September 22, 2018
Modern Law spoke to Chris Bull, Executive Director, about what considerations should be made when introducing an outsourcing specialist into your business but also what are the benefits of investing in external support.
Q: How can law firms benefit from outsourcing?
A: At its most basic, every organisation, whether they are a law firm or not, should always consider, with every type of service they offer and activity they organise, do we build it or do we buy it? There is some truth in the criticism that for many years law firms didn’t question everything in that way, but it seems that all types of organisations, including law firms, are starting to take that approach. Businesses are beginning to question whether they need to do everything themselves and whether it would be more efficient and cost effective to introduce an outsourcing specialist to the strategy.
The key for firms is to question what they need as a firm and whether external support will help them to achieve that.
Q: What are the drivers for law firms when investing in outsourcing options?
A: Cost is always up there. If we got someone else to do some of our services outside of the business could they do it much more cheaply? By no means is that always the case, but it is one of the big drivers.
Convenience and quality of service are other considerations. This applies particularly to IT services. If you outsource your IT systems, they may be able to make that service run 24/7 365 and the specialist will probably know more about certain systems and processes and probably do a better job.
Q: How are the services of new model law firms being utilised by traditional law firms?
A: The model of law firms is changing, but why are they changing and what is driving that? Are they looking for new alternative legal service providers (ALS)?
People are constantly starting up new law firms and those firms are very much using new models. A lot of them won’t have staff for their core functions and their IT systems will be in the cloud; they may or not have offices and instead they will have people working in an agile and flexible way from home or remotely; and they probably won’t be a partnership. Very few firms are establishing themselves as a partnership – they are much more likely to be a limited company.
The other thing that is inspiring and changing the world we live in is the digital age. As technology evolves and matures, more people, even lawyers, get used to it at home and all the other parts of their lives.
People are getting more confident with technology. If you are in a city, it is really expensive to operate and have property and employ people, so there is often an argument to say that if we can put some of this work somewhere that is lower cost then we are saving ourselves some money and that has been a big driver amongst more of the bigger firms. We have seen lots of big names such as Freshfields and DLA Piper who outsourced big parts of their operation to somewhere else and that trend continues.
Q: How should the legal sector capitalise on new technologies entering the field in order to help with workflow and productivity?
A: There is a lot going on and there is still a lot more to do, but basic automation has probably been the primary element that firms have looked at. Repetitive tasks, like entering data, basic form filling and processing financial transactions, can now very easily be automated. I always say that you should apply a litmus test – take a look at your current process, map it out if you can and take a look at where the most paper is involved. This is a process improvement opportunity. Firms look at where there might be duplication and where there are delays, particularly if the delay is impacting the client. You should always start with the client – start with the output, what service are you want to get to the client and what are the client’s expectations – work from there and re-write your processes that way.
We are just coming into things like machine learning and artificial intelligence. It is early days but it has got great potential in the sector because there are all sorts of judgements, decisions and actions that are performed in the legal process based on a set of rules and some data and therefore you can train a computer to do them for you. People are starting to invest and go beyond just automation. It can be a daunting challenge as it is a bit of a leap into the unknown, particularly for smaller firms, it will look like a very expensive route.
Q: How are client expectations and customer service being influenced by consumers’ experience of other products and services outside of the legal sector?
A: Yes, I think they are. I don’t think outsourcing is a panacea for speed or for quality but if you are finding that your clients are demanding faster service, longer hours and are less patient and tolerant, then bringing in some outsourced support and service can help you do that, especially if you are a small organisation. Customer expectations are driving the demand for outsourced IT but also outsourced paralegal services – it is becoming more difficult for firms to deliver the kind of service that clients want around the clock, therefore they need to start thinking about how they can do that.
Q: How can the introduction of a consultant offer a firm a new perspective?
A: I go back to something I say to a lot of firms – if you are a business, of any sort, and you are facing a changing environment with more demanding clients and new competitors, particularly if you are also trying to expand and grow and be smart about the way in which you use technology – you need to look around your firm or your partnership table or your management board and look at their experience and skills and how those can help you make that move and change. Most often you will look around and there are twelve people in the room and at least eleven of them are lawyers, one might be an accountant if you are a big enough firm, most of them will have been working in this organisation since they left university, they are possibly all men of a certain age, and the question is, ‘have you go the diversity or experience and skills that you really need in order to take these big next steps or do you need to broaden out?’ There are lots of ways that firms can broaden out and that could be that firms take on non-executive directors who will have a totally different set of skills and experiences and could share some new insights.
There are a lot of unknowns in the sector, such as in technology, and there are very few lawyers who are experts in them. If you are going to try and compete and deliver to your clients something that is a lot more 24/7 365, then you really have to question whether you have got the skills and experience internally and then can be a great place to introduce a consultant. A lot of firms are increasing focus on particular sectors and types of clients and that is becoming much stronger – those firms are realising that if they can get a consultant to really advise them and get some external input they are able to properly understand what is happening in the market.
Q: How would you advise law firms wanting to invest in outsourcing services?
A: There are some big things that I would suggest that firms do – we go back to our first question; if we look at all of the things we do in a firm, whether they are done by people who we employ or they are done by third parties, we review whether we are getting the best service at the best price and whether we think they are things we should be doing ourselves or we should be buying from a third party outsourcer or sub-contractor. For me, people present outsourcing as a sensitive decision – the best firms do it really well, they are constantly open to review and challenge themselves on the automatic assumption that they have to do internally and I think firms needs to keep challenging themselves on that.
The next step is if you decide that you should be using outsourcing measures – then the question is – what are we trying to achieve? Only then do you look at who is available in the market and can meet your criteria. Then you have to have a really good process in place – set out a small number of things you want from that process. Try and understand the outsourcer’s motivation and business model – what is in it for them and understand how they make money from your contract so everyone understands what is in it for each party. Once you have outsourced, really think about how you keep the relationship working and strong.
Chris Bull has a portfolio of Retained Advisory and NED roles within the legal sector.