07 Sep LPO possibilities in Bulgaria
LPO – also known as legal process outsourcing refers to the practice of a law firm or corporation obtaining legal support services from an outside law firm or legal support services company (LPO provider).
When the LPO provider is based in another country, the practice is called offshoring and involves the practice of outsourcing any activity except those where personal presence or contact is required, e.g. appearances in court and face-to-face negotiations.
From a historical perspective this practice has been a part of the legal experience since the 1950s, where it was restricted only to patents. Later, firms began to contract certain services to back door firms.
The process of subcontracting part of the legal process to different countries is at a nascent stage, with relatively consistent market growth. Legal process outsourcing has predominantly been to countries that had previously taken advantage of the business process outsourcing wave.
The concept of legal process outsourcing is based on the division of labour principle, prevalent in law firms, where various time consuming and onerous processes like due diligence are delegated to paralegals, document reviewers or interns.
This allows the firm to address the various legal issues that arise on a daily basis while being able to streamline productivity.
The process involves a contract, with due consideration, between both firms.
The following are the various methods by which the process could be initiated:
- Direct Contract – This is the most straight forward means of establishing contact. The firm needing legal services directly approaches the legal process outsourcing vendor.
- Managed Outsourcing – This is a case where the firm establishes contact with a legal process outsourcing vendor and retains a traditional law firm to coordinate the vendor’s activities and to ensure quality control.
- Required Outsourcing – This form of outsourcing occurs when the firm mandates a certain level of outsourcing in the legal process, either to reduce costs or to fulfill statutory requirements.
- Multi-sourcing – This involves segregating the work assigned to LPO providers in order to reduce risk and take advantage of each provider’s strengths. This approach is helpful in cases where expertise is required on matters of jurisdiction and merits.
Having more than one provider “on deck” also allows a service recipient to obtain more favorable pricing. On the other hand, multi-sourcing can be more complicated than other approaches. Successfully managing multiple, competing providers requires strong and effective governance procedures.
Is it possible Bulgaria to be a competitive destination for LPO?
According to recent surveys Bulgaria is one of the most competitive countries for BPO (Business process outsourcing). Therefore, from this perspective, it is a natural process of development in another market niche of the business model of process outsourcing.
The primary benefit for LPO Company to outsourcing in Bulgaria is that they retain the quality that they would have if the work is executed in USA, UK, Germany, France or Italy. Additionally, with more than three times as many law students graduating each year than there are job places, Bulgaria has a significant number of skilled young lawyers looking for work.
What are the Bulgarian competitive advantages to other parts of the world?
With a well-rounded education system and its high ratio of graduates per capita, Bulgaria is compared to the other countries in EU and USA. Labour market regulations in the Bulgaria, including working hours, are flexible, and staffing costs are highly competitive with salaries – including personal tax of 10%.
Bulgaria offers an ideal location for higher value qualitative work such as due diligence, IP services, governance, risk management and compliance. Employer’s national insurance rates are among the lowest in Europe with only 17.8%.
There are 50 universities in Bulgaria and 9 of them offer master courses in law, producing over 2000 law graduates each year. This, coupled with the dynamic and vastly experienced BPO workforce (Bulgaria is ranked 9 in 2014 A.T. Kearney Global Services Location Index), makes Bulgaria the ideal location for an LPO business to succeed.
Bulgaria is member of EU although the does not have the price advantage for LPO, compared to India or The Philippines but Bulgaria is still substantially cheaper than other regions around the EU. Salaries in Bulgaria are according to Euro stat 10 times lower than in other EU countries. Rental and overall facility prices are also substantially lower.
Bulgaria facts – general information:
- Population- 7.3m
- Labor force- 4.6m
- Time zone- GMT+2 / EU
- Only 10% corporate tax
- Unemployment rate – 9.5%
- Average wage – 500 EUR – lowest labor cost in the EU
- Social Security Rate for Companies – 17.8%
- Social Security Rate for Employees –12.9%
Some educational facts
- Educational system – 50 universities
- Universities offering law degree – 9 with 2000 law graduates+
- Many law graduates from leading EU universities
- Language skills – proven tradition of specialization in major or local languages
What are the potential services from Bulgaria?
- Company formation
- Bookkeeping and billing
- Contract management
- Contract review
- Data analysis and management
- Document drafting
- Document production
- Due diligence
- General litigation support services
- Intellectual Property (IP) services
- Legal research
- Legal transcription
With a strong background in business process outsourcing Bulgaria has an advantage for legal outsourcing. Sofia, in particular, is known for its young and well educated population.
Bulgaria share culture with other EU countries making communication and shared work easy.
Additionally, travel to and from Bulgaria is straightforward with over 200 flights per week to major EU cities, lasting from one to two hours, often at low prices. Furthermore, Bulgaria has good infrastructure, with the technological and telecommunications systems in one of the first places in the world necessary to support international work.
Bulgaria has a strong background in knowledge-based BPO and IT outsourcing.
While the BPO industry has limited scalability, due to the fairly small population of Bulgaria (certainly when compared to places like India), there is currently a surplus of trained lawyers.
Not on the last pro-business government policies and a favorable tax regime with only 10 % corporate tax, and only 1 EUR capital for establishment of a new company – Limited Liability Company.