August 2006
By Richard Phillips, Operations Director, www.outsec.co.uk
Part Four: Where Outsourcing Works
Outsourcing and offshoring are buzzwords that have been circulated by certain parties in the legal profession as ‘the next big thing’; the perfect business solution to all those administrative nightmares It is the proverbial silver bullet that will kill all those expensive fixed back-office costs and ensure future commercial existence in the global marketplace. The business mantra for the 21st Century is an easy one to learn – ‘Outsource, Cut costs, Increase profits, Survive’. But is it really that simple? Does outsourcing really work? The practice of a business (or individual) turning to an off-site resource for support is not new. You would not think to deliver your own parcels, clean your own office, or design your latest brochure, so why would you type, invoice, archive files or answer the phone when someone (or something) can do it cheaper, faster and quicker?
Pick and Mix
The rapid spread of broadband with its always-on high-speed access to the
internet has opened up the office door to a global sweet shop of services,
from which the legal firm can now pick and mix. New companies are springing
up to meet this huge increase in demand, located both in the UK and abroad.
Call centres, IT support, website design, transcription services, secretarial
support, data storage, invoicing and factoring are just some of the tasty
morsels on offer in the cyber-confectionary store. Some companies will gorge
themselves on this new diet and rapidly get indigestion. Others will abstain
from any participation and slowly starve to business death. The smart firm will
analyse those parts of it’s operation that can be outsourced and snack
accordingly.
The Cascading Effect
One element of the business mix that is already coming to prominence is the
delegation of specific parts of a large firm operation to smaller operations,
further down the legal food chain. Informal arrangements between law firms
have existed for many years. Smaller firms with lower cost bases can help
deliver a particular project for a client. One such example has been the
relationship between the Prudential funds and three participating law firms;
Lovells, Cripps Harries Hall and Knight & Sons. The property deeds and all
the documentation for any property instruction are scanned and stored
electronically and all precedents are shared between the firms electronically.
“Whilst it is particularly useful for firms based in the City of London, it could
also work for large firms based in other major financial centres around the UK
where there is a significant difference between the cost of their services and
law firms outside those areas” says Michael Stevens, Senior Partner at Cripps
Harries Hall LLP.
Optimum Allocation
Best business practice advocates optimum allocation of finite resources – in a
legal firm the fee-earner must be freed up to maximise revenue by removing
all other non-productive distractions. Sue Bence, a partner with Leigh Day and
Co, specialist personal injury solicitors with one of the country’s largest clinical
negligence and human rights teams, is a firm advocate of outsourcing and
was an ‘early-adopter’ of the practice in-house. “It has made a huge difference
to the running of my particular department, increasing both efficiency and
output. It does not necessarily suit all areas of law or practice, and those with
sophisticated case management systems and fairly repetitive processes or
low revenue work will probably not see much gain. However, for those
practicing in the higher value personal injury market, in family or in criminal
law, I can see huge advantages – the fact my team no longer needs to train or
use temporary secretaries is a massive bonus. As a firm, we feel it is
important to look into the ethics of the situation before setting up any form of
outsourcing arrangements. We have been at pains to ensure that the people
who do our outsourced work have proper pay and conditions including
ergonomic assessments of the way in which they work”.
Size Matters
It is a paradox that outsourcing seems to work best in a small to mediumsized
enterprise (SME). Existing staff can be retrained and utilised much
better in a small operation. Rather than being made redundant the worker can
move departments, be promoted or take on new roles and responsibilities
which leads to personal empowerment and a stronger long-term position
within the firm. Moving the existing staff skills-base upmarket is a simple and
effective way to increase productivity, improve profitability and enhance
company value. Shedding staff is the least efficient and most disruptive
scenario, especially for large-scale employers, with its associated lay-off
costs, negative publicity and lowering of morale. Sometimes, the redundant
employee can move to the outsourcing supplier, an elegant switch that has
obvious and immediate benefits for all parties. This is often dependent on
geographical considerations but the trend is growing and with teleworking
becoming a viable and attractive option it will be an important factor in the
future successful application of outsourcing.
The Perfect Marriage
There is a truism that “the more you invest in a marriage, the more valuable it
becomes”. The same certainly applies to the relationship between legal firm
and outsourcing provider. There does appear to be a ‘best-fit’ between client
and off-site provider. A possible lonely hearts ad might read: “Flexible, fairly
slim, open-minded but experienced legal firm with too much work and not
enough time, seeks like-minded partner with a view to partnership and longterm
commitment – distance not a problem, prepared to change old habits
and embrace the new if required”.
