Legal Process Right-sourcing…

This is the second blog post in this six-part series presenting the Canberra paper…

More commonly known as Out-Sourcing, this is one of the most significant trends you should be aware of and getting some experience with.

Wages costs are the biggest single expense, and premises to accommodate team members are also a very significant factor.

To create flexibility for high work demand times, illness or other absences, and to reduce operating costs, Australian firms are increasingly looking outside their firms, including overseas, for suitable resources, often at significantly reduced cost.

Far too many firms I raise this issue with respond with a plethora of reasons why it won’t work for them, or why it’s just all too hard.

Your competitors are getting involved at accelerating rates, so if they can gain the various advantages, including reduction in costs, you will eventually, belatedly, have to look hard at it or suffer the consequences of the competitive disadvantage.

I have commented recently in a variety of forums that the debate has moved full circle now, from firms asking what could they consider trialling with out-sourcing to early adopter heavily-involved firms looking to identify areas they genuinely cannot…yet!

Potential areas might usefully be split into “Back Office” functions and “Knowledge” or “Legal” functions…

I do not intend herein to attempt complete lists for you...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…very efficient indeed!

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 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 needs once you get beyond right-sourcing an initial area or two.

This applies also to location. The right provider for you in some legal functions may be in India, while the right provider for some back office functions may be in Australia, The Philippines, South Africa, New Zealand, or Ireland as examples only.

LPO is by no means just for “big” firms…on the contrary it provides small firms with options to help them compete on much closer to a level playing field.

IT has assisted LPO development…and to take full advantage you will need fast, secure, communication. We are discussing IT later in this session, but suffice to say here, as but one example, that cheap Apps purchased on-line for the majority of Mobile phones will turn them into a reasonable quality digital dictation tool, and allow you to immediately email work to your provider from wherever you are.

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 functions you do not actually need to do at all any more!

A small practical example provided by an attendee at a recent KMS seminar in Melbourne involved a need to urgently overnight convert two hard copy documents, amounting to some 120 pages, into a Word document.

Even if the firm had the internal resources to get it done overnight the cost would have been high. Scanning the documents to an offshore provider resulted in perfect documents turned around extremely quickly at the huge cost of less than AUD$20!

One strategy I suggest for small firms is to utilise a capable casual resource to identify areas where you should benefit most, do the research, establish the initial relationship, and get a trial going. This will increase the likelihood of you getting moving, with benefits flowing earlier and at relatively low cost.

Small and Medium Law Firms…Where To Now For Your Business Management?

Practice Management & Business Skills...

This paper was delivered at a Legalwise Seminar- “10 Points in One Day” in Canberra on Thursday 13 March 2014.

The pace of change in the Australian legal landscape continues to be rapid, and there remain many challenges, and opportunities, for Small-Medium law firms. These firms continue to make up the vast majority of firms in Australia.

In this session I will draw on 40 years in the Profession, and my day to day experiences working in or with 1331 Australasian legal practices, to pass on to you some practice management tips and traps that I observe impacting, positively or negatively, on your peers in similar firms as I work my way around Australia and New Zealand.

We have less than an hour, so I have necessarily chosen just six key areas to spend about ten minutes on each, with no particular priority in terms of perceived importance. There will be time for your questions towards the end of the session.

•            Alternative Fee Arrangements and Pricing Blog Post 10 March 2014

•            Legal Process “Right-sourcing” Five Blog Posts to follow

•            Employment Flexibility and Remuneration of Employed Lawyers

•            Business Development (“Marketing”)

•            Technology Trends

•            Opportunities To Lift Your Profit Strongly

 Alternative Fee Arrangements and Pricing

We are talking here “alternative” in the sense of alternative to billing by the hour, a methodology that has come to dominate.

Not only are many clients seeking wider and better options, but in many circumstances billing by the hour can actually be a significant impediment to you in terms of profitability.

This is especially so if for whatever reasons you have set your hourly rate too low for the value you deliver to your clients. Worse still if when push comes to shove your confidence is such that you “find” lots of reasons to not actually charge what you should!

The key point I want to make is that clients deserve a range of options in your fee arrangements, and that, properly-structured and implemented, you will also benefit greatly.

At this stage of development there is still good “mileage” to be had with the big majority of clients if you take the lead on offering a range of options for each project they bring to you, making clear they thereby have real control over their legal spend, in most cases.

It takes a little experimentation usually to get a good range of options established, and it will be ongoing for the foreseeable future, but work I’ve done with a number of firms has shown clearly that while initially not recognised collectively, many firms are already experienced with, and utilising ad hoc, many more pricing options than they thought.

A careful audit of what billing arrangements are in place now for individual clients will usually reveal in existence a small suite of options including fixed fees, fixed fees with “strike-rock” provisions, contingent fees, success loadings, various periodic retainers…some with their own versions of “strike-rock”, time-based billing with and without caps, volume-based pricing etc.

It is important to remember that being very professional and proactive about the discussion of potential fee options for clients, and being very professional about assisting clients to understand the value they should expect to receive for their investment in your services, is a big part of giving clients, and of course prospective clients, professional reassurance.

Avoid doing it at your peril. Pricing and fee options play a huge role in firm profitability, and profitability, coupled with vigorous cash flow management, ensure the ongoing financial health of your business and of the families it supports.

There is a huge range of fee options being used in the market, so many that I readily confess to not yet understanding some of them!

One of the leading consultants working in this field is experienced New Zealand lawyer Richard Burcher, at Validatum, and I commend to you his blog in particular. In a December 2013 article for “Managing Partner” Magazine, re-issued as a blog post, he listed a big range of options. The whole post is well worth a read.

The bottom line in Alternative Fee Arrangements is that you need to further develop what you already use, always being proactive with clients, and accept that if you want a client to utilise your services you need to have a mixture of skill, awareness and confidence, to communicate fully in every matter the value the client will get for their particular investment in this particular matter. One size fits all simply does not apply!

That skill will not come overnight and you will not get it 100% right every time. It’s something you need to learn, practise, and test. There is absolutely no single silver bullet.