In my experience when the thoughts of the bulk of lawyers in
Australia and New Zealand turn to LPO they do so quite narrowly…
I thought it an opportune time early in another year to
“pen” a few thoughts on LPO, hopefully as a “heads up” on where the trends are
going…
Leading commentators are indicating that the bulk of law
firms are very slow to react in this area, but that doing nothing is simply not
an option. Two key practice costs are just so cripplingly high for most
firms…staffing costs and premises costs…that major savings have to be found.
I read somewhere recently that someone suggested we think
not of outsourcing per se, but of “Right-sourcing”.
With pressure definitely increasing on pricing, and more
sophisticated clients demanding that firms find ways to deliver services with
better value, right sourcing is something that must be looked at.
I’m not going to canvas social issues here. Given that the
trend to outsourcing is essentially client-driven, I can’t see how genuinely
client-focussed firms will be able to resist. Ironically, as the GFC has
dragged on in its effect, and financial disruption, even chaos, has impacted
some marketplaces, there is renewed room for firms to include onshore options
closer to home when they are looking at provider options.
A bigger available workforce, keen to work, for less
remuneration, and cheaper premises, especially on the outskirts of some cities,
means that not every LPO option is in India, The Philippines, or South Africa!
It is suggested by experienced LPO players that beginners
start small and test the waters, so I will start by suggesting a list of some
areas you might want to be aware of as possibilities.
In this regard I have to pass on a comment I heard recently
that in terms of what firms outsource the trend in leading firms is now to
assume everything is up for grabs, and probably to end up for the time being
hanging on only to relationship management and work that requires experienced
judgment calls! In other words it’s not what can we outsource, but what can’t
we outsource!
LPO might usefully be split into “Back Office” functions and
“Knowledge” or “Legal” functions…
I do not intend to attempt complete lists...the situation is
simply too fluid.
“Back Office”…
Event Management
Library and Research
Transcription/Word processing
Database Management
Data Entry
Payroll
Billing (all the Admin aspects)
Accounts Payable
IT Network
Website design
Website Maintenance
Financial Reports
Secretarial Support…as long as the proverbial piece of
string!
Knowledge Management incl. Precedents
Power Point Presentation preparation
Activity Capture entry…I still see many firms where this is
not done universally as direct entry by “authors”…many still complete Timesheets,
and a few even then enter to the computer system themselves!
Call Centre including out of hours “switchboard”…
Client/Market Surveys
“Legal”…
Litigation Support…a very wide-ranging area!
Document Review
Contract drafting
Research and Analysis
There is a wide range of LPO providers and they have their
strengths and weaknesses. Choose an initial provider wisely after good
research. It should not be assumed that you will use one for all your LPO needs
once you get beyond right-sourcing an initial area or two.
This applies also to location. The right LPO provider for
you in some legal functions may be in India, while the right provider for some
back office functions may be in The Philippines, South Africa, New Zealand, or
Ireland.
LPO is by no means just for “big” firms…on the contrary it
provides small firms with options to help them compete on closer to a level
playing field.
IT has assisted LPO development…and to take real advantage
you need fast, secure, communication.
Savings range across a broad spectrum, with 30% being very
common, and 50% being not at all uncommon. Commonsense suggests start with the
low hanging fruit where the results will give strong returns for the
dislocation of the process changes. Further, looking carefully at what you do
with a view to right sourcing can reveal areas you do not actually need to do
at all any more!
Certainly do not expect that you will be able to simply
“pocket” all the savings. Firms thinking they can simply subcontract legal work
and add a juicy margin are in for nasty surprises.
Early adopters will use the strategic advantage to provide
clients with improved value for money, and may actually improve profitability
through attracting more of the right sort of work at satisfactory price levels.
Late adopters can expect to be “chasing the game” just to
stay in it at all.
A very useful resource is “Legal Process Outsourcing-A How-To Guide” from the Association of
Corporate Counsel. How-To Guide To LPO
This
overview provides ideas and best practices to consider when looking at Legal
Process Outsourcing and includes tips, comparisons, additional resources, a
listing of providers, and a selection checklist. There are also a lot of other
excellent resources in relation to LPO on the ACC site, including tips on how
to choose an LPO provider, and ideas for outsourcing the right things for the
right reasons.
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