A new report from ValueNotes, a business research company, gives a summary of the changing face of the industry following the recession.
The report illustrates the extent of the slowdown in the market. In 2007, revenue growth was over 40% a year for legal process outsourcers. By 2009, it had dropped to 16%. Unfortunately, 2010 will not see much improvement in compound annual growth rates (CAGR). ValueNotes predicts only a slight rise to 19% ($440m). However, longer-term expectations are more optimistic, with CAGR predicted to rise by 26% by 2014.
Increasing demand for end-to-end LPO services from recession-hit law firms and company legal departments has required a ‘scaling up’ of capabilities and headcount As leading players are best placed to scale-up, the report predicts market consolidation over the next few years where the distinction between ‘the leaders and the laggards’ will become more pronounced. Undifferentiated service providers are identified as those vendors most likely to suffer.
ValueNotes also notes the development of ‘strategic sourcing’. By this, they mean the development of long-term relationships and a shift towards multi-service contracts. The report provides an interesting snapshot of an industry in flux but a lack of client focus in the research does not allow for much insight into buyer behaviour.
New tool to assess LPOs
Assessing individual legal process outsourcers is a difficult task for most buyers. However, ValueNotes have developed a new methodology to do just that in their ‘Sourcing Prism’ report. Using three key performance indicators - service maturity, sustainability and strategic intent - the report maps the position of each LPO against industry averages. The results are shown graphically on a prism.
Fig. 1 ValueNotes Sourcing Prism
By segmenting the industry into ‘pacesetters’, ‘contenders’ and ‘aspirants’, ValueNotes add clarity to the LPO market. Integreon, CPA Global and Pangea3 emerge as the pacesetters, with WNS Legal, Lexadigm and United Lex close on their heels at the top of the contenders section. Clutch Group scores high on strategic intent and sustainability with average service maturity, whilst it is Mindcrest’s service maturity which qualifies their place amongst the contenders. Within the aspirants, Aphelion, Cobra Legal Solutions and Quatrro Legal Solutions again show promising strategic potential, but are average or below average on the other two parameters.
The pacesetters are seen as moving to more of a consultative role. Established vendors are growing inorganically by acquiring businesses outside of the BPO compass. Those who emerged on the back of the flat world boom, the ‘me too’ players, are shown as those who will find it difficult to sustain growth.
ValueNotes have provided an insightful overview of the market. Although it is not easy to assimilate their prism visuals, and a lack of product analysis and client feedback does need to be addressed (next year's edition is due to include this), the report gives a clear picture of market leaders and promising firms.
The full report is available to buyers of LPO services.
Please contact Neeta Joshi at ValueNotes on +91 20 6623 1793, or by email: neeta@valuenotes.com
LEGAL PROCESS OUTSOURCING
Crisis creates new opportunities for LPOs
‘Crisis creates new opportunities for LPOs’
A new report from ValueNotes, a business research company, gives a summary of the changing face of the industry following the recession.
The report illustrates the extent of the slowdown in the market. In 2007, revenue growth was over 40% a year for legal process outsourcers. By 2009, it had dropped to 16%. Unfortunately, 2010 will not see much improvement in compound annual growth rates (CAGR). ValueNotes predicts only a slight rise to 19% ($440m). However, longer-term expectations are more optimistic, with CAGR predicted to rise by 26% by 2014.
Increasing demand for end-to-end LPO services from recession-hit law firms and company legal departments has required a ‘scaling up’ of capabilities and headcount As leading players are best placed to scale-up, the report predicts market consolidation over the next few years where the distinction between ‘the leaders and the laggards’ will become more pronounced. Undifferentiated service providers are identified as those vendors most likely to suffer.
ValueNotes also notes the development of ‘strategic sourcing’. By this, they mean the development of long-term relationships and a shift towards multi-service contracts. The report provides an interesting snapshot of an industry in flux but a lack of client focus in the research does not allow for much insight into buyer behaviour.
New tool to assess LPOs
Assessing individual legal process outsourcers is a difficult task for most buyers. However, ValueNotes have developed a new methodology to do just that in their ‘Sourcing Prism’ report. Using three key performance indicators - service maturity, sustainability and strategic intent - the report maps the position of each LPO against industry averages. The results are shown graphically on a prism.
Fig. 1 ValueNotes Sourcing Prism
By segmenting the industry into ‘pacesetters’, ‘contenders’ and ‘aspirants’, ValueNotes add clarity to the LPO market. Integreon, CPA Global and Pangea3 emerge as the pacesetters, with WNS Legal, Lexadigm and United Lex close on their heels at the top of the contenders section. Clutch Group scores high on strategic intent and sustainability with average service maturity, whilst it is Mindcrest’s service maturity which qualifies their place amongst the contenders. Within the aspirants, Aphelion, Cobra Legal Solutions and Quatrro Legal Solutions again show promising strategic potential, but are average or below average on the other two parameters.
The pacesetters are seen as moving to more of a consultative role. Established vendors are growing inorganically by acquiring businesses outside of the BPO compass. Those who emerged on the back of the flat world boom, the ‘me too’ players, are shown as those who will find it difficult to sustain growth.
ValueNotes have provided an insightful overview of the market. Although it is not easy to assimilate their prism visuals, and a lack of product analysis and client feedback does need to be addressed (next year's edition is due to include this), the report gives a clear picture of market leaders and promising firms.
The full report is available to buyers of LPO services.
Please contact Neeta Joshi at ValueNotes on +91 20 6623 1793, or by email: neeta@valuenotes.com
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