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Mohan Ayyangar is the COO and CTO of Pangea3 Thomson Reuters. In this e-mail interview with Bar & Bench, he talks about the company’s acquisition by Thomson Reuters, the future of the LPO industry and technological developments in the field.
Bar & Bench: Any significant changes in the management structure of Pangea3 following the acquisition by Thomson Reuters, followed by the departure of the company’s co-founders David Perla and Sanjay Kamlani?
Mohan Ayyangar: Following the planned departure of Sanjay and David, the founders & Co-CEO’s of Pangea3 in 2012, we restructured our management team to create a strong growth focus and integrate with Thomson Reuters. Greg McPolin is our CEO and he leads the charge from NY. Naveen Gupta continues to be our CFO and I head Pangea3’s India Operations as COO & CTO.
Pangea3 is a part of the Corporate Counsel segment within the Legal business at Thomson Reuters. The business critical services groups enjoy a matrix organization structure. Marketing, Finance and HR functions have a dotted reporting line to the segment leads in addition to their direct reporting to the management. Core business functions like sales, service delivery and operations continue to operate without any changes.
B&B: What is your outlook of the LPO industry, in India and globally, in the next 3-5 years? Do you see areas such as patent filing, regulatory compliance etc as an emerging trend in India?
MA: Industry estimates value the current global LPO market at between $500mn and $1.1bn with $20bn of head room for growth. Even conservative estimates peg CAGR between 20-30% over the next 5 years. Going forward, we expect the US to drive majority of the demand but we are seeing a lot of traction in the APAC & European markets for compliance work in response to increased regulatory complexity and tighter enforcement. The market for Intellectual Property prep, prosecution, monetization, and administration services has seen steady global growth since 2010.
While India has traditionally been the top destination to outsource legal and compliance work, its status as a viable market for LPO work is currently limited due to the ambiguity of existing rules in addressing ethical and practice of law implications that arise from legal outsourcing. Local rules permitting, we will be prepared to address India opportunities as they present themselves.
B&B: What do you think is the biggest challenge the LPO industry faces in India?
MA: All other challenges being equal across Knowledge Services companies, the regulatory ambiguity around legal ethics and practice of law considerations that arise from outsourcing legal work is the single biggest challenge to the LPO industry.
B&B: Indian law firms have experimented with their own LPOs with little success. A few foreign law firms, however, have made progress in this field. Do you see more law firms taking such initiatives? Any reasons why previous attempts have failed?
MA: Broadly speaking, the entities you mention often face challenges that arise from being based exclusively in India or the US rather than having a firm footing in both.
The other important consideration is the leadership vision and persistence to learn and bridge the wide chasm of differences between traditional Law Firm and LPO cultures, operational models, and organization structures. As compared to Indian law firms, foreign law firms have already succeeded at setting up operations across the globe and have the organizational will and momentum to set up outsourced operations in India, market conditions and local regulations permitting.
B&B: In terms of clients, do you see an equal division between law firms and in-house departments or does one constitute a larger client segment? If so, why?
MA: In-house legal departments currently outnumber Law Firms by a large margin in our customer base. We expect that bias to change fast given the obvious reciprocal benefits of the LPO – Law Firm partnerships in a challenging new legal environment where the client is driving disaggregation and right tasking of outsourced work as a value multiplier.
The notion of end-to-end managed solutions that leverage expertise (know how), content, technology and services is beginning to gain traction in the legal market place.
B&B: In a 2012 interview, Sanjay Kamlani and David Perla of Pangea3 had said that India remains an attractive hiring ground because of the large number of law graduates. Your thoughts on recruitment trends in India?
MA: I stand by that even today. The only difference is that we’re seeing interest in LPO (by law grads) grow exponentially. The opportunity to work with an international clientele and exposure to sophisticated global legal work is unparalleled when compared with traditional legal careers in India.
B&B: Do you see predictive coding as the “next big thing” in the e-discovery world?
MA: There is a lot of excitement around predictive coding technologies in the e-discovery world and not without good reason. General awareness and acceptance of predictive coding and the availability of opportunities to leverage this capability are on the rise. We appreciate the long-term potential of predictive coding and see ourselves as early movers in the space.
B&B: Lastly, what is the investor climate in terms of the Indian legal market? Have you noticed any change in interest levels in the recent past?
MA: The 2013 economic slow-down, and political & bureaucratic lethargy have clearly impacted India’s general competitiveness as an investment destination globally. However, anecdotal evidence such as recent M&A activity and the launch of a few new legal outsourcing startups point to a modestly positive outlook.