With the increasing offshoring of Legal Process Outsourcing (LPO) services, managing data security and prohibiting data breaches are becoming the need of the hour

Legal Process Outsourcing (LPO) Category Intelligence

Outsourcing legal services to third-party providers helps law firms to reduce the cost of legal services without compromising on service quality. This allows firms to increase their profit margins and, in turn, offer competitive rates to their clients. However, a rising need for stringent security systems has been observed among both, clients and LPO service providers, to ensure the privacy of client data. Multiple cases of data breaches have been reported in the last 10 to 15 years despite having proper security measures in place. As such, lawyers are highly emphasizing this aspect while evaluating the competence levels of outsourced agencies. For instance, Focused Technologies Imaging Services (FTIS) was awarded a USD 3.45 million contract from New York State in 2008, wherein employees were required to scan the State Division of Criminal Justice Services records, which included sensitive personal information such as fingerprints, Social Security Numbers (SSNs), and dates of birth. FTIS outsourced more than a third of the contract to an Indian company for USD 82,000. In March 2016, after a lawsuit was filed, FTIS agreed to pay USD 3.1 million in penalties and fees for unlawfully outsourcing the work to India and risking the privacy of millions of people.

As India is a leading destination for outsourcing LPO services, it has become essential for clients to understand the data security measures of the country. The legal aspects of data protection are distributed under various acts in India. One of these acts is the Information Technology Act 2000. This Act addresses electronic data, computer crimes, hacking, damage to computer source code, and breach of confidentiality provisions. However, the privacy rules of this Act do not apply to Indian companies.

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 Legal Process Outsourcing Category Intelligence Highlights:

• Legal process outsourcing service providers are collaborating with small regional LPO companies to outsource legal services as well as maintain high profit margins, low overhead costs, and their overall competitiveness in the market.

• The legal process outsourcing market has a fragmented competitive landscape and is witnessing the entry of several small regional players.

• Suppliers largely prefer approved provider operating models to reduce risks and improve the potential for value creation.