We recently wrote about the emerging trend of content moderation outsourcing. In this blog post, we turn our attention to another growing trend: legal process outsourcing.
Legal functions are undergoing significant transformation, due in part to the rise in remote working, digitization and technological innovation including AI, complex regulatory environments, and, in many sectors, a renewed focus on cost management amid economic volatility.
At the same time, and while the merger and acquisition (M&A) outlook in 2023 is complex, an uptick in corporate acquisitions, sales, or spinoffs would require dedicating significant in-house legal resources, as well as expert external advice, from attorneys otherwise charged with managing certain process-driven tasks. The volume of post-closing M&A disputes, another heavy consumer of legal resources, is reportedly on the rise from perceived valuation gaps amid challenging market conditions, inflation, and possible recession.
Delegating process-driven tasks to third-party providers can enable legal resources to focus on critical, higher-value priorities for the business during uncertain times. Recent industry research values the global legal process outsourcing market at $14.81 billion in 2023, with bullishly forecasted growth to $38.13 billion in 2027.
What Is Legal Process Outsourcing?
Broadly, legal process outsourcing and related corporate services covers the outsourcing of process-driven tasks such as contract management, compliance assistance, entity management, due diligence on corporate transactions and business license management. A combination of attorneys, compliance professionals, and legal operations may identify where process-driven tasks could be outsourced, and a recent Wolters Kluwer survey found that a majority of such decisions were made by legal operations professionals.
Key Takeaways
Process-driven tasks, such as business license and entity management, may help the legal function of a business determine how to best serve its clients, and in some instances are critical to that business. Other key functions such as contract management may assist in determining the business’ risk exposure to clients and suppliers, ranging from receiving payment to business continuity.
Additionally, as the legal process outsourcing market continues to grow, the Wolter Kluwer survey predicts:
- cost management and employee recruitment would make up over 50% of expected drivers of outsourcing,
- when it comes to choosing vendors, budget and cost, experience, and security are valued most,
- regulatory risk and compliance services are the work most anticipated to be outsourced, and
- trusted providers drive legal functions to outsource certain activities, rather than businesses making that decision independently first.
We will continue to monitor the rise in legal process outsourcing. Stay tuned!
Summer associate Cooper J. Attig contributed to this post.