The article raises a number of questions about the LPO system but seems to miss one or two issues. Intra-firm trust can be a serious issue in many firms - why else do so many spend so much time persuading partners to be open with information. If lawyers can have difficulty assuming that anyone else in the firm can do the work "properly" then I'd suspect that the chance of them using people outside the firm are very low. Larger firms are presumably already in a position to do this. The "big boys" can logistically offer 24 hour service (without simply demanding longer hours from the lawyers working on the deal or case) - but how many of them will work in this way at a matter level? So why will it be any different for smaller firms? Why should they choose to outsource to offer this service?
One vital things is required. The quality of service. Any outsourcing firm must be able to offer at least the quality of service provided by the "host" firm. The "host" firm must be absolutely sure that the work provided will be good enough every single time. The firm must also be absolutely sure that the client will be happy that the matter is being dealt with in this way. It is one thing to explain that the firm's Hong Kong office will be dealing with the matter out-of-hours - it is quite another to explain that a completely different firm will be working on the client's matter.
The issues above are very serious - so serious, in fact, that I doubt about the practicality of outsourcing a client matter in the way described in the article. Efficiency in processing is absolutely vital - but outsourcing it is a much more complex thing altogether. It will come - and possibly come soon - to law firms. It will, however, be in simple, transactional issues rather than in any complex litigation, I am sure.
Update: James has an interesting take on this item - see here.