By Jeffrey Teso of CPA Global

Before you start working with a Legal Process Outsourcing (LPO) company, there are a number of steps you need to take. These include:

1. Evaluating the quality and reliability of the company;
2. Investigating the company’s background and reputation;
3. Performing reference checks;
4. Asking about the company’s hiring and training policies;
5. Vetting the qualifications of the individuals performing the work; and
6. Meeting with core management staff.

It is essential that you make a visit to the site of the LPO company where the work will be performed, even if the work is being outsourced a great distance away, such as India.

You should also prepare the instructions for the review team, participate in the team’s training and participate in regular meetings and communications with the review team. It is important to establish formal processes and document questions and answers between the two parties.

If you provide follow up instructions to the LPO team, make sure to document that as well. That trail can be very helpful in making sure that it is clear that it is a lawyer that is supervising the guidance.

Take time to ensure the quality of the work and to make sure the LPO company and all relevant subcontractors have the relevant confidentiality, non-use, non-disclosure agreements in place. Make sure your LPO company has the ability to create meaningful and actual separation (Chinese Walls) among matters being delivered for different clients.

How Should Billing Be Handled?

The rules on how billing of LPO costs should be handled are less than clear. However, there are two views that are emerging.

The first is that LPO should be treated as an expense or disbursement, also known as a pass-through cost. Most opinions suggest that a lawyer is limited to charging the direct cost associated with outsourcing, plus a reasonable allocation of overhead expenses associated with managing the outsourced resources.

The alternative view is that LPO work is treated as a component of legal services performed. Under this viewpoint, a lawyer can mark up direct costs of outsourcing, provided that the lawyer takes responsibility for the LPO work and the total charge represents a reasonable fee for the services provided to the client.

Relevant opinions make clear that regardless of approach, before engaging the services of an LPO company, the lawyer should disclose to the client the basis upon which it will be billed for the outsourced services.

Jeffrey Teso is Director of Operations at CPA Global, a leading global provider of outsourced legal services. Mr. Teso oversees CPA Global’s U.S.-based delivery operations, and works with clients to help them manage the risks and costs associated with discovery and document management in connection with complex civil litigations, regulatory investigations and business transactions. Mr. Teso has over 10 years’ experience managing and supervising delivery of multiple litigation and regulatory matters the complex across various industries.

Teso was a featured speaker on the LexisNexis® Webinar: Bensen & Myers’ Best Practices for Litigation Management: Budgeting Tools, Settlement Strategies, and Solving Ethical Dilemmas, on May 12, 2011, along with Eric E. Bensen and Rebecca Kelder Myers, co-authors of Bensen & Myers on Litigation Management.