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Jeff Fehrman on March 8th, 2010 at 12:23 pm :
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By Jeffery C. Fehrman
Recent advances in litigation support technology now make it more feasible than ever to preserve, assess, and produce electronically stored information from backup tapes. Why is this important? Because no longer is it necessary to recreate complex backup environments or utilize tedious and costly manual processes to restore data from backup tapes. Now you can quickly identify and extract just the relevant data required for court or regulatory requests. In this new white paper from Integreon’s ESI expert Jeff Fehrman, results are compared from two actual tape discovery projects in which his team utilized different technologies for the same set of backup tapes. The findings, which were also discussed in a recent webinar, are a “wake-up call” for e-discovery technologists and litigation support professionals.
To request your free copy of the white paper, please complete and submit the registration form below, including your professional (work) e-mail address (no personal email addresses accepted). Qualified registrants will receive the white paper within 3 working days.
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Mark Ross on February 18th, 2010 at 6:06 pm :
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By Mark Ross
LLRX.com recently published a white paper, Ethics of Legal Outsourcing (February 14, 2010), authored by Integreon’s Mark Ross. The paper examines the ethical and practical realities of legal process outsourcing in the US and UK, particularly with regard to the offshoring of core legal and support services to countries such as India, South Africa and The Philippines. Included are citations of key bar and bar regulatory authority opinions on legal outsourcing, such as from the ABA, which provide guidance on acceptable practices for firms that wish to ethically utilize outsourcing strategies.
Ross discusses such pertinent topics as:
- Avoiding aiding and abetting the unauthorized practice of law
- Competent representation
- The duty to disclose
- Protecting client confidences and secrets
- Avoiding conflicts of interest
- Billing for outsourced legal support
- Malpractice insurance and LPO errors and omissions
- Export control regulations
- UK specific concerns, including data protection export issues
A shortened version of this white paper was also published in the San Francisco Daily Journal (Legal Outsourcing: Ethical Compliance, February 9, 2010).
Download White Paper (PDF)
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Mark Ross on January 15th, 2010 at 4:50 pm :
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By Mark Ross, Published in The Lawyers Competitive Edge in January 2010
Driven by the technological forces and the associated communications revolution that have fueled globalization over the last 30 years, outsourcing has emerged as perhaps the key strategic business process essential for the successful modern day organization, large or small. The large-scale outsourcing of manufacturing jobs which started in the 1970s resulted in a paradigm shift for the world’s developed nations in moving towards service as opposed to production economies. With the rapid improvements in telecommunications and information technology, a second wave of outsourcing followed in the 1990s. This development, which moved from blue collar to white collar services, was coined business process outsourcing (BPO). BPO involves the contracting of the operations and responsibilities of a specific business function to a third party service provider. BPO can be further compartmentalized into either “back-office”, such as HR, Finance and Accounting, or “front-office”, meaning client-facing services including help-desk, call centers and the like.
Whether viewed as a specialized subset of BPO or independently, the next step in the evolution of the outsourcing market was knowledge process outsourcing (KPO). KPO represented a new frontier in a new millennium, and referenced the outsourcing of core business functions. Traditionally these are areas that have involved a degree of subjective decision making, language skills and often specific academic credentials. KPO necessitates a relinquishing of control over areas that traditionally clients have been reluctant to let go. It was not until relatively recently, in the early 2000s, that the KPO industry began to take off. Mark Kobayashi-Hillary and Dr Richard Sykes in their book, “Global Services: Moving to a Level Playing Field,” define KPO as:
“Merely a continuation of BPO, though with rather more business complexity. The defining difference is that KPO is usually focused on knowledge-intensive business processes that require significant domain expertise….The offshore team servicing a KPO contract cannot be easily hired overnight as they will be highly educated and trained, and trusted to take decisions on behalf of the client.”
Over the course of the last decade, KPO has grown to encompass several specialist areas including pharmaceutical research and development, market research and analytics, healthcare services and engineering research and development. Unlike traditional BPOs, where relatively low-level skills were required, here knowledge and professional education is the key. According to a Confederation of Indian Industry (CII) study, KPO is estimated to grow by 2010 at CAGR of 46% to $17 billion, of which $12 billion will be outsourced to India. NASSCOM projects that the KPO sector in India may reach $15.5 billion by 2010, up from $1.2 billion currently.
Perhaps unsurprisingly the global legal profession was the last of the professional services to jump on the KPO bandwagon. Business, engineering and market research functions requiring a degree of subjective analytical expertise were routinely outsourced in the early 2000s. The global legal profession is of course one that has historically been characterized (most routinely by its own members) by specialized, jurisdictionally specific, training and practice, with its members applying their domain expertise to solve their clients’ legal problems. Datamonitor estimates that the revenues generated by legal services worldwide stands at a minimum of $370 million, with the U.S. contributing over 60% of this figure.
Over the course of the last 4-5 years the legal profession has slowly begun to take advantage of the labor arbitrage that was exploited by the BPO and KPO pioneers in the earlier part of the decade. The demand for lower cost legal services resulted directly from increasingly cost conscious U.S. and U.K. corporate clients becoming aware that a significant proportion of the day-to-day work undertaken by junior associates, paralegals, secretaries and support staff had the potential to be outsourced. Over the lifecycle of the emergence of the legal process outsourcing (LPO) or Legal KPO industry, the work performed in outsourced locations has evolved from providing low end administrative support including transcription, work processing and other secretarial document production functions, to more substantive, core legal work, including legal research and writing, document review, contract review and patent support services.
Of course technology has played a significant role in the emergence of the Legal KPO industry. Technological advances have had a two-fold affect. First, they enable the performance of increasingly more complex legal tasks at the simple push of a button and in a fraction of the time. Documentation relevant to the litigation process is now stored electronically and is available for storage, transfer and review anywhere in the world. With the increased prevalence of digital dictation, document production centralization and hosted document solutions, it matters little whether your secretary, junior associate or paralegal is ten feet down the corridor or 7000 miles away. Second, through improved connectivity a vast pool of common law trained legal talent from India, South Africa and The Philippines is now available to assist law firms and legal departments in the U.S. and U.K.
In 2007 the research company ValueNotes predicted revenue generated from the LPO industry in India alone to reach $640m by 2010. The LPO and KPO industries however have not been immune to the global economic downturn. These estimates have since been revised downwards substantially. Revenue is estimated at $320m for 2008 and $370m for 2009, and is expected to reach $440m by the end of 2010. Although India is the dominant offshore destination, others such as The Philippines and South Africa cannot be discounted, and perhaps more importantly, these figures do not reflect the substantial legal outsourcing engagements to onshore destinations both in the U.S. and U.K. In addition to slower than originally expected revenue growth, the overall manpower employed by the LPO industry (again, only in reference to India) also witnessed sluggish growth. Forecasts a few years ago of 32,000 employees working within the LPO industry by the end of 2010 now appear wildly optimistic. The revised prediction for 2010 stands at 15,400. However, as the global economy continues along the path to recovery while concurrently LPO becomes an increasingly desirable strategic option for both major corporations and law firms, ValueNotes anticipates that the there will be an upswing from the currently plateaued manpower levels towards a more consistent period of stable growth.
As the Legal KPO (aka LPO) industry matures, scalability and multiple service capability are becoming a prerequisite in order to attract business from major corporations and the U.S. and U.K.s’ leading law firms. A rapidly globalizing legal profession has reached a tipping point where legal outsourcing is now recognized as a viable and efficient option for the delivery of certain types of legal services. An industry that in its formative years was perhaps characterized by the emergence of numerous, boutique providers, is now beginning to scale up and consolidate in order to meet the increasing sophistication of AmLaw 200, UK Top 50 and Global 2000 procurement.
Over the course of the last couple of years, several of the largest U.K. law firms have announced outsourcing initiatives. On review of the dates of these public pronouncements, it is readily apparent that the pace of these declarations is picking up. 2009 may be viewed as the crucial year when major law firms began to acknowledge that their public embracing of outsourcing was clearly viewed by clients as indicative of being forward-thinking, innovative law firms of the future. Global legal giants Simmons & Simmons, Allen & Overy and Osborne Clarke all announced outsourcing engagements with Integreon, while Pinsent Masons and Australian corporate mining behemoth Rio Tinto professed to be entering into LPO contracts with Exigent and CPA Global respectively.
As major law firm and corporate procurement of legal outsourcing services becomes increasingly the norm, provider companies without the scalability to match both the increased demand and sophistication of the buying community will suffer. Purchasers will be inclined to opt for providers who can offer scalability through a global, multi-shore delivery platform. In addition, legal services procurement will seek out providers who can offer a broader suite of multiple service lines, across the legal services spectrum. As the proliferation of electronically stored information grows exponentially, the technological infrastructure to offer an end-to-end solution to the electronic discovery process (collection, processing, hosting and review of electronic data), will become increasingly desirable. Ensuring the security of client confidential information is clearly of paramount importance within the legal outsourcing industry. Legal KPO providers who can assuage some of these data security concerns, by avoiding the necessity to subcontract elements of their service delivery capability, will be better placed to serve the particular needs of the demanding legal professional community. There may remain certain niche areas of demand that boutique (single geographical delivery center) providers can satisfy. However, for larger scale engagements with the leading global law firms or corporations, a fully owned and integrated technological solution spanning a broad range of legal service verticals, provided from multiple locations, and backed by access to a scalable workforce will soon become a prerequisite.
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Eric Feistel on November 18th, 2009 at 4:28 pm :
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Bar&Bench News Network
30 Oct 09 - 12:06
(reprinted with permission)
The LPO market in India received a boost last week with the signing of the outsourcing agreement between the UK-based international firm, Simmons & Simmons and LPO leader, Integreon. Bar & Bench speaks to Mark Dawkins, Managing Partner at Simmons & Simmons and Lokendra Tomar, Chief of Operations of the Asia-Pacific arm of Integreon. While Mark Dawkins refused to be drawn on whether the firm has any India-specific expansion plans, Lokendra Tomar reveals Integreon’s plans to raise funds through private equity to further its expansion plans.
Mark Dawkins, Managing Partner at Simmons & Simmons
B&B: South Africa appears to be becoming a popular outsourcing destination for UK law firms. What were the factors that led your decision to outsource work to India instead?
MD: Our aim is to find, design and deliver new ways of working that provide the same quality legal services to clients in different ways and for materially better value, whilst sustaining the firm’s profitability. Outsourcing legal work to a well established LPO such as Integreon helps reduce costs considerably for our clients and provides us with the satisfaction that their work will be done in a quality assured environment. The talent pool in India is enormous. Integreon provided us with options no other provider anywhere else could have provided.
B&B: What made you choose Integreon over the other outsourcing vendors on your shortlist?
MD: The most important criterion for us was high standard quality of work. With Integreon, we felt assured that our clients’ work would be in safe hands. Furthermore, Integreon has worked for some of the biggest law firms and financial institutions and the feedback has been positive. They have a good reputation in the market and we felt they would fit in well and adapt easily to the Simmons & Simmons culture.
B&B: Did you receive any pressure from your clients to outsource legal work, or was this a firm-driven initiative?
MD: We did have clients enquiring into whether Simmons & Simmons would be exploring the option of outsourcing legal work; however, this is also an integral part of the firm’s business strategy going forward.
B&B: Your press release mentioned that the London offices will be piloting the project. Are there any immediate plans to outsource work from any of your other offices?
MD: This project will be piloted from London but rolled out to other offices where there is a demand. In its early stages, it is likely to be applicable to locations where English is the principal language.
B&B: How long will the pilot project last before commencing full-fledged outsourcing?
MD: One year.
B&B: Many firms have been wary of revealing their outsourcing plans, fearing backlash from the media and from within the firm. Why did Simmons choose to make their outsourcing agreement public?
MD: We have full faith in the capability of Integreon’s facility in Mumbai. We will be having a dedicated team of qualified and experienced Indian lawyers working exclusively for us. We are confident our clients will appreciate the fact that we have made an effort to address their concerns in this difficult economic climate.
B&B: How much cost savings do you anticipate from outsourcing to Integreon?
MD: We hope to save anywhere between 30 to 50 percent on equivalent UK rates.
B&B: Does Simmons have any plans to expand into India?
MD: Nothing planned.
Lokendra Tomar, CEO Asia-Pacific, Integreon
B&B: Integreon is one of the market leaders in the knowledge outsourcing industry. What about Integreon, in your opinion, appealed to Simmons?
LT: Integreon offers a wide range of services to a narrow client base. This helps us hire people from the relevant industries, and develop specific products suited to that industry. We are one of the few LPOs to have a product development team. Law firms who work with Integreon consider us a ‘Partner’ in their efforts, and cost is not the sole factor upon which our services are depended.
B&B: It is very unusual for LPOs to be open about their client base. What made Integreon and Simmons go public with the outsourcing agreement?
LT: Outsourcing outfits and their clients are generally secretive because they fear backlash from the public. But this backlash happens because most LPOs pitch themselves as being cost-effective, this is their main selling point. Integreon, however, transforms a business by absorbing ourselves in the processes of the company and improving efficiency. It is an innovative approach that appeals to large law firms and investment banks, leading them to choose Integreon for their outsourcing needs.
B&B: There have been several market reports of Integreon’s growth plans. What can you tell us?
LT: We are looking to raise about $100 million through private equity investments in the next six months. We are one of the few companies in the outsourcing space that have acquired 3 legal process outsourcing organisations, and have plans to expand further. Our next acquisition may be in the research space. We are looking at both organic and inorganic growth. We anticipate several captive outsourcing companies to come on the market within the next year or so, and we might look at buying some of these entities.
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Eric Feistel on September 3rd, 2009 at 4:26 pm :
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FreePint recently published the results of a new benchmarking survey on outsourcing: VIP Report: Survey on Outsourcing. Integreon and FreePint jointly designed a survey to assess industry perceptions about the importance of outsourcing, barriers to adoption, and the satisfaction level of organizations that currently practice outsourcing. You can read about some of the key findings from the survey in our recent blog post, Survey Shows it’s Time to Take a Fresh Look at Knowledge and Information Services Outsourcing. Integreon is also making available a free copy of the report; click here if you would like to request a copy.
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Eric Feistel on July 14th, 2009 at 4:11 pm :
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Aberdeen Group recently published Partnering for Performance: Knowledge Process Outsourcing. This report explains how companies have improved operations and profits by migrating high-end, knowledge intensive work to the right outsourcing provider. In a recent blog post, How Best in Class Companies Benefit from Effective Knowledge Process Outsourcing, Integreon summarizes key findings from the Aberdeen report and then we share our perspective as an integrated KPO provider. Integreon is also making available a free copy of this report; click here if you would like to request a copy.
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Sharmistha Kshatriya on November 14th, 2008 at 8:58 am :
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Download a PDF version of this white paper to your computer.
Introduction: Why Law Firms Need Business Research
It wasn’t too long ago that old guard law firm leaders questioned whether it was ethical to include a firm’s phone number on letterhead. They feared it could be implicitly regarded as solicitation. Once law firms got beyond the letterhead issue, the “marketing” function morphed into collecting resumes, and if a firm was particularly ambitious, commissioning a brochure. Indeed as late as 1990 very few law firms even had formal marketing departments. Clearly the world has changed. Competitive and cost pressures have forced law firms to operate like businesses and actively develop new clients and work harder to retain existing ones. And like any business, you have to spend money to make money. Therein lies the challenge. To compete effectively, law firms must have a deeper understanding of their clients’ and prospects’ businesses and challenges. A treasure trove of information is available online, but it takes considerable time and skill to research, categorize, and package it. This is where a firm’s business research challenge begins.
The Limits of Current Business Research Approaches
To keep overhead costs down, some law firms delegate business research to already over-worked legal librarians. This is an ineffective use of a valuable resource: law librarians are trained to do legal research, which requires a very specialized knowledge and skill-set. Furthermore, business research is a distraction from important billable legal research. Other firms ask marketing departments to do business research. This too is problematic. Business research can distract marketing managers from higher value tasks. They add much more value by focusing their time and efforts on client outreach, branding, event planning, and other activities meant specifically to retain clients or introduce the firm to prospects. Of course, law firms can hire specialized business researchers. This solution, however, is costly. It requires yet another layer of staff and associated management headaches. Moreover, since the demand for research ebbs and flows, the only way to meet peak demand is overstaffing (or overworking staff). Law firms may also find that attracting the best research professionals is difficult because law firm career paths are limited for these individuals. Whatever the staffing approach, business research typically follows the artisan and craft approach of lawyers. That is, each lawyer and each researcher views each request as “one off.” Firms rarely standardize either the research intake procedures or the outputs. Consequently, research requests vary widely, as do the actual outputs, depending on who requests the work, the phrasing of the request, and who actually performs the research. This can drive costs higher and confuse lawyers.
A Better Approach: Outsourcing Business Research
Progressive law firms - from the top AmLaw to mid-size ones - increasingly outsource business research. Established providers of outsourced research standardize intake and output. This does not mean that every research request is rigidly formatted; rather, appropriate parameters and guidelines are outlined and followed. For example, lawyers and marketers might submit their requests using a web-based, checklist and fill-in-the-blank form that streamlines the research request and elicits all the information required to perform the right work. Experienced outsourcers also develop firm-customized templates for delivering results. Some outsourcers excel at “packaging” research with graphics, tables, and bullet points. Lawyers likely never ask for information this way but are almost always pleasantly surprised to see crisp, standard reports. Some providers offer presentation graphics services and incorporate this expertise to deliver even more polished and easily readable reports. Outsourcing does not mean not mean eliminating staff from the research equation. Rather, by offloading the basic research, librarians, marketers, and business development professionals have time to add their own analysis, call attention to the most important points, customize the research, or conduct more highly specialized, truly one-off research. Beyond eliminating a headache, freeing employees to add more value, and streamlining the process, outsourcing can significantly reduce cost. Going offshore can save up to 50% of the cost (especially for firms with London offices). The savings do not come at the expense of confidentiality. Established outsourcing companies have multiple layers of security, typically more extensive than what is even found in most law firms. Nor do savings come at the expense of turn around time. Most outsourcers can return results within 24 hours, often by the next morning; special arrangements may be possible for rush jobs. The case studies below illustrate the potential benefits of outsourcing business research.
Outsourced Business Research Case Studies
Large Law Firm Case Study
The Problem: The large firm had both a big business development team and extensive legal library capabilities. The challenge was that the business development team was reliant upon the legal library for business research. Research reports were inconsistent, time consuming and ultimately costly. The Solution: The firm’s business development professionals devised a plan for outsourcing the business research function to Integreon’s delivery center based in Mumbai, India. The “soup-to-nuts” plan included design templates, training, documentation and a proprietary information transfer/delivery system. The firm had sufficient research needs that Integreon assigned a dedicated delivery team of employees in Mumbai working exclusively for them. The Mechanics:
- Attorneys submit requests for company and industry profiles as well as other research inquiries using secure, menu-driven software;
- The delivery center immediately receives the request and begins processing it;
- Document services professionals seamlessly package the profile for easy digesting;
- Research package is returned to the firm, typically within 24 hours.
The Benefits: The firm cut its business research cost by 30% yet improved the quality and turn around time delivering reports. Lawyer satisfaction increased.
Mid-Size Law Firm Case Study
The Problem: A mid-sized law firm prided itself with a “hands-on” approach and ability to dig deep into client issues. This was its competitive advantage. The firm wanted to have a broader capacity to target prospects and more quickly learn about industries and companies. A limited staff precluded the level of research required. The Solution: The mid-size firm chose a “pay as you go” strategy. Individual assignments could be requested and turned over quickly resulting in a flexible, streamlined process. The mechanics and delivery model was very similar to that used by the large law firm, but the mid-sized firm didn’t have a dedicated team handling its research requests. The benefit were fulfilling far more research reports with faster turn around time without increasing cost.
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Sharmistha Kshatriya on October 20th, 2008 at 11:48 am :
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This article was first published in the September - October 2008 issue of the Association of Legal Administrators’s Legal Management magazine, Dealing with Documents: The Pros and Cons of Outsourcing - How outsourcing can slash payroll & facilities costs, reduce turnaround time, and boost in-house secretarial careers (PDF)
For years, law firms have improved financial results mainly by growing revenue through strategies such as lateral recruiting and investments in marketing. More recently, smart firms have also focused on improving operating efficiencies and controlling costs. One key strategy has been to reduce or eliminate secretarial overtime, increase the ratio of secretaries per lawyer, and centralize document processing and other support services. This achieves savings, but comes at the expense of disrupting traditional lawyer-secretary and other long-established staff relationships. Administrators have options, however, to reduce costs with less disruption. Numerous firms, especially ones with 200+ lawyers, now outsource document-processing. Enabled by easy modern telecommunications and collaborative Web technology, outsourcing offers several benefits: it reduces cost without sacrificing quality or confidentiality; improves turnaround time in document processing; and preserves important working relationships. In fact, freeing secretaries from high volume or complex document processing tasks enables them to perform more like executive assistants, which is better for both lawyers and secretaries. Outsourcing can also free other support staff and administrators to focus on higher-value work and improve their job prospects. This article looks at the pros and cons of outsourcing, how it works, and how it recasts the role of support staff. It also explains the law firm administrator’s pivotal role in executing these changes and maintaining greater operating efficiency.
FROM TRADITIONAL TO GLOBAL
Traditional secretarial relationships – one-to-one or two-to-one ratios – are “high-touch,” with the secretaries stationed close to attorneys. This enables ongoing and close relationships and excellent client familiarity. When personalities match, the relationships can be highly productive and satisfying. (Of course, if personalities conflict, life can be difficult for both). The benefits of this traditional approach come at a price. Secretarial and document processing services are typically the third-biggest cost, after associates’ salaries and rent. The direct cost for a secretary in large urban area is about $85,000 per year (including salary and benefits). There are additional costs such as hiring, training, supervising, and covering leave. Operationally, the traditional model also presents three big challenges. First, administrators often must over-staff to provide service for peak demand. That means excess capacity when demand is average. This is a recipe for inefficiency, idleness, job dissatisfaction and attrition. Furthermore, staffing beyond a 10- or 12-hour day is a challenge. In other words, the traditional model is nine-to-five, while the increasingly global practice of law has become 24×7. Of course, overtime provides additional coverage, but it is expensive and not feasible for round-the-clock coverage. Second, secretaries must be generalists, which sometimes results in a lack of immediately available specialized support. The right match between a lawyer’s business requirements and secretarial skill and experience is a matter of luck. Administrators face so many constraints that it is virtually impossible properly to pair secretarial skills with lawyer requirements. And third, supervision is bifurcated. Secretaries divide their loyalty between administrators who hire (and can fire) them and the attorneys to whom they are assigned. This problem is compounded by the widely understood but little discussed problem that many lawyers refuse to rate secretaries unfavorably, which hobble supervisors’ ability to take remedial action.
WORK GROUPS & DOCUMENT CENTERS
To manage capacity more efficiently, some forward-thinking administrators have tried new working models. One example is a centralized document processing staff (e.g., support stations on each floor) for labor-intensive or specialized tasks. Another is small secretarial teams to serve groups of lawyers. Teams are most effective where attorneys’ output is a joint work product. The team approach facilitates specialization, provides opportunities for career advancement, and can create motivating peer pressure. These new approaches have resulted in lower secretary-to-lawyer ratios, but also caused some disruption in previously exclusive, long-term relationships between partners and their secretaries. Beyond disruption, firms may experience the unintended consequence of reduced productivity and job satisfaction for some lawyers. Junior associates often must compete for secretaries’ time: When two or more lawyers share a secretary or even a pool of secretaries, the junior ones often do not get the services they need because the senior ones demand – and receive – a disproportionate share of the staff’s time (see Figure 1). Associate satisfaction and client service can suffer.
Changing Ratios Affect the Size of “Time Slices” that Lawyers Get:Stretching the ratio leaves associates with too small a slice to use, so they must fend for themselves.
Figure 1
In some secretarial sharing situations, some lawyers, typically junior ones, get so little attention from secretaries that it is like not having one at all.
GLOBALIZED OUTSOURCING
Just as outsourcing solved several law firm management problems decades ago, it can solve the secretarial problem. A bit of history…. Law firms began outsourcing administrative jobs like payroll in the 1970s. Over the next decade firms broadened outsourced tasks to photocopying and mailing, travel arrangements, and food service, for example. Those were followed in the new century by outsourcing more knowledge-intensive tasks such as litigation support (document production and management) and legal research, some of it to offshore support centers. By outsourcing document processing and other routine tasks, firms can save money and free secretaries for higher-value work. This reduces cost and allows around-the-clock support. Substantial cost savings come not only from lower labor costs, but also matching specialized skills to tasks, tailoring resources to capacity, eliminating overtime, and streamlining workflows. Administrators pursuing the outsourcing option should find a vendor that offers domestic as well as offshore document processing centers. The dual-shore approach provides the option to work through domestic contacts to assign tasks to offshore centers. This way, staff interacts primarily with the U.S.-based staff, which handles job intake and in turn assigns work to centers in fully vetted offshore locations, while closely monitoring deadlines and quality control. A dual-shore approach allows more flexibility than single-shore. Some firms and administrators may elect to use only the onshore option. Others may find that after a period of adjustment, dealing directly with offshore personnel is easy. With delivery centers in multiple time zones, administrators can be assured of business continuity, an increasingly important concern today. Moreover, they can elect around–the-clock service without running a graveyard shift in any location. (Seasoned administrators certainly know the challenges of staffing the midnight-to-8 am shift!) Law firm administrators have a choice of several established outsourcing providers today. Firms typically use a combination of consultants, internal resources, and vendor expertise to analyze workflow and cost efficiencies and develop a customized plan to meet the firm’s long-term needs. With the right vendor, firms can be sure to have a flexible, customizable, and scalable solution. “Scalable” means that the “team” assigned to a firm can grow to meet unpredictable demand on short notice. The positive financial impact can be significant when deploying the right administrative services solution. A firm with over 800 lawyers, for example, should save roughly $2 million per year. One result of outsourcing both highly specialized “one-off´ tasks and routine labor-intensive tasks such as document processing is that the secretaries are able to focus on higher-value job responsibilities such as relationship management, workflow management, global knowledge management, drafting documents, and billing. They become more akin to executive assistants with potentially higher pay, greater prestige, and more advancement opportunities. Figure 2 illustrates a conceptual way to think about how outsourcing can significantly alter the mix – in ways favorable to all involved.
RECASTING THE ROLE OF SECRETARIES & SUPPORT STAFF
Figure 2
When low-value tasks are outsourced, in-house secretaries can focus on higher-value tasks, enhancing their prestige, satisfaction, and opportunities for advancement.
ADMINISTRATOR’S PIVOTAL ROLE
The role of the law firm administrator in outsourcing ranges from fairly black-and-white quantitative tasks such as a cost-benefit analysis to high-touch change management initiatives. Here are the key steps administrators should follow:
- Research the firms that provide outsourcing services—the vendors—and work with them to analyze the potential costs and benefits and establish a budget for the outsourcing project. Some administrator will retain legal market consultants in addition to relying on their own staff and vendors for analysis.
- Evaluate the options, narrow the field, and then recommend and select the vendor. This involves educating and presenting the cost-benefit analysis to partners or a management committee. Administrators can naturally expect to face objections about changes in relationships, productivity, confidentiality, potential conflicts, quality, and comfort. The right preparation should suffice to overcome these objections.
- Plan the transition. The transition process can be gradual, and therefore not difficult to manage. Outsourcing can start small and grow according to a plan, and be fine-tuned as it progresses. Once the program is in full swing, the administrator must manage, evaluate, and adjust it as necessary. Finally, the transition involves managing new job descriptions, expectations, and training of in-house support staff.
A top-notch outsourcing vendor will advise and assist the firm administrator in making presentations to partners, and “engineering” the transition within the firm, even helping to reallocate tasks within the in-house support staff, based on their experiences with other law firm clients. The change management work can be a delicate task because it involves changes in how both lawyers and secretaries work. Delicate does not mean hard, though: Initial resistance to outsourcing often melts as all involved see the personal and institutional benefits.
CONCLUSION
Practicing law is partly about building relationships. Successful lawyers value and protect relationships, not only with clients, but also with their support staff. Administrators must nurture these relationships but, at the same time, fulfill their imperative to control costs. The lawyer-secretary relationship is already undergoing change in progressive firms—sometimes disruptive—as law firm economics tighten and the supply of experienced legal secretaries shrink. Smart outsourcing can save money and reduce administrators’ headaches. At the same time, it involves some transition work to make everyone comfortable and minimize disruption to lawyer-secretary relationship. Beyond any short-term cost savings and operational improvement, outsourcing can enable re-thinking secretarial and other support roles. Administrators who go down the outsourcing path can increase both lawyer and secretarial job satisfaction.
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Sharmistha Kshatriya on October 9th, 2008 at 12:32 am :
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This article was first published by LLRX.com, 1 Sept 2008.
Introduction
Over the last three decades, large law firms have evolved into big and sophisticated businesses. Around 1985, the American Lawyer magazine first published profits per partners (“PPP”) for the AmLaw 100. Ever since, large law firms have worked to improve profits. Today, the fear of losing top partners to lateral moves forces firms to focus even more on PPP. How have firms increased profits? To state the obvious, profits are revenues minus costs. Until recently, firms emphasized revenue growth over cost reduction. They have merged, invested in marketing, added practice groups, and opened offices around the world. Now, however, with a recession likely, cost control is of growing interest. At the same time, firms face increasing client pressure to improve service and efficiency. Law departments are complaining about rate increases and demanding efficiency improvements. Being top-notch lawyers no longer suffices. Firms must differentiate themselves from competitors with outstanding service and cost-effectiveness. Outsourcing is one way firms can both reduce cost and improve service. Though already common, outsourcing still has tremendous potential to reduce costs further and to improve operating efficiency. Doing so requires neither diminished service nor staff disruptions. The story is similar for corporate law departments. They face tremendous pressures to reduce cost and improve operations. Outsourcing is a good way for the general counsel to control costs and improve efficiency. This article reviews the history of and logic behind legal outsourcing. It then outlines some of the current legal outsourcing options. A detailed discussion of each option is not possible in one article. Instead, the final section takes a close look at one, outsourcing secretarial and word processing tasks. This discussion is a useful analysis on its own plus it illustrates how to evaluate the other options. Left for another day is a discussion of offshore versus onshore outsourcing.
A Long Tradition of Legal Outsourcing
Law firms long ago realized the benefit of outsourcing back-office functions such as payroll, copy center, mailroom, food service, and travel. Outsourcing is especially important in technology; the December 2007 ILTA White Paper on Law Firm Staffing1 notes “There are simply too many IT functions to be performed in today’s law firm and too many different skill sets required to go it alone; outsourcing some IT functions, either in whole or in part, is the norm for firms of all sizes.” It finds that some firms of all size outsource tech functions such as helpdesk, network, training, apps development, and web development. Outsourcing even extends to law practice itself. Some firms rely on armies of contract lawyers to review the growing volume of discovery documents. Others turn to well-established companies for legal research. One large law firm, UK-based Lovells, farms out aspects of real estate matters to British firms with lower rates.2 And recently, law firms and departments have outsourced administrative and substantive legal work to offshore destinations, especially India.3 Law departments too have extensive outsourcing experience. Almost all retain outside counsel, which is itself outsourcing. Beyond, that many outsource e-discovery and e-billing.
Lawyers Outsource to Save Money and for Operational Benefits
Cost Savings and Other Financial Benefits. Outsourcing can lower costs and offers other financial benefits:
- Many tasks can now be performed away from the main office. Outsourcing providers locate in onshore or offshore markets where labor and occupancy costs less than in the expensive cities where many lawyers work.
- Vendors serve multiple customers. Aggregating demand has two key benefits.
- More consistent capacity utilization than any single customer. Fewer peaks and valleys mean lower costs.
- The scale to make investments in efficiency-enhancing processes or technology pay off.
- Outsourcing converts fixed costs to variable ones and avoids the need to borrow. Many law firms are under-capitalized. Partners may therefore want to avoid fixed commitments and to minimize borrowing. Similarly, law departments have small capital budgets and like to avoid locking in headcount. For both, outsourcing provides flexibility and avoids capital commitments.
- Allow lawyers to focus on their “highest and best use,” which is serving clients and winning new business. Eliminating managerial distractions from lawyers can let them bill more hours, thus boosting revenue.
Operational Benefits. Beyond cost savings, outsourcing offers operational benefits.
- Outsourcing avoids management headaches such as finding, recruiting, and evaluating staff. Vendors can do this more effectively than firms because of their focus and scale.
- Vendors may offer better talent. Recruiting and retaining quality talent can be easier for a large, focused company that chose its location to tap certain labor. Moreover, the bigger scale creates better career paths, which attracts and keeps talent.
- 24×7 service without operating hard-to-manage graveyard shifts. This facilitates better service to lawyers and, more importantly, to clients.
- Multiple locations for business continuity.
Some law firms skip outsourcing but try to replicate the advantages with an internal shared services model, centralizing in one place functions previously distributed across locations.
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Primary Interest To: |
| |
Overview and Comments
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Firms
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Dept’s
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| Legal and Business Services |
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| E-Discovery |
Most law firms and departments already outsource a significant amount of data collection and processing for e-discovery. The explosion in EDD has led to numerous outsourcing options, from specific services (e.g., forensic data collection) to “end to end” solutions. |
X |
X |
| Litigation Document Review |
Vendors now offer outsourced document review services, both onshore and offshore. Arguably, this differs little from using contract lawyers. Law firm and law department interests may diverge here: some firms do not want to lose their margin on lawyers who review documents. |
X |
X |
| Due Diligence |
Due diligence is similar to litigation document review in that a large volume of documents must be reviewed in a short time period. |
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| Contract Drafting, Review, and Management |
Some law departments must deal with a large volume of contracts. They need to simplify the process so are evaluating a combination of outsourced services and specialized software. This service appears to be offered primarily offshore. |
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| Legal Research and Drafting |
Domestic companies have long offered outsourced legal research and drafting. The new development here is a large number of offshore providers offering this service. |
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| Business Research |
Lawyers have learned they need to know more about business. Inside counsel must understand their own company, competitors, and industry. Outside counsel must understand their clients and prospects. Obtaining company, industry, and competitor profiles and analysis from library or marketing departments can be hard given the other demands. Outsourcing companies now offer these services (e.g., a recent Recorder article reports that O’Melveny & Myers outsources business research to India4). |
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| Intellectual Property Support |
Patents require both legal and scientific-engineering know-how. Patents, copyright, and trademark all have numerous, detailed administrative requirements (e.g., maintaining current registrations in multiple countries). Offshoring substantive legal work had its start in IP; today many offshore companies offer IP support. |
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| Paralegal Support |
Paralegals offer critical support to lawyers. Corporate law departments are especially eager to delegate work to paralegals as a way to control cost. Hiring paralegals in some locations is hard and it can be hard to match headcount to fluctuating needs. Outsourcing is a way to access talent and manage capacity. |
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| Administrative Services |
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| Word Processing and Transcription |
With the increase in ratio of lawyers to secretaries, firms employ more word processing specialists. Many large firms have centralized document processing and transcription. The leap from a central department to an outsourced service is not that big. |
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| Presentation Graphics |
As outside counsel learn the value of “pitching business,” they increasingly need graphic presentations (typically in PowerPoint). Inhouse lawyers have adopted the practice of their business clients and now rely more heavily on presentations. Many firms and departments are ill-equipped to meet all the demand for high quality presentations. Outsourced services can meet this demand. |
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| Finance & Accounting |
Finance adds value to law firms; accounting supports finance. Yet in many large firms, the manual demands of accounting (e.g., processing expenses, reconciling the general ledger, and dealing with payables) consume available resources. Outsourcing F&A lower level tasks can free up staff to focus on higher value activities. |
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A Detailed Look at Outsourcing Word Processing
Secretaries and document processing are typically the third biggest cost for law firms after associate salaries and rent. Though the ratio of secretaries to lawyers has fallen, few firms have fundamentally re-thought the role of secretaries and how best to meet lawyers’ administrative support needs. Outsourcing can lower costs, improve service, and create opportunities to improve overall operations. This section examines in more detail the benefits of outsourcing for this specific support function. While the focus here is on law firms, the same logic applies for law departments.
Matching Resources to Needs
Large law firms face a widespread but little discussed and infrequently solved challenge: aligning secretarial support with lawyers’ needs. Secretaries’ skills vary as do lawyers’ needs – matching secretaries to lawyers is hard, even on objective criteria. Throw personalities into the mix and the pairing process is that much harder. Another challenge is availability. Support needs vary by month, week, day, and hour, yet staff assignments are fairly fixed; most secretaries work for a set number of lawyers during regular hours. Also, managing scheduled time-off (especially at holidays) and unplanned absences can be a big frustration. The result is that lawyers sometimes compete for secretarial time, especially on big projects where one secretary cannot produce all of the necessary documents. Floor coordinators, informal sharing arrangements, and floaters help balance workloads but do not solve the problem. To provide the necessary back up and 24×7 coverage, firms must staff central departments, which is hard because of the shift work. The solution is over-staffing. Most firms have a net surplus of available secretarial time – they pay for secretaries whether or not there is work to be done. Secretaries are not to blame; extra capacity is a response to the reality that workloads vary far more than the resources.
Simplifying HR Challenges
Whether a firm relies on ads or agencies, identifying candidates and screening them is a hidden cost in most firms. Another often overlooked cost is training, both to teach new employees firm standards and to maintain and improve the skill level of existing staff. These costs will likely increase over time as the pool of qualified candidates shrinks and the status of legal secretary continues to decline. Most outsourcing providers operate in domestic or offshore locations where they can tap a bigger and different pool of talent, typically at price points much lower than major cities in the US or UK. With the right contractual arrangements, firms can meet their staffing needs and make recruiting, hiring, training, and dealing the vendor’s problems.
Managing Quality and Performance
Most firms have trouble managing secretarial performance. Part of the problem is structural: administratively, secretaries report to a supervisor, but substantively, they report to a lawyer. Part of the problem is personality: an open secret is that many lawyers fear their secretaries. The combination makes monitoring quality and delivering performance reviews inherently difficult. Skill mismatches, underperformance, quality control, and personality conflicts often become chronic problems. Through no fault of their own, secretaries may miss opportunities to improve and work may need to be re-done or shifted to other resources. For example, some lawyers send complicated documents to central word processing even if their own secretary has time. These same issues make quality checking difficult. Secretaries usually work as individuals, so lack colleagues to review and correct work. That neighboring secretaries may help proofread is the exception, not the rule. High quality outsourcing companies build quality control and performance appraisal into their work process. If they do not maintain high quality, it means more than grumbling lawyers – it means losing a valuable contract.
Improving Workflow
Document management software allows sharing and version control but does not track progress when someone else works on the document. At most, a lawyer who sends a job to central word processing can see if a document is checked out or not. This can be frustrating and lead to missed deadlines if communications is not carefully managed. Good outsourcers cannot afford this problem. They deploy workflow software that allows lawyers and staff to track job status.
Reducing Costs
The direct cost (salary plus benefits and payroll tax) for a secretary in a major urban area is about $85,000.5 Making reasonable assumptions about hours worked, the hourly cost is about $50. If, however, secretaries are utilized only 80% of the time, then the internal hourly cost is over $63 per hour. The table below presents these estimates in more detail. The hourly cost for outsourced support is often lower. Firms may therefore be able to save direct costs while also reducing the indirect management costs described above.
Secretarial Cost per Hour for Large Law Firms in Major Cities
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Assumed Utilization |
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100% |
80% |
| Days Worked Per Year |
| Business Days Per Year |
|
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| Weeks per year |
52 |
52 |
| Business days per week |
5 |
5 |
| Business days per year |
260 |
260 |
| Time Off |
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| Holidays |
10 |
10 |
| Vacation |
20 |
20 |
| Sick + personal days |
5 |
5 |
| Total Time Off |
35 |
35 |
| Total Available Working Days |
225 |
225 |
| Hours Worked Per Year |
| Working hours / day |
7.5 |
7.5 |
| Utilization |
100% |
80% |
| Hours Worked Per Day |
7.5 |
6 |
| Hours Per Year (Days * Hours/Day) |
1687 |
1350 |
| Cost Per Hour |
| Fully loaded costs |
$85,000 |
$85,000 |
| Cost per hour |
$50.37 |
$62.96 |
Opportunities to Improve Support
With the right planning, firms can do more than just save money by outsourcing. They can also benefit by re-organizing how they deliver support generally. For example, firms can outsource “heavy” document production tasks and transcription. This frees-up secretaries for higher value tasks such as relationship management, workflow, and contributing to knowledge management systems. The chart below provides a conceptual view of how outsourcing can lead to a new mix of higher value tasks for secretaries. Outsourcing enables this type of workplace re-engineering but does not guarantee it; firms have to give considerable thought to such changes. 
Conclusions
Even before the advent of the Internet made tapping low cost labor offshore so attractive, outsourcing was a common business practice. The “build versus buy” decision is one that lawyers must periodically re-visit. Today, since most work is computer-based, it is easily shifted from one location to another. This has created new opportunities to outsource. As the discussion of secretaries above illustrates, significant costs savings and operational benefits are possible. Law firms and departments considering outsourcing can apply a similar type of analysis to other functions. For example, offshoring document review has received significant press and some controversy. Once the discussion moves from rhetoric to actual analysis, lawyers can make informed decisions. The outcome of a hard, analytic look at how the work is done today versus how it would be done on an outsourced basis would likely address most lawyers’ concerns. The legal market has steadily evolved and adopted ever more business-like approaches to operations and law practice. Law firms and departments that seek to improve operations, offer their lawyers and clients a higher level of service, and reduce costs should consider the outsourcing option based on a rigorous analysis.
About the Author:
Ron Friedmann is SVP, Marketing at Integreon, a legal and knowledge process outsourcing company. He was CIO at Mintz Levin and ran practice support for Wilmer. Ron is a well-known blogger and frequent author and speaker. He has a JD from New York University.
- 2007 IT Staffing Survey, International Legal Technology Association
- This is the so called Lovells’ “Mexican Wave.” Detail are available at Lovell’s website
- A List of Outsourced Legal Services is available at the Prism Legal web site. It lists law firms and law departments that have outsourced and also includes a list of legal outsourcing vendors.
- Picking an Outsourcing Partner, The Recorder, March 31, 2008.
- Staffing company Ajilon Legal surveys law firms across the US. The company’s 2006 Salary Guide reports that the average salary in NYC, DC, Chicago, and Minneapolis for secretaries with 3+ years experience is $65,000. An old rule of thumb for additional costs is 25%. With higher health care costs and the generous law firm benefits, the percent is probably higher. In fact, a recent Bureau of Labor Statistics press release reports that benefits for office workers are 40% of hourly wages. Applying a conservative 30% benefit factor, the fully loaded cost is $85,000.
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Admin on January 1st, 2008 at 10:25 am :
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“The evolution of knowledge outsourcing.” CiG Yearbook 2008: 20-22.
The outsourcing or offshoring of business information work to India or other low cost destinations is now commonplace. As far back as the late 1990s, a well known management consultancy set up its own knowledge centre in India. Since then, the investment banking industry has truly embraced outsourcing.
Although many organisations have experienced large scale outsourcing that is driven primarily by both strategic and cost considerations, many companies still have misconceptions about this practice:
- At the individual level, there is often a lack of understanding of what roles, processes and tasks are appropriate for an outsourced model. “It will never happen to me” or “I have studied for 4 years, and have extensive experience, why should I hand my job over to India?”
- At the institutional level, there have been some publicised bad experiences with outsourcing which can deter serious consideration. “The quality is never going to be good enough.”
- On both levels, there is a lack of understanding of the longer term business direction. “It’s only a phase and will pass.”
- On both levels there is sometimes the perception that offshore outsourcing is only a cost arbitrage issue.
What’s a better way to view outsourcing?
If we take the financial services industry as an example, outsourcing has been prevalent in IT and back office operations for many years, and now reaches up the value chain to investment research and high level analytics. Either by partnering with a service provider or working with their own “captive” operation, financial services increasingly rely on outsourcing. Two distinct models have started to emerge for the management of high-value information and research:
- Core research support offshore
- Onshore/offshore hybrid
In the pure offshore model, local information support is replaced by a team of offshore researchers. Over a period of 4-5 years offshore researchers gradually replace the majority of the local team. Usually a small, local team of core information professionals remains to “manage traffic”.
In the hybrid model, a more gradual transition takes place and the onshore team focuses on more specialised, higher value work. The offshore teams begin working with their local counterparts gradually building their knowledge and experience. The two teams work very closely together, with the offshore team providing much needed help with quick and easy requests. In this model, the work going offshore typically has the following three characteristics:
- it is highly repeatable,
- it does not require local knowledge,
- it does not require strong industry knowledge.
By moving the more routine aspects of the work offshore, the onshore researchers can concentrate on sophisticated, higher value work. The onshore researchers can develop stronger industry and subject knowledge because they spend much less time focusing on the commoditised, repeatable work, which is fulfilled offshore. Furthermore, an offshore research strategy provides the investment banking community with the ability to easily scale upwards and downwards depending upon market conditions: a very important factor given the current volatility seen in the financial markets. Indeed, cost arbitrage, though significant, takes a back seat to other value propositions.
Although survey data is sparse, it appears that offshoring is common among investment banks and that the hybrid model dominates. Smaller banks seem to outsource less, possibly because they do not see themselves as having sufficient scale to benefit from the strategic advantages and costs savings.
Knowledge offshoring is not limited to the financial sector. Professional services such as accountancy, law, and management consultancy are also offshoring knowledge work. These organisations typically adopt the second model, where offshore services are used extensively, but usually as a supplement to the onshore presence.
Impact on the information industry
Outsourcing has fundamentally affected the information industry in the UK. Though there may have been some job losses in the UK market, offshoring creates many benefits in the local economy. Individually, onshore local researchers have expanded their capabilities and knowledge. The fact that offshore researchers can now take care of the quick and easy requests has allowed many local researchers to specialise in a particular industry or practice. What we are now seeing is a new type of researcher who is much more aligned with the business and who understands the internal and external client requirements in much greater detail. Institutionally, this allows organisations to provide more and higher value services to their clients at lower cost.
An interesting by-product of the growth of outsourcing has been the demand for information professionals who have experience managing offshore researchers. Many recruitment agencies now look for candidates who have experience in this area and in many cases it can be a real differentiator.
So what does the future hold for the UK information professional? It is most likely that the majority of organisations will continue to adopt a hybrid model of an offshore/onshore blend. This will certainly cause the number of traditional information roles to shrink. What it will leave in their place is a more specialist researcher. A researcher who is integrated more deeply with the business and has the opportunity to develop the now increasingly sought after skills associated with managing offshore relationships and service providers.
Jeff Davis, Sales VP for Integreon, has spent two decades in investment banking and management consultancy research. Integreon (www.integreon.com) provides outsourced services that improve profits, effectiveness and efficiency for law firms, financial services, and corporations. The company operates in India, the Philippines, US and UK. Contact: jeff.davis@integreon.com or +44 (0)20 7268 3465.
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