Evolving Trends in Legal Process Outsourcing Services￼
|Key facts and highlights: |
The current size of the global Alternative Legal Services (ALS) market is US$14 billion
Claims processing, credit lifecycle management and government /regulatory findings (IP, securities) are the top three legal functions to be outsourced over the next year.
Robotic Process Automation (RPA), Artificial Intelligence (AI) and billing and invoicing tools are technologies ALS providers plan to deploy over the next year.
Nigeria vs US monthly salary comparisons:
– Nigerian Junior Lawyer – US$722
– US Junior Lawyer – US$6,105
– Nigerian Paralegal – US$614
– US Paralegal – US$4,314
An industry that is reaching a point of maturity, Alternative Legal Services (ALS) plays an important and growing role in the global legal sector. According to the 2021 Thomson Reuters Institute Alternative Legal Service Providers Report, the global ALS market is valued at US$14 billion and is shifting from merely providing a cost-saving proposition to being a valuable partner for legal expertise and tech-enabled solutions for global law firms and corporates.
To dive deeper into what is driving the industry, insights into the latest trends in ALS will be presented. Survey data will be used from the 2021 Knowledge Executive Vertical Industry Demand Survey, a report that conducted interviews with enterprise executives, directors and heads of departments from organizations in key source markets, such as Australia, Canada, the United Kingdom and the United States. A standout trend to be unpacked is the use of junior lawyers and paralegals by US law firms from locations such as Nigeria and how similarities in the Nigerian and US legal systems support this movement.
Evolving Global Trends in Alternative Legal Services (ALS):
More legal service providers are taking on higher-order tasks and processes:
Global corporates and law firms are increasingly allocating legal services to outsourced ALS providers, particularly in claims processing (73%), credit lifecycle management/recoveries (70%) and government/regulatory findings (70%).
What is significant with this finding is that these functions are higher-order tasks, suggesting a trend of ALS providers moving towards more high-value, complex legal functions. Traditionally, ALS offered services at the lower value end of the legal value chain, which many have perfected. In their quest to differentiate and exploit richer revenue streams, ALS providers have gradually ratcheted their service offerings into more complex legal domains that require skilled and qualified personnel, sophisticated technology and more robust data protection and cybersecurity requirements. For instance, credit lifecycle management/recoveries take on a multidimensional view of the credit management process – a highly complex, yet holistic, angle on debt recovery – requiring data analysts, AI technology and risk modeling software.
In fact, the survey data in the chart below brings to surface other high-level legal functions that organizations plan to outsource over the coming year, including integrated legal services (52%) contract management (27%) and M&A due diligence document review (27%).
Legal functions buyers are planning to outsource in the next 12 months:
Rise of e-Discovery services
Source: 2021 Knowledge Executive Vertical Industry Demand Survey
Discovery/document review or e-discovery is another noteworthy complex legal function that is currently a dominating service within ALS, where 55% of respondents already outsource this function to ALS providers, due to its cost-effectiveness and convenience in the legal process.
‘’More growth is expected in this area, as the US Federal Rules of Civil Procedure has recently been amended, allowing electronically stored information such as emails, voicemails and e-calendars to be discoverable on handheld devices in litigation processes,’’ says Outsource Global Founder and CEO, Amal Hassan. As such, discovery/document review or e-discovery is set to continue growing within the ALS space, with 39% of respondents revealing their intentions to outsource this to ALS providers over the next year.
Artificial intelligence and automation:
Streamlining processes and developing more efficient workflows to create capacity for high-volume job inflow is a significant factor for success amongst ALS providers. Artificial Intelligence (AI), Robotic Process Automation (RPA) and other automation solutions are useful tools for legal teams to shift away from mundane manual tasks, thereby increasing efficiency and lowering costs.
RPA (36%), AI (33%) and billing and invoicing tools are the top technologies that ALS providers plan to deploy over the next year. Other automation technology that will be at the core of ALS operations will be machine learning (30%), automated document management (31%) and automated legal research applications (18%).
Technology ALS providers will deploy over the next year:
Source: 2021 Knowledge Executive Vertical Industry Demand Survey
The Use of Junior lawyers and paralegals in Nigeria Providing Legal Aid and Litigation Support to Senior Lawyers and Counsel in the United States
Following the rise in outsourced legal functions is the increased demand for legal talent in offshore destinations, such as Nigeria, providing legal services ranging from administrative functions to high-level case-dependent contributions to senior lawyers and counsel in the US. As Hassan points out, ‘’Strong English-speaking capabilities, deep, youthful legal talent pool, reliable connectivity and low salary costs are key influencing factors that have pushed legal enterprises in the US to outsource legal aid and litigation support to offshore locations’’.
With over 79 million English speakers, Nigeria is Africa’s largest Anglophone nation and one of the largest globally. In combination with the 4,000 law graduates that are produced each year, Nigeria has become a rich base for US law firms to source junior lawyers and paralegals for US law firms. Nigeria’s large and highly developed ICT sector is a key enabler in the virtualization of legal offshoring to the US.
Additionally, legal salaries in Nigeria are significantly lower compared to those in the US. Junior attorneys in Nigeria are paid an average monthly salary of US$722, whereas in the US they are paid US$6,105. Nigerian paralegals are paid US$614 per month, on average, while those in the US receive US$4,314.
Similarities of the Nigerian Legal Environment to the US Legal System
An underlying factor of US-based law enterprises sourcing Nigerian legal talent is the shared similarities of the Nigerian and US legal environment. The legal systems of both nations are based on a federal system, meaning that although the national or ‘’federal’’ government possesses significant powers, the individual states preserve certain powers and are thus sovereign.
Common law forms the basis of the US and Nigeria’s legal system, although Nigeria has three other distinct legal systems, including English law, Customary law and Sharia law. The court structure is also similar in Nigeria and the US, both of which have state courts (trial level courts), the court of appeal (the first level court of appeal) and the supreme court (the final arbiter of the law).
The ALS market has not only grown in volume, but in value as well, offering a suite of complex legal tasks and technology solutions in the form of AI and automation, indicating the validity of ALS as an effective strategy for organizations to reduce costs, yet add value to their legal objectives.
Nigeria’s value proposition in the areas of English-speaking capabilities, the inflow of entry-level legal talent, competitive labor costs and global connectivity have caught the attention of US-based law firms in providing value-adding support to senior lawyers and counsel. Similar legal frameworks between Nigeria and the US foster this developing trend. Hassan concludes by remarking, ‘’Nigeria’s ability to provide those ALS solutions shows that the country can do a good job in helping global legal teams preserve their margins and please their clients’’.
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