Legal Process Outsourcing: A Service In Full Maturity

Thursday, November 1, 2007 - 01:00

The Editor interviews Chris Veator, Executive Vice President and Bhaskar Bagchi, Country Head - India, Computer Patent Annuities Limited (CPA).

Editor: Please tell our readers something about your professional experience.

Veator: I spent 15 years as a senior executive for the Thomson Corporation, a large information and publishing company. In 1999, I had the opportunity to purchase a software business from Thomson, Artesia Technologies, which I ran for several years and sold. I joined CPA Global at the beginning of this year and am the Executive Vice-President responsible for our legal services outsourcing business.

Bagchi: I am the country head for CPA's India operations. I received my management education at the Indian Institute of Management, Ahmedabad, and I have been in the corporate world for a little over 16 years. After ten years in the banking industry with organizations such as Citibank, I worked in the off-shoring space in India, largely with IBM-Daksh, the off-shoring arm of IBM Global Services.

Editor: CPA has been serving the legal community for close to 40 years. Would you tell us about its evolution as an off-shore legal services provider?

Veator: It has been a very natural evolution. CPA was initially set up by lawyers to help customers navigate the complex challenges of IP management. Around 2005 our customers' needs evolved and we looked for ways to further extend our outsourcing services. We began to put together solutions covering areas such as paralegal and docketing support, as well as proof-reading, and so on. We accomplished this principally through acquisition. In 2005 we acquired a business called Intellevate and two years later another called Lacasse Associates, both of which were focused on outsourcing services for the IP community.

Recently, and again at the behest of our customers, we have begun to extend our outsourcing services to include a wider range of legal matters. This includes litigation support covering e-discovery, document review, deposition summaries and legal research. We are also beginning to offer our customers contract review and management services as well. CPA's evolution has been one of expanding its IP outsourced solutions and moving toward the broader legal outsourcing arena, both on-shore and off-shore.

Editor: Would you share with us your thoughts on the benefits that customers obtain from outsourcing?

Veator: The equation is pretty simple: we provide a very high quality service at a cost-effective price. The most important benefits, however, do not relate so much to cost savings, but rather to the fact that the customer is enabled to focus on its core mission, leaving the matters that are peripheral to their mission to us. Finally, legal resources at both the attorney level and the paralegal level are increasingly scarce in the West. CPA has access to a very large talent pool, and we are able to marshal those resources for our customers not only on an ongoing basis but also in a way that allows them to meet spikes in their workload and throughout the litigation process.

Editor: What concerns do customers have about outsourcing?

Bagchi: The most prevalent concern has to do with confidentiality and information security. We address this in a number of ways, including an extensive background check on our personnel, the execution of a nondisclosure agreement - which is enforceable both during and after the project, and limitations on access to information. With respect to data security, all of our applications are password protected, and we have firewalls on all of our Internet gateways to prevent hacking. We can ensure that hard drives and USB drives are disabled based on customer requests.

Another area of concern is conflict of interest and whether we are doing work for the customer's competition. Where we are dealing with competing organizations at the same time we take steps to insure that the same people are not working for both organizations and that the two groups are physically separated.

Some customers are initially concerned with sending their work thousands of miles away. There is a sense that control is some how being lost. This is definitely not the case. We report to the customer on a daily, weekly or monthly basis, depending on their needs. For some customers it is safe to say that the level of control they have over the work is greater than if it were being done in a room next door.

Finally, many people, particularly in the West, have a concern over the quality of the work coming out of India. We have a stringent quality control policy, and we use quality improvement methodologies such as Six Sigma and work toward ISO and similar certifications to ensure that what we deliver from India meets the highest quality standards. Our feedback in this regard has been excellent.

Editor: How is legal process outsourcing similar to, and different from, other outsourced services?

Bagchi: Interesting question. Legal Process Outsourcing, or LPO is similar to other outsourced services in that it has to start with a clear understanding of the customer's needs. The migration methodology of work from customer location is similar, as is the focus on process discipline and metrics.

There are, however, very significant differences. LPO requires a significant degree of specialization. What has worked in one domain cannot necessarily be replicated in the legal domain. For LPO, there is a critical need to understand the nature of the work including the delivery standards expected by the customer. Each customer is unique, and we work with each of our customers to ensure that the services we provide meet their needs.

Editor: What differentiates CPA from other providers?

Veator: The most significant differentiator is the fact that CPA has been meeting the very complex needs of the legal community, both law firms and corporate legal departments, for close to 40 years. During this time, CPA has built a reputation of trust and today we are a solution provider for over 40,000 customers. I think that many of our competitors are new and have not had the kind of global experience or the financial stability that CPA enjoys. As a company, we have a significant footprint. Another differentiator is the breadth of our service offerings. Few, if any, of our competitors are in a position to offer such a range of services. And, finally, those services are customized to meet the particular needs of our customers.

Editor: Speaking of customers, what is the profile of a CPA legal services customer?

Veator: Our customer base is global, and at present about a third of our business is conducted in North America, a third in Europe and the balance in Asia. Most of our corporate customers are the legal departments of large multinational organizations. They tend to think of us as an extension of their legal team, not as a replacement. With respect to law firms, we see a concentration of major firms with an international reach and a focus on IP or litigation.

Editor: Please tell us about CPA's facility in India.

Bagchi: We currently have a facility that is 57,000 square feet spread across three floors. Access is controlled throughout and our security systems and IT infrastructure are all state-of-the art. CPA has the ability to expand our current premises to up to 100,000 square feet. We are in a position to provide almost 100 percent of uptime service through significant investments in network redundancy.

Editor: How does CPA see this market changing?

Veator: This is a very dynamic high-growth market. It is growing at a compounded rate in excess of 50 percent per year, and many of our services are seeing a growth rate greater than 100 percent. In the early days this was a developing market, and most of its entrants were risk-takers. Today it has matured to the point where the trends are derived from the success stories of the early adopters.

Legal costs - and particularly the high cost of litigation - continue to rise. The starting salaries for many associates in major metropolitan areas in the U.S. exceed $160,000. At corporations, the office of the general counsel is under intense pressure to keep legal costs under control. All of these factors point to outsourcing as an important strategy for addressing the challenge of cost management.

Editor: Are there particular challenges associated with legal process outsourcing?

Bagchi: A number of people still believe that India is only suitable for business process outsourcing or call center services. That is certainly not the case and part of our challenge is to educate the market that high-end work is available to them out of India. To ensure the ongoing quality of such work, our recruitment and retention policies receive a great deal of attention. We select our employees from the finest educational institutions in the country, including law colleges, technology institutes and universities. In turn we offer our people challenging and interesting work, fair compensation, excellent benefits and a very attractive workplace. All of this contributes to our ability to address the skeptics.

Editor: How do you handle communication between the India facility and customers?

Bagchi: That is linked to one of the concerns I referenced earlier. Communication, I think is the best way to address the issue of control. We discuss communication at the outset of any customer relationship - how often we should be in contact, the communication format - teleconferencing, videoconferencing, and even face-to-face meetings - these are all the things worked out at the start of the relationship.

Editor: What are CPA's plans for future growth?

Veator: This is a very strategic space. As I mentioned, we are reaching beyond our heritage in IP to include new services in the general legal arena. Our expectation is that we will be able to build on our market leadership. Over the next few years we anticipate investing more than $40 million to enhance our capabilities in this area, and we expect to employ about 10,000 people around the world supporting our LPO offerings. Most of these people will reside in India. We believe we will have a very large presence in the LPO market in the coming years.

Bagchi: Our success in the future is an outgrowth of our success in the past. Our approach is solutions-based. We do not go to our customers dictating policy. We work with them to customize our services to their particular needs. We invest heavily into making certain that our customers are comfortable with the way we work and, most importantly, with the processes which ensure the quality and security of the work.

Please email the interviewees at cveator@cpaglobal.com or bhaskarb@cpaglobal.com with questions about this interview.