-07-23 13:22
thank you sanjay for enlightening us with the knowledge of LPO industry. This will indeed be useful and will definitely save many from burning their hands.

Plz come up with something more, if there's any possible way of grabbing opportunity within this industry.

Regards
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Recommend! +0 Objection! -0 Anonymous guest 2010-07-24 01:48
What a great article! It was a pleasure to read.

Almost every point in this article could, with suitable modifications, apply equally well to Indian fresh law graduates looking for jobs in Indian corporate law firms. Especially this paragraph: "... many career minded professionals, who are new to the profession, place a premium on learning. Such candidates realise that law is a profession, and that a mere law degree is not enough to be a legal professional. Rather, the degree is only a passport for a journey in that direction. Those good candidates also realize that the intrinsic value of what they can learn during the formative stages of their career is more important than the monetary value."

And this line:
"Even the best Indian brains, who graduate from India's top law schools, invariably have only the potential, and not the expertise..."
is something that all the jaded and cynical ex-NLU lawyers who frequent Legally India would do well to remember.
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Recommend! +0 Objection! -0 Anonymous guest 2010-07-24 05:17
Good luck to Sanjay and other brave entrepreneurs running LPOs. We all know the pressure that is being put on them by certain quarters.
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Recommend! +0 Objection! -0 Anonymous guest 2010-07-27 03:33
Respected Sir,
It's really a eye opening write up for those trying to venture the LPO industry. What basically matters for any profession is the passion for the particular job. Here, precisely, the passion to inculcate a logical mind and its application to the clients/users need mirrors the future of LPO setup. As for as India is concerned the back office business of this type is still a dark horse. I am of the view that one of the ingredient required for this business, i.e, training, which hardly commensurate with our academic set up is a big hindrance.

Regards
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Recommend! +0 Objection! -0 Anonymous guest 2010-07-29 02:29
Mr Sanjay Bhatia...im sorry to say but ur initial comments sound that you are really apprehensive of new entrepreneurs entering the LPO industry.... why does it appear to me that you more likely intend to milk the cow and not share it with the young blood.... its not as grey as you've described in your article sir....
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Recommend! +0 Objection! -0 Anonymous guest 2010-07-29 06:16
@1 to 9. Thank you all for your comments.

@3 - I sure will write on the opportunities for Western attorneys in the LPO industry, once I get enough information. Thank you for the suggestion. Referring specifically to the salary aspect, all employees - across all industries, need to recognize that what they earn is only a by-product of what their value to the organization is. The salary offered at the time of joining is not determinative of one's worth. Rather, it only gives the employee an opportunity to prove his/her worth. Effectively, every employer takes a calculated risk in hiring an employee on a particular salary, taking into account how much value the employee may bring in. No matter how accomplished you are, if your organization is spending more on you than what you are earning for it, your stint is unlikely to last long.

To my knowledge, there is no salary bench mark for Western attorneys wanting to join the LPO industry. Determining their salary is no easy task either. Clients off-shore work to India to save costs. Of course, they do not want to compromise on quality, but the number one reason for outsourcing is to cut down on their legal spending. Effectively, what an LPO may earn on a given assignment is far less than what a U.S. law firm would have earned on the same assignment. Simply put - an Indian LPO may often not have the resources or ability to pay the same compensation that a U.S. law firm can afford. Therefore, if Western attorneys expect U.S. law firm salaries in the LPO industry, they are likely to be disappointed. The comparatively lower cost of living, by relocating to India, does not help much either. This is because most U.S. law graduates entering the profession invariably have U.S. expenses. Almost all of them take loans to finance their legal education, which they need to repay once they start earning.

@4 - Mr. Ramesh. I have nothing much to advise, except that perseverance will pay.

@9. My intention is not to discourage people from venturing into the LPO industry. Rather, my article was meant to be a reality check for enterprising LPO entrepreneurs. What I wrote is a reflection of my experience. There is enough room for all in the industry. All said and done, there are several ways to fail but very limited ways to succeed. Indeed, there are no short-cuts to the top. My views are open to correction and I'll be happy to study LPO models which have succeeded without the factors I have listed.

Regards,

Sanjay Bhatia
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Recommend! +0 Objection! -0 Anonymous guest 2010-08-06 22:25
Good Morning Sir,
This article is very helpful to start LPO as well as provide lacuna's of our educational system & its time to CHANE our educational system & change to our view more practical
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Recommend! +0 Objection! -0 Anonymous guest 2010-09-14 07:37
Good piece sir,

But I beg to differ.
The LPO industry is on a rising curve and this issues pointed out, as rightly pointed out by comment no. 9 is quite apt. This article seems more on the lines on discouraging new entrepreneurs, whereas one should help them come up in larger numbers for the sake of the growth of the industry. Only then can India, with its huge number of law graduates, can hold up its pioneer positions as the numero uno LPO provider in the world.

A criticism of this article can be found on my blog at this link.
megalpo.blogspot.com/2010/09/setting-up-failure-is-investing-in-lpo.html

Please read it and comment.

Regards,

Anagh
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Recommend! +0 Objection! -0 Anonymous guest 2010-10-31 02:23
Hello sir , thanks a lot for giving such a wonderful information about LPOs.
I want to ask one thing only , if you dont mind - Why you have used An before LPO?
LPO means legal process outsourcing,legal word begins with L which is not a vowel , then why you did so ? is it an exception or what.
I would be very thankful if you explain the reason behind it so that i can understand what to use A , An or the before LPO.I have a confusion on the usage of An.
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Recommend! +0 Objection! -0 Anonymous guest 2010-11-06 23:07
"An" is used before "LPO" because phonetically the letter "L" sounds like "El." Since "E" is a vowel, the article "an" precedes it, rather than "a."
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Recommend! +0 Objection! -0 BPS_LLC 2011-06-12 19:45
Good day Sanjay,

I have been a lawyer and also in the legal recruiting industry for a number of years, which is suffering, to say the least. I've been contemplating for sometime now the idea of opening an LPO and your article is very informative. I really appreciate your hard diligent work and efforts to spread your knowledge.
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