Legal Process Outsourcing Has Grown Up: Microsoft has nurtured ‘mature’ relationships with LPO providers

Wednesday, October 11, 2017 - 15:56

Microsoft Corporation has been outsourcing legal work to India since 2004, the year that Lucy Endel Bassli joined the company. Bassli, an assistant general counsel, now oversees legal operations and contracting and has seen the company’s relationship with the legal process outsourcing (LPO) providers “mature” during that time. The result is that the providers do more work and need less guidance, which benefits everyone. The interview has been edited for length and style.

What kind of work do you outsource to India these days?

Bassli: When we outsource, we often outsource to multiple jurisdictions. A lot of the mature outsourcing companies have delivery centers around the globe. India is obviously a big location, but in our case there’s also one outside of London and another in Fargo, North Dakota. In a real robust outsourcing model, what you're hoping for is that the outsource service provider is balancing their resources in the most cost effective and efficient way, since they're balancing the time, the language needs and the skill sets that they have and spreading that work, potentially, across multiple jurisdictions.

In my particular area, I oversee our contracting operations, and the Indian office of the LPO that we use handles a very large volume of administrative support help, contract administration, specifically. We have our LPO act as the front line to answer questions from potentially anybody at Microsoft. Any employee at Microsoft who has a question about contracts is directed to the Indian office of our LPO. That could reach well over 100,000 requests a year for help. Think of it as kind of help desk support for contracting.

The other type of work that goes to India, not specifically within my oversight, is some administrative document assembly work. Additionally, there is some level of contract review services that is done out of India, but that's a smaller volume compared to the work that's being done out of the Fargo, North Dakota, and Bristol, UK, offices.

Is there some arrangement ensuring that the people there work exclusively for Microsoft?

Bassli: The companies do not exclusively work for us, but the teams that are assigned to our work are often exclusive to us. Yes, we would have dedicated teams of people within these companies and those dedicated teams work just on the particular engagement that we've arranged with them, whether it's IP or contracts.

Why does it matter if there's a dedicated team working on a Microsoft matter?

Bassli: I think it depends on the kind of work. There is some work that isn’t done by a dedicated team. If it is an unpredictable volume, it it's a one-off or work items that come in and there's a start and an end. Where you have an ongoing operation and we want to treat a team as a virtual extension of our operation, they really gain a lot of insight into how Microsoft works, and who the people are internally. It helps with the continuity, and our own internal stakeholders feel that they're dealing with people who understand our processes, our policies and our culture and philosophy as well. There are enormous economies of scale that are gained by having the same people do the same work over and over. They become more efficient, they become really more experienced. The more they learn, the higher the level of work we can give them.

If they do really good work at the lower level, we'll raise the complexity a little bit, which allows the LPO to provide a greater value as they move up the value chain, so to speak, and we extract a greater value because we get to offload more work that would have had to be done in-house. We create a deep relationship that continues to grow over time, and that set of people who are dedicated to our work also feels a sense of commitment to the project. We see less attrition in these scenarios, too, where people feel a real connection with the work and their client – in this case, us.

What is the most complex kind of work that LPOs do for you in India?

Bassli: I'd say that some of the complexities are in the patent space, in the IP review space.

Can you talk to me about how your circumstances, structure and the type of work you're doing has changed over the last dozen years?

Bassli: In terms of India specifically, there was a bit of a learning curve that happened on both sides, from the supplier and from us as a customer. The LPO providers in India have matured their business model, they've matured their skill set and they've matured their level of customer engagement. Even things like writing style and communication style have become more sophisticated.

Similarly, as a customer, we've matured in understanding our expectations. We've matured in the way we engage these LPOs and track performance quality using data. I think we've both developed and grown in parallel, and that's benefited one another. In general the evolution has been healthy. As you know, a lot of consolidation has happened in the LPO world in the last decade, a lot of mergers, a lot of combinations, a lot of buyouts by large conglomerates. I think all of that is leading to a more qualitative experience for the customer, and it's really leading the LPOs in India to deliver higher-level, higher-value service that frankly could at some point start to compete with some of the law firms. Ten years ago there was no competition and there was no question that an LPO from India couldn’t possibly threaten work that was being sent to a law firm. I think now that's probably becoming a more realistic scenario, and one that the global law firms are paying attention to.

What providers do you use, and where does most of the work go?

Bassli: If we're not talking about law firms and just talking about LPOs, or the alternative service providers, most of our work is probably going to two providers. In the IP space, CPA Global Ltd. is a key provider. In our contracting and immigration, it’s Integreon Managed Solutions, Inc. And it’s going to three key areas. Outside of India, Bristol does a large volume of contract work for us, and then so does Fargo, North Dakota. That's actually where we began with our contract work. Before we went off-shore, we started in Fargo.

As far as percentages, I'd have to divide it by our work areas. For the IP area, I think they're probably almost at 100 percent in India. In the contracting work, the legal review work of the contracting is split between Fargo and the UK. I don't believe many substantive contracts go to India; however, the contract administration work is probably 90 percent in India. This is all the administrative tasks that go along with viewing or finishing the contracts. It's not the negotiation of the words on the paper, but it is perhaps helping find a template, helping search for other preexisting contracts in our system, helping get contracts signed electronically, stored appropriately, extracted, retrieved later. All the other things you could do with the contract, with the exception of the words on the page.

You were talking about how you want your service providers to divide up the work and in a sensible way, to spread it around. This suggests that most of them have multiple locations. Is that correct?

Bassli: For the LPOs we use, CPA Global is largely India-based. I think Integreon is much more globally distributed. It really does depend on the LPO. Based on the selection criteria that a company would use when they outsource, that either is or isn't one of the things they're looking for. They're either looking for global delivery centers, or they know specifically they want to go to a particular location, like India.

So you want to send your work to a company you have a relationship with and  have confidence that they will handle it appropriately in the appropriate place.

Bassli: That's the goal. We need to know the cost and then we need to have very good success measurements that we can track, but we really shouldn't be dictating where, unless we have some other philosophical need or specific business need. For the most part, you should hope that when you're outsourcing to a mature outsource service provider, they will allocate the resources, again, in the most efficient, cost-effective way. In fact, we recently awarded some more work to Integreon in doing some business processes for us that would be considered a little bit administrative, but that we decided were better handled outside rather than using our internal resources. One of the reasons we awarded to Integreon was their ability to move this off-shore and provide for us cost savings. We made the selection based on the skill and capabilities that the company can offer, but also the price was reflective in that. Obviously, India is a lower cost region than on-shore here in the States.

The goal should be that we're not dictating where, whether it's Manila or India. We shouldn't have to make that decision. We should really just be able to look at the cost and then track the quality. That's tough, but over time you learn to create quality and success measures and performance indicators. Then you get comfort that the resources are appropriately allocated.

How do you do quality control? Do you just kind of spot check a certain percentage of the work with a team that decides whether it meets muster?

Bassli: At the beginning, you're doing more and more spot checks on a greater number of documents or artifacts, whatever it is they're producing for you. You're watching closely and you're watching the higher number. Over time, that number should decrease and there should be much more confidence built up. At the same time, as you're learning how you do your own quality check and start to write that down in the process, that in itself is something that could be handed off to the LPO as well. They develop a stand-alone quality assurance team, and you have a segregation of duties from the team that's delivering the service. Then they can track quality based on some objective measures that you have developed together.

The word "savings" comes up a lot. Do you try to estimate savings and keep track of how much you've saved by outsourcing the work?

Bassli: Yes. In our initial business case, certainly in contracts, and as we continue to expand some of the work we do and the type of contracts we send, that is definitely one of the things that we track. We look at the cost of this work, had it gone to a law firm. And in some cases, we did move work from a law firm to an LPO. That's an obvious savings of attorney hourly rates at a firm compared to an LPO.

In other cases, we got to take work off the desks of our attorneys in-house. That's a demonstrable time savings. You can obviously allocate a billable hourly rate to an in-house attorney as well. That's not 100 percent accurate, like it is when you're actually spending part of your budget to an outside company. If you're shifting in-house work, it's not so much about the money saved, but the time savings. That is often very impactful as well.

Who supervises this work?

Bassli: We try not to oversee their work. We really want to hand off the operation for them to manage as a service and deliver to us. Having said that, we have different business owners within our department that are accountable for different parts of the work. We've mentioned the IP work, we've mentioned some of the immigration document assembly work, and then we've got the contracting work. There are three very distinct groups in our department that probably have the bulk of the outsourced work, and each one of us manages that piece of work that's been outsourced. But we don't actually manage the work – and we certainly don't manage the workers, the employees of these outsourcing companies. They have very clear hierarchies and team structures with team leads and they even have internal subject matter experts that are brought in on certain issues. We have escalation processes and matrices. It's a very process- and data-driven engagement. We are very largely hands off in the day-to-day work and instead really just expect to see reporting. It should be a very operational relationship.

I'm wondering how new workers are trained. Is there a process to teach newcomers about the company's culture and expectations?

Bassli: When we first onboarded with these companies, and were first giving them work, there was definitely a lot of training that happened and they came on-site and learned about the business. We mapped processes, we created matrices of people and relationships and information that would be helpful for them to do their jobs. Once the initial training happened, or this initial hand-off happened and we went live, the ongoing training as people roll on and off from their company, that's handled by the outsource company.

One of the factors that was of real concern to multinational companies in the early days of LPO was safeguarding their proprietary information. Is that still something that you're concerned about?

Bassli: It's like engaging any third party. With the exception of law firms, who have confidentiality obligations and obligations under the bar that we're a part of, any other company – think of the Big Four. With any consultants, you have to protect against that through the right contract. You have to have the right terms. I think it's a valid concern, as it would be with any third party that we engage, but companies like ours engage thousands and thousands of parties on a day-to-day basis to help us get our work done.

A few years ago, there were predictions that legal process outsourcing would explode into a multi-billion-dollar industry. In your view, has it grown as quickly and as robustly as those predictions suggested it would?

Bassli: I don't know what size of market they have today, so I don't know if they've reached that particular number. I do think they've grown. I think they've grown in the type of work that they're getting. They used to only do very basic type of work a decade ago. Now they're doing more robust work. They are nipping at the heels of some of the law firms, frankly. I don't think it's been an explosion, but it has been a gradual evolution as trust has been built and as quality has been demonstrated.

Lucy Endel Bassli is the founder of InnoLegal Services and is Chief Legal Strategist at LawGeex. Formerly, she was assistant general counsel overseeing legal operations and contracting at Microsoft. Bassli gained first-hand experience in outsourcing by engaging a legal process outsourcing provider to assist her with high-volume contract transactions and launched an industry-leading “managed services” engagement with law firms and expanding legal shared services and implementing operational improvements.