July 2006
By Richard Phillips, Operations Director, www.outsec.co.uk

Part Three: Who is outsourcing in the legal profession?

The Red Queen Effect

In Lewis Carroll’s “Through the Looking Glass”, Alice and the Red Queen had to run faster and faster just to stay still. Legal firms will soon encounter this “Red Queen Effect” in business terms, with clients expecting better service levels at the same or lower prices. Outsourcing is just one way of meeting these demands. Political pressure through the White Paper recommendations of October 2005 will make outsourcing of most non-essential office functions commonplace within the legal profession in a few years. But along with the government imperative, there must also be an economic and personal willingness to embrace the new way of working.

There will always be certain characters within law ( but not exclusively in that profession it must be admitted) that doggedly resist change at all costs, and equally there will always be others that rush headlong into the blinding white light of technology, heralding each new piece of software or gadgetry as the universal panacea they have been seeking all their working lives. A line must be found between these two extremes for future legal success.

The practice of moving to off-site resources will naturally have greater appeal in certain specific disciplines of law where the nature of work lends itself to the process. Large volume of repetitive effort where there is little room for error is a classic example of early outsourcing success –think “production line method”. This routine work becomes a form of data-processing and is ideally suited to automation. A transcription service, voice recognition program or case management system can be applied as a solution with much the same degree of success. There is little point processing such work in-house when much if not all of the documentation can be assembled remotely at a greatly reduced cost and in-house staff can be utilised on more productive and profitable matters.

Legal factories of the future
Huge factories exist in the Far East just to service the call-centre and dataprocessing requirements of European and American companies. The skill element is minimal in the business mix in these instances and cost-saving is the paramount consideration when choosing a partner. If your firm produces a large amount of repetitive, low-grade keyboard entry work and fixed costs are high at home then India is an obvious route to take. For those at the bottom of the legal profession’s food-chain, it is a quick easy way to boost profits and ensure company survival in the global market place.

Outsourcing companies can assist law firms in many areas including:

• indexing and scanning documents
• transcription and secretarial support
• software coding
• converting physical data into electronic form
• reviewing transactional and litigation documents
• drafting contracts
• due diligence reports
• prosecuting patents
• surveying laws of various jurisdictions
• collecting debt
• invoicing and accounts
• data storage

Offshoring versus Outsourcing
Offshoring, where larger Western law firms set up their own offices in the Far East is now also common. Such movements overseas are likely to hit lowlevel work typically performed by UK-based legal assistants, paralegals and possibly even junior lawyers. Those who cut their teeth on basic assignments will suffer as in future many of these will be processed abroad.

For smaller legal firms, offshoring is not normally a practical option as the administrative burden will outweigh any financial benefits that accrue. However, for those firms where compliance issues arise and national and international regulations apply during the routine course of document creation, it may be the only outsourcing option available.

The perfect partner
Invariably the most profitable areas of law are those that require specialist knowledge combined with a non-routine work process. This is true both of the lawyer and secretary who are equally highly prized parts of the business jigsaw. In these instances the decision to outsource is invariably not a costsaving one. It is more likely to be attributed to employment, recruitment or space considerations. The outsourcing partner is a much more highly valued part of the business mix and quality of work is the paramount consideration. A case management program will not normally have any great value and voice recognition is of limited use due to non-specific terminology and multiple speakers.

Areas of law suitable for specialised outsourcing would include:

• personal injury
• family
• matrimonial
• interview and witness statements

These require keyboard skills that can only be acquired through experience. Secretaries familiar with terminology, the due process of law, and in possession of sector-specific knowledge are a valuable commodity – outsourcing this part of the labour process is an effective way to access a wider and more experienced database of potential workers who are no longer bound by geographical proximity to the office. The internet offers a global marketplace for the provision of support services by both individuals and companies. There is a further benefit in that existing staff are free to operate in a more productive and accountable manner, with legal secretaries often being upgraded to para-legal status.

Marry in haste...
It is a truism that lack of successful application of automation and technology in any field will place a greater value on the input of the individual in that process. Choice of a successful outsourcing partner is vital and it is emphatically a false economy to select one based purely on price in the premium legal disciplines. To paraphrase Marshall McLuhan, ‘The trouble with a cheap business partner is that you never stop paying for them’.