...The UK financial giant Lloyds Bank is close to buying CPA Global, one of India's largest LPOs. The New York Times reports that Lloyd's will purchase CPA Global for about $700M. Neither Lloyds or CPA Global have confirmed a final deal.
The Lloyds-CPA Global deal occurs just as there's an LPO industry shakeout. The smaller uncompetitive "mom and pop" LPOs are closing down. Many boutique LPOs, generally specializing in only one or two practice areas, failed to find the sweet spot. Some of India's larger Business Process Outsourcing companies (eg call center providers) have shuttered their LPOs out of fear of providing poor legal services to current clients (and killing the relationship) or frustrated that the legal "cycle" doesn't provide the immediate returns that BPO does. Or both. Finally, a handful of India's larger stand-alone LPOs are fighting for outside funding, and many are losing the battle. It's worth noting that the Lloyds-CPA Global deal puts an actual value on LPO. LPO numbers are dominated by misleading industry reports.
The shake up has led to deals like Lloyd's-CPA Global. Next, look for India's BPO global giants to take on legal services in a big way, having learned the lessons of those smaller players who dove into the pool first...
• Orange Rag Comment: Given that Lloyds is in the middle of some totally incomprehensible UK government prompted restructuring following the RBS and Northern Rock bailouts, anything is possible. We like the comment about "mom & pop" LPOs as, by coincidence, yesterday the Rag was contacted by PRs acting for three one-man-&-a-dog LPOs we'd never previously heard of, all trying to pitch us stories and get a mention on our hallowed pages – prompting us to wonder whether there are now more companies offering LPO services that there are law firms using them. CPA Global is one of the largest players in this market and its European staffers include Derk Kropholler (ex Aderant) and Jason Hulme (ex Informa).
