Owing to globalization of the labor pool, it has become more possible to access professionals for reasonable prices. The recent trend of tech companies is to outsource operational management, including accounting, HR, finance, marketing, and legal services. In this article, we will answer some of the frequently asked questions on the benefits of legal process outsourcing.
1. What is LPO?
Legal Process Outsourcing (LPO), commonly referred to as Legal Services Outsourcing, is the practice of contracting with an external provider to have some legal work done, i.e. the company procures professional legal services from a third party to reduce costs. LPO is popular among companies from various industries, either related to law or not. IT companies and startups are also actively exploiting LPO worldwide.
2. What legal services can be outsourced?
The most typical requests from tech companies are, for instance, Intellectual Property rights support, stock option plans, M&A negotiations, or other things like how to divide equity in a startup, open an American B1/B2 visa, etc.
In general, the outsourcing firms look for:
– contract drafting
– corporate law
– deals support
– compliance assistance
– Intellectual Property support
– patent support
The legal service industry is now transforming from knowledge-based into tech-enabled. For this reason, companies and LPO providers mutually benefit from cooperation. Technologies facilitate the work process of lawyers, so the client receives prompt services.
3. Why do you need this?
The best thing about LPO is that it allows companies to reach the best source of knowledge. Among other advantages, we can distinguish:
· Reduction of costs. LPO costs less than consultations in law firms. As an IT company, you won’t have to invest in your own infrastructure to build a legal team.
· Less workload for in-house employees. Some companies already have the legal department and still look to LPO services as an opportunity reduce workload in place. This enables in-house specialists to focus on their foremost and higher-value work.
· Access to senior legal advisors. Part of legal work sometimes requires higher qualifications. LPO is a perfect solution to have cost-saving professional consultations or get access to the team of lawyers who are far more efficient than one employee.
· Flexibility. Companies that outsource legal work bypass fixed costs of salaries for in-house lawyers. LPO also allows your company to scale up for a project quickly due to the timeliness.
· Mitigating risks. When opening your own offshore software development center, legal outsourcing helps successfully set up in a new country. Software R&D centers only need daily legal support that can be beneficially outsourced.
4. How does it work for IT companies?
As a rule, tech companies sign a service-level agreement (SLA) which establishes the level of service a vendor is supposed to deliver. The SLA also defines the metrics of measuring results, and penalties in case the services fail. Clients appreciate fixed-fee pricing because it’s simpler and ensures predictability.
Furthermore, a company needs to decide on pricing. The majority of outsourcing firms exploit the full-time equivalent (FTE) pricing model. It suggests that the payment is based on an estimated amount of input provided by the vendor. The price is calculated as an average FTE rate per hour.
5. Where to outsource?
Whereas the most popular outsourcing destinations are India, the Philippines, Brazil, or China, there are lots of Ukraine-based LPO service companies. Ukrainian lawyers are qualified professionals with international experience, who are also like-minded people for Western cultures.
A trusted partner is the key to success. To develop strong relationships with local service providers, it’s necessary to treat LPO providers as partners and strategic advisors. At Alcor, you can get full legal support of your IT business in Ukraine. Our team of lawyers are competent in IT law and have strong government relations in Ukraine. Make sure you’re being transparent in offshoring with Alcor!
To conclude, legal process outsourcing is beneficial to tech companies because of its cost-saving opportunities. However, at the same time the quality of services remains high. Considering nearshoring, Ukraine is the most attractive location to outsource legal services due to a big number of diligent English-speaking lawyers and cultural similarities.