Legal Process Outsourcing

What is Outsourcing?

Outsourcing is ‘Paying another company to provide services which a company might otherwise have employed its own staff to perform’[1], in layman terms , it’s similar to your mother paying you monthly to water her plants/the garden. Though outsourcing has existed in the economy for over a decade now, its concept is still foreign to many and is only linked to call centers. There are two kinds of outsourcing; Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO). BPO provides services like customer care, technical support through voice processes, tele-marketing, sales, etc., whereas KPO provides in-depth knowledge, expertise and analysis on complex areas like Legal Services, Business and Market Research, etc., which requires skill and expertise of knowledge employees. Legal Process Outsourcing is a type of KPO.

Legal Process Outsourcing (LPO)

Legal process outsourcing, refers to the practice of a law firm or corporation obtaining legal support services like legal drafting, legal research, proof reading, etc., from an outside law firm or legal support services company. The term ‘LPO’ might derived from BPO but it is a misnaming for the legal services industry as legal research, legal analysis, or drafting complaints, contracts, is not a BPO-like, commoditized process which requires no special training or knowledge. These are legal services, even if they do not amount to "practicing law," which can only be done by the supervising, licensed attorney who reviews the services that so-called LPO companies provide.
That is why firms of this industry do not refer to themselves as “LPOs”. Companies use the phrases such as, ‘Provider of Global Legal and Patent Outsourced Services’, a Premium Legal Services Company’, as Legal Knowledge Services’, or as Legal Services Organization."[2]

Why Legal Process Outsourcing?

The legal process outsourcing business is stretching across boundaries due to upgraded technology and high speed uninterrupted communication channels. The web and universal embracing of English language have made it possible. Besides, there are cost, time and efficiency benefits that amplify for its requirement.

Legal process outsourcing is a kind of virtual assistance for attorneys, law firms and lawyers. It is coming upfront due to pervasive common law practices across many continents. Other than saving costs, legal process outsourcing is beneficial in many ways including access to outside talent, round-the-clock availability through time zone differences and saving on infrastructure investments. However, ethical considerations and data security concerns cause some to hesitate in outsourcing their simpler legal operations.

Why is India a Major Player in Global Legal Process Outsourcing?

Today, India is the biggest LPO destination for all the major developed countries. India's legal system is derived from the English common law. A plus point in India is that, English is the language of instruction in Indian colleges and law schools. Also, low labor cost is one of the major factors in sourcing work to India and it has one of the largest cluster of English-speaking graduates in the world., and a huge labor-class population.

However, India has an issue in getting offshore outsourcing i.e getting LPO from foreign firms because of our legislations like the Advocates Act, 1961, etc. In A.K. Balaji v. Govt. of India[3], it was argued that since the foreign law firms were not enrolled as advocates under the Advocates Act, 1961, they could not be allowed to practice even in non-litigious matters, such as drafting documents, reviewing and providing comments on documents, conducting negotiations and advising clients on international standards and customary practice relating to the clients transaction. The issue of entry of foreign law firms and their modus operandi for providing legal services in India was also addressed in this case. If in pith and substance the services amount to practice of law, the provisions of the Advocates Act with apply and foreign law firms or foreign lawyers will not be allowed to do so.

Laws Regulating LPO Structure in India

There is no national law that specifically regulates outsourcing transactions in India. Multiple legislations govern different aspects based on the industry, parties’, jurisdiction, preferred structure, and outsourcing scope. Some laws that generally are in play are[4]:

1. Indian Contract Act,1872- contract, essentials; performance, consideration, termination
2. Companies Act, 2013- operation management, restructuring
3. Foreign Exchnange Management Act, 1999- foreign investment
4. Income Tax Act, 1961- taxation of income, profits and capitals gains
5. Goods & Services Act, 2017- taxation on provision of services
6. Information Technology Act, 2000- protection and privacy through online channles
7. Intellectual Property Act,2011- Protection of Intellectual Property and Rights
8. Contract Labour Regulation and Abolition) Act, 1970- To prevent exploitation of contract labour and also to introduce better conditions of work. A workman is deemed to be employed as Contract Labour when he is hired in connection with the work of an

establishment by or through a Contractor. Contract workmen are indirect employees. Cipla Ltd. vs Maharashtra General Kamgar Union[5] of this judgment is that, if contract workers filed a complaint of any unfair labour practices against any principal employer alleging that he was, in fact, their employer and that the contractor was a mere name-lender interposed in the relationship merely to shield the principal employer, this complaint would become non-maintainable[6].

Following the lacunae present in the LPO sector, the question that arises is that of the absence of a regulatory framework and the possibilities of tackling the problems that arise out of LPO. While there is no specific national legislation as such in India regarding the LPO industry, certain steps have been taken by the firms of the industry themselves like the formation of the ‘Global Legal Professional Certification Test’. This particular test was devised in April, 2007 by a firm called Rainmaker that focuses on the LPO industry in collaboration with three other LPO firms namely, JuryMaterix, Bodhi Global and Quislex. This test aims at testing candidates on skills needed in LPO: English fluency, technology and professional skills, personal effectiveness and legal knowledge. While this test can be considered as step in the right direction, and was devised by reputable companies, it is still a private initiative which does not have a legal standing or any legal credibility in the country or anywhere outside the country. It might turn out to be a useful step if it were done in collaboration with the Bar Associations of the various countries that outsource their legal work to countries like India and vice versa.[7]

Major Indian Players[8]

1. Bodhi Global Services (P), Ltd.
2. Clutch Group
3. Cobra Legal Solutions, LLC
4. CPA Global Ltd.
5. Integreon Managed Solutions, Inc.
6. LawScribe, Inc.
7. Mindcrest
8. Pangea3
9. Quislex

10.UnitedLex

The abovementioned firms have certain uniformity in their structures and that is, USA Headquarters and Corporate Presence; India Delivery Centers; Familiar Processes or Certifications; Law Firm and Corporate Clients; Service Line Diversity; LPO is the Core Business; Non-Indians in Senior Leadership Roles

Major World Players[9]

The global Legal Process Outsourcing (LPO) market is valued at 4550 million USD in 2018 and is expected to reach 24100 million USD by the end of 2024, growing at a CAGR of 32.0% between 2019 and 2024[10].

1. CPA Global
2. Capita
3. QuisLex
4. Unitedlex
5. Clutch Group
6. American Discovery
7. Accace
8. Integreon
9. Cobra Legal Solutions
10. Infosys
11. Evalueserve
12. Amstar Litigation Support

Scenario Due to Covid-19

As the coronavirus pandemic pushes India into a lockdown, the call centers and IT services firms that function as the world's back office are struggling to piece together work-from-home solutions and other business-continuity plans. While BPO companies are feeling the heat of the global lockdown and resorting to layoffs and other cost cutting measures, their LPO (legal process outsourcing) counterparts could be thriving like never before in a few months’ time because of the legal activity that has been generated by the crisis throughout the world.
Law firms dealing with foreign companies operating in India might be seeing an increase in their turnover, even if their work is now more about post-lockdown issues like restructuring, downsizing, layoffs, closure of branches, winding up of subsidiaries and termination notices to collaborators and franchisees.

Conclusion

With the whole, ‘the world is one village’ concept that we are thriving upon, legal process outsourcing is an industry which has massive scope in terms of growth, changes and complications. India, being a country with major labor population and low labor costs will always be a prime landing place for firms looking for outsourcing their legal operations. What can be suggested is the development of a proper legislative framework for the sole purpose of regulating LPO industry in the country which works efficiently even when global players enter the market.

{Author’s Profile: Stuti Bhansali, Second Year student at Manipal University, Jaipur}

REFERENCES

[1] Merriam-Webster’s Collegiate Dictionary (Merriam Webster, U.S., 11th edn., 2003)

[2] ‘Legal Process Outsourcing,’ available at: http://www.legalsupportglobal.com/legalprocessoutsourcing.html (last visited 25/05/2020)

[3] 2018 (5) SCC 379

[4] Dhruv Suri & Arya Tripathy, ‘India: Outsourcing 2019’ (2019) < https://iclg.com/practice-areas/outsourcing-laws-and-regulations/india > accessed 25/02/2020

[5] 2001 (3) SCC 101

[6] ‘How to Start a Legal Process Outsourcing Business?’ (2019) available at: http://www.legalservicesindia.com/law/article/1208/3/How-to-Start-a-Legal-Process-Outsourcing-Business- (last visited 25/02/2020 )

[7] ‘Legal Process Outsourcing: Is the lack of a regulatory framework one of the challenges facing the LPO industry in India?’(2010) available at: https://www.indialawjournal.org/archives/volume3/issue_4/article_by_megha_vipula.html (last visited 25/05/2020)

[8] ‘Outsourcing Portfolios’ (2010) available at https://www.cobralegalsolutions.com/pdf/cobraTop10.pdf (last visited 25/02/2020)

[9] ‘Global Legal Process Outsourcing (LPO) Market 2019 by Company, Regions, Type and Application, Forecast to 2024’ (2019), < https://www.wiseguyreports.com/report-info.pdf?report_id=3928138 > accessed 25/05/2020

[10] Ibid.