Once viewed primarily as a way of cutting costs, legal process outsourcing has much more to offer
Ever since the 1980s, lawyers have continually reinvented the way they work. As a species they have proved remarkably adept at adapting to the demands of their clients and taking advantage, albeit cautiously, of advances in technology. The big question, though, is whether they have understood the best way to manage their key activity, the legal process itself.
“What many law firms don’t yet appreciate, but soon will,” says Jordan Furlong, a legal industry analyst, “is that a more modern and efficient deployment of talent and systems to accomplish legal work not only reduces personnel costs, but more importantly, also increases productivity.”
In other words, a more intelligent allocation of work is not just a cost cutter, but it is also a business builder. And it is the part played by legal process outsourcing (LPO) in this new scenario which will prove vital
The pent-up potential in the legal industry for improved productivity through better infrastructure, workflow and employment systems is, according to Mr Furlong, “off the charts”. So far we have gained some hints of what is possible, but by no means the whole picture.
The past decade has seen a range of different experiments and innovations with variable success rates. However, as Barbara Mendler, managing director strategic projects and operations at CMS comments: “Legal process outsourcing is here to stay. It’s as beneficial to firms as it is to general counsel. My advice, above all, is don’t be afraid of it.”
THINKING IT THROUGH
Thinking strategically about how best to configure all the options to maximise the benefits while minimising the risks is now a key challenge for general counsel and managing partners alike. What should be headquartered and why? Where can you outsource safely? Who can you trust as your suppliers? How can you bind them into your culture? These are the questions which need to be answered whether you are planning to outsource higher-level legal work, commoditised legal activity by paralegals or an array of IT and administrative services.
What is emerging from the most progressive law firms and LPO providers is a multi-layered approach in which organisations play to their strengths, then draw on others for everything else. Hence a firm like CMS not only outsources some of its own work in conjunction with Integreon, but also itself provides, from its Scottish-based centre, an outsourcing service for the more routine and/or volume legal tasks across the business where an external outsourcer would not be suitable.
By contrast Capita is best known for providing a range of outsourcing services, but also itself owns two law firms, Cost Advocates and Optima Legal, which are regulated by the Solicitors Regulation Authority.
Progressive law firms and LPO providers play to their strengths, then draw on others for everything else
According to James Cowan, director of Capita Legal Services, the firms specialise in “delivering legal expertise through operational excellence and best-in-class business processes”. Services include legal recoveries, dispute resolution, and cost negotiations for financial services clients and insurers. Meanwhile a dedicated operation in Krakow is staffed by English-speaking Polish law graduates working as paralegals, who undertake due diligence and similar low-to-mid-level work on behalf of leading law firms.
“The combination of a leading City law firm doing the top-end litigation with a well-known brand like Capita providing the standardised work is very reassuring to clients. It means they get the best of both worlds,” says Mr Cowan. “Strategic advisory work is the core business of top law firms. That’s what they are good at. They are not necessarily so good at managing the standardised end of the job. That is where we can come in, providing a high level of service at lower-level costs.”
But LPO is also starting to grow at the high end as well. Lawyers On Demand (LOD) was set up in 2007 under the wing of Berwin Leighton Paisner by Simon Harper, who saw the convergence of three complementary factors.
He says: “First, there was the availability of a large number of high-quality lawyers, who wanted the flexibility of working freelance often on a remote basis. Second, there was the need of clients for ‘something different’, namely high-quality lawyers who could work short term or on a project basis. And, thirdly, the development of technology which would enable lawyers to work together although not necessarily in the same building or on the same site.
“What was needed was a glue to put these three elements together. That’s what Lawyers On Demand provided by selecting people with the right skills-set, and offering quality assurance and continuing professional development as well.”
The other dimension provided by LOD, however, is ensuring the relationship between client and lawyer works effectively. As a result, says Mr Harper, clients working with LOD primarily gain enhanced flexibility and strength.
Proof of the appeal of the service is evidenced by an increase in LOD’s turnover of 500 per cent in four years and a client list which includes the likes of Google, Barclays and EE.
Kerry Phillip, legal director at Vodafone and an LOD client since September 2013, explains that what she needs is flexibility and the ability to fill gaps in her team immediately. She now has on-demand, call-down facility for a set number of hours each month with LOD. But what gives her reassurance is that the LOD lawyer, who works remotely, understands how the in-house team at Vodafone works and can fit in easily as part of the team.
“The means by which legal work can best be done, in terms of productivity, sustainability and effectiveness, will become a primary consideration for legal service providers and their clients,” says Mr Furlong. Legal process outsourcing is becoming central to tackling that challenge.