Successful Outsourcing Strategies for Law Firms

Successful Outsourcing Strategies for Law Firms EDWARD BROOKS PUBLISHED BY IN ASSOCIATION WITH Successful Outsourcing Strategies for Law Firms is ...
1 downloads 2 Views 1MB Size
Successful Outsourcing Strategies for Law Firms EDWARD BROOKS

PUBLISHED BY

IN ASSOCIATION WITH

Successful Outsourcing Strategies for Law Firms is published by Ark Group

UK/EUROPE/ASIA OFFICE Ark Conferences Ltd 6-14 Underwood Street London N1 7JQ United Kingdom Tel +44 (0)207 566 5792 Fax +44 (0)20 7324 2373 [email protected]

NORTH AMERICA OFFICE Ark Group Inc 4408 N. Rockwood Drive Suite 150 Peoria IL 61614 United States Tel +1 309 495 2853 Fax +1 309 495 2858 [email protected]

AUSTRALIA/NZ OFFICE Ark Group Australia Pty Ltd Main Level 83 Walker Street North Sydney NSW 2060 Australia Tel +61 1300 550 662 Fax +61 1300 550 663 [email protected]

Online bookshop www.ark-group.com/bookshop

UK/Europe/Asia enquiries Robyn Macé [email protected]

ISBN: 978-1-908640-87-1 (hard copy) 978-1-908640-88-8 (PDF)

Reports Commissioning Editor Helen Roche [email protected]

US enquiries Daniel Smallwood [email protected]

Copyright

Reports Publisher – International Fiona Tucker [email protected]

Australia/NZ enquiries Steve Oesterreich [email protected]

The copyright of all material appearing within this publication is reserved by the authors and Ark Conferences 2013. It may not be reproduced, duplicated or copied by any means without the prior written consent of the publisher.

ARK2335

Successful Outsourcing Strategies for Law Firms EDWARD BROOKS

PUBLISHED BY

IN ASSOCIATION WITH

Contents Executive summary.............................................................................................................VII About the author................................................................................................................IX Chapter 1: The legal process outsourcing trend................................................................... 1 Defining legal outsourcing...................................................................................................... 1 The history of legal outsourcing.............................................................................................. 1 The threat to address............................................................................................................. 2 Chapter 2: What is strategic legal process outsourcing?...................................................... 5 Determining a strategic focus.................................................................................................. 6 Moving from tactical to strategic LPO...................................................................................... 7 The journey to strategic LPO................................................................................................... 8 Initiating a strategic approach................................................................................................. 8 Chapter 3: LPO in perspective – The challenge to law firms............................................... 11 The challenge to the business of law..................................................................................... 11 Chapter 4: The geography of legal outsourcing................................................................. 15 Offshore............................................................................................................................. 15 Onshore............................................................................................................................. 16 Nearshore........................................................................................................................... 17 Selecting the right geography................................................................................................ 17 Chapter 5: The challenges of legal outsourcing................................................................. 19 The legal challenges............................................................................................................ 19 The outsourcing challenges.................................................................................................. 21 Chapter 6: The benefits of legal outsourcing..................................................................... 25 Risk.................................................................................................................................... 25 Investment........................................................................................................................... 26 Operational capacity........................................................................................................... 27 Cost................................................................................................................................... 28 Chapter 7: The scope of services....................................................................................... 29 What to include................................................................................................................... 29

III

Contents

What to exclude.................................................................................................................. 29 Core LPO scope.................................................................................................................. 30 Non-core LPO scope........................................................................................................... 31 Chapter 8: Data capture – Building the business case....................................................... 35 Competing for the outsourcer’s attention............................................................................... 35 What data to capture........................................................................................................... 35 Future data......................................................................................................................... 37 Practicalities of data collection.............................................................................................. 37 Chapter 9: Ethical compliance........................................................................................... 39 When things go wrong......................................................................................................... 39 Addressing ethics: The American Bar Association................................................................... 40 Value from strategic LPO...................................................................................................... 41 Ethical compliance in a strategic relationship......................................................................... 42 Chapter 10: Supplier selection – Part 1 – The methodology............................................... 45 The process......................................................................................................................... 45 Defining the scope of services............................................................................................... 45 Building the RFP.................................................................................................................. 46 Selecting suppliers to invite................................................................................................... 46 Scoring the selection process................................................................................................ 47 Chapter 11: Supplier selection – Part 2 – The journey........................................................ 49 Setting the tone................................................................................................................... 49 Managing supplier interactions............................................................................................. 49 Reading RFP responses......................................................................................................... 50 Executive alignment............................................................................................................. 50 References........................................................................................................................... 51 Solution sessions.................................................................................................................. 51 Site visits............................................................................................................................. 52 Best and Final Offer............................................................................................................. 52 Chapter 12: Managing strategic partnerships and measuring progress.............................. 55 Cultural alignment............................................................................................................... 55 The team............................................................................................................................ 56 Having the right skill sets...................................................................................................... 56 Managing the service........................................................................................................... 57 Measuring progress............................................................................................................. 58 Chapter 13: The strategic LPO project plan....................................................................... 61 Strategy............................................................................................................................... 62 Writing the RFP.................................................................................................................... 62

IV

Successful Outsourcing Strategies for Law Firms

Supplier selection................................................................................................................. 63 Contracting......................................................................................................................... 64 Transition planning............................................................................................................... 64 Chapter 14: Lessons learned............................................................................................. 67 Lesson 1: The validity of the strategy..................................................................................... 67 Lesson 2: Change is achievable............................................................................................ 68 Lesson 3: Real change is hard to do alone............................................................................ 68 Lesson 4: LPO can really grow the business........................................................................... 69 Lesson 5: Clients do not see the concerns.............................................................................. 69 Lesson 6: LPO scope is not set in stone................................................................................. 69 Lesson 7: You are not alone................................................................................................. 70 Chapter 15: Learning from the corporate world................................................................ 71 The experience of the corporate world................................................................................... 71 Lessons for law firms............................................................................................................ 72 Finance outsourcing as a starting point.................................................................................. 72 Applying the experience to legal process outsourcing............................................................. 73 Impact on selection of the LPO supplier................................................................................. 74 The CFO and CIO as change leaders................................................................................... 74 Case study 1: Integreon – Providing the LPO supplier perspective...................................... 77 Case study 2: Bingham McCutchen LLP – Opening a Global Services Center..................... 85 Appendix 1: Building the request for proposal (RFP)........................................................... 87

V

Executive summary WHILE THE roots of the legal outsourcing market have been around for many years, its growth over the last five years has beaten all expectations, achieving 30+ per cent year on year growth, and topping $1.1bn in market size in 2012. This has been fuelled by the economy’s slow progress and real pressure on legal budgets, and it has also led to an awareness that certain legal services can be delivered differently – by suppliers who are not law firms. By breaking the pattern of automatically using law firms for low level, but essential, transactional legal work, the evolution of legal process outsourcing (LPO) has put in place changes that will not be unwound. The typical response by many law firms over the last five years has been to do very little to address the change, or to take tactical steps to incorporate legal outsourcing within its service delivery model. This has proven effective on a project by project basis, but really leads to the fundamental question as to where a law firm should be investing and growing its capabilities, and where it should be deciding to leverage the deep specialism of legal outsourcing suppliers. This shift from tactical to the strategic use of legal outsourcing is the next wave of change facing law firms. While it does require hard decisions and deep analysis of the options available, the opportunity is to have the best of both worlds – a firm that can demonstrate its ability to focus on providing the highest level of advisory

services to its current and future clients, while also delivering those clients a cost effective but highly specialized set of transactional legal services. This report addresses this shift towards strategic legal outsourcing and outlines the various challenges, benefits, and considerations to be made by law firms, and in doing so provides concrete guidance for law firms considering their own legal outsourcing strategies (or for law firm leaders who simply want to learn more about the process). The report discusses the overall value of legal outsourcing. Despite the challenge of change in any established organization, the reality of a client base that is adapting its spending approach to incorporate the use of LPOs is one that has to be faced up to by law firms across the world. While this entry-point analysis creates a negative context for the wider strategic debate, the positive attributes of a strong, long term, and visionary approach to legal outsourcing will outweigh it. It is hard to look past the strategic value of accessing a lower cost delivery model that requires no further capital investment, frees up the firm’s skilled legal staff to provide high-value advisory services, gives flexible capacity that can be turned on and off at short notice, provides a trained expert skills base that is also imbued in project management, process, and quality excellence, and is wrapped in a transparent reporting framework that allows almost real time monitoring.

VII

Executive summary

For larger firms, there is always a political and logistical question about how they even explore this kind of model. However, for smaller firms, it provides them with access to a platform that is otherwise unaffordable and unachievable, giving them the capacity and capabilities to compete for significantly larger volumes of work. This in itself sets up another competitive threat to the larger law firms from more effective and capable smaller firms who have seen the advantage from a strategic legal outsourcing model. Successful Outsourcing Strategies for Law Firms provides comprehensive advice for law firm leaders who are considering a legal outsourcing strategy, and it addresses the main considerations which are to be made in relation to that strategy. It provides detailed advice on the main aspects of an outsourcing strategy such as the challenges and benefits, the ethical concerns, and the business case for outsourcing. Guidance has also been included on defining the scope of outsourcing strategies and expert advice is provided in relation to supplier selection and management, and the question of where to outsource to. A case study interview with Robert Gogel, CEO of Integreon (an LPO supplier who have previously entered into deals with firms such as Allen & Overy and CMS Cameron McKenna), has also been included to provide the supplier perspective in relation to LPO work and to provide additional advice for law firms considering a legal outsourcing engagement. Outsourcing represents a change, and organizations in any sector and of any size face considerable challenges when considering changes to established ways of operating. The benefit of a firm-wide understanding of the rationale behind the changes and the real value – to clients and to the firm itself – from embracing those changes is discussed in this report.

VIII

The report finishes with a focus on the lessons learned so far in legal outsourcing. As with any significant change program, the adoption of strategic LPO will create challenges across the organization. The actual transition to the new delivery model will take in excess of 12 months, during which the visibility of real progress needs to be emphasized while any real issues are quickly recognized and addressed. Successful Outsourcing Strategies for Law Firms aims to equip legal professionals with the required knowledge and understanding of legal outsourcing in order to consider and develop their own LPO strategies. Legal outsourcing will not disappear and, to the contrary, it will continue to take an increasing share of the lower value work that would automatically have been given to law firms. So, for law firms the question is how to react to those changes, not whether to react.

About the author EDWARD BROOKS is an expert in outsourcing and runs The LPO Program, a new-wave consulting business that delivers its clients the tools, knowledge, data, and support necessary to carry out complex legal process outsourcing projects. The LPO Program enables law firms and in-house legal counsel to quickly determine the appropriate LPO strategy for their specific circumstances. Edward joined Accenture in 2000 and since then he has had 11 years in the outsourcing and offshoring sector leading over $5 billion worth of deals in areas as diverse as finance and accounting, HR, clinical research, customer services, and legal process outsourcing. This experience has covered the full project life cycle from designing and selling delivery models, through to implementation and operation. For the last four years Edward has worked as an advisor to major corporations and law firms, taking them through the complex process of determining the appropriate outsourcing delivery strategy (whether in-house, onshore, offshore, or outsourced) and then ensuring the successful implementation of that strategy. As a chartered accountant with experience of running businesses and establishing new ventures, Edward brings his strong commercial experience to any organization he works with. He has had extensive practice in keeping executives and project teams focused on strategic objectives and the short-term issues involved in strategic arrangements. Edward can be reached at [email protected]

IX