Re-Tooling Law Firm Support in Response to Crisis

Firms target back office cuts amid cost pressure in LegalWeek.com (12 March 200) provides a great snapshot of senior partner views about law firm support costs in the UK.   With revenues shrinking, firms are thinking hard about managing costs and considering options such as outsourcing.

LegalWeek surveyed UK partners on which law firm support functions partners want cut the most.  It’s instructive to start with those that partners don’t think are over-staffed.  Only a handful (4%) think IT should be cut.  As an ex-large law firm CIO, I know that both UK and US firms reacted strongly in the 1990s to growing IT costs and took steps to assess, benchmark, and control.  Finance and HR would also be spared by most partners.  These two functions never grew explosively as did IT so arguably are close to being “right sized”.

So, just where do partners think the cuts should come? Almost 20% want to cut marketing, which mushroomed in many firms with insufficient attention on its return on investment (ROI).   Few firms have applied the same rigor to marketing spending that they did to IT.

At biggest risk, however, is secretarial and admin support, which 54% think should be cut.  That is no surprise.  Secretarial job functions started changing 20 years ago as lawyers began using PCs.  Yet only a few firms have systematically assessed how to re-align admin staffing to meet new support needs.

It is clear that new support models are required across the board.  For example, top 30 UK law firm Osborne Clarke recently adopted a completely new support model, outsourcing much of its Middle Office to Integreon. And, as the article notes, Clifford Chance “currently offshores and outsources support functions to a centre in India.”  (For more information, see the Integreon press release Integreon to Build Service Center in Delhi to Support Global Administrative Functions of Clifford Chance.)

Firms not ready to adopt an entirely new approach can start with “point solutions.”  For example, “[o]utsourcing document processing can slash payroll and facilities costs, reduce turnaround time, and boost in-house secretarial careers“.  That is the sub-title of of the Legal Management article Dealing with Documents (PDF, Sept-Oct 2008).

LegalWeek reports that almost one-third of respondents “said that outsourcing and offshoring support functions will become more important to law firms moving forward as firms look to cut costs.” We think outsourcing makes sense.

Law firms must reduce costs.  Layoffs address only a short term problem – firms must rationalize support and costs for the long term.  Most law firms, however, lack the capability to do so on their own.  Few have internal operations consulting capabilities that can evaluate and benchmark their operations against best in class peers. Law firm management consulting firms are great for strategy, finance, marketing, and technology.  For operations and support, however, they have neither the in-depth expertise to recommend detailed staffing and workflow changes nor the resources to implement their recommendations.

So what’s really needed is someone who understands law firm culture, knows how to run support operations, and has sufficient cross-firm experience to make specific people, process and technology recommendations and then has the ability to execute their recommendations.  Reputable outsourcing companies such as Integreon offer law firms both the analytic horsepower to design long-term solutions for lawyer support and the experience and resources to execute them