Monday, May 31, 2010

Leveraging Outside Vendors

Featured in the Spring 2010 International In-house Counsel Journal is an article titled “Leveraging Outside Vendors in a Changing Legal Landscape” authored by Richard Reade, UK General Council of ISS and me. The ten page article covers many key topics regarding the current state of the LPO industry. It’s a good read for those just getting familiar with the LPO industry or those who are already involved and need to gather more information.

The article covers these topics:
• Setting the stage (background information)
• Cost pressures
• Risk management
• Outsourcing profiles
• A structured approach to LPO
• Sourcing opportunities
• Offshoring opportunities and challenges
• ISS UK sourcing innovations
• Tips and best practices

It was my pleasure to work with Richard Reade on this article. He has been involved in legal outsourcing since early 2008 when he established an innovative outsourcing solution with a team based in India and London. Richard is also a frequent speaker on the topic and nominee for in-house legal innovation awards.

The article will be published in it’s entirety in the June addition of the International In-house Counsel Journal.

Thursday, May 27, 2010

Legal Futures: A Shore Thing

I had the pleasure of contributing a piece for Legal Futures website. The site focuses on the leading news and trends impacting the UK legal landscape.

My piece, A Shore Thing, comments on the impact of the onshore legal outsourcing trend and how it will potentially impact the roles of legal professionals both within and outside of the traditional legal model.

The ascent of the onshore legal outsourcing industry may change the shape and structure of traditional law firms from High Street to major City firms. The onshore component also raises questions regarding the relationship dynamics between general counsel, their respective law firm(s) and outsourcing vendors.

I also noted the changing roles of legal professionals: The 2010 Global Sourcing Study also revealed that legal outsourcing has changed the roles and dynamics of domestic lawyers and legal professionals. General counsel and lawyers who remain within the traditional legal structure of law firms and corporations will increasingly find themselves acting as aggregators, aggregating and integrating legal matters delivered from sources within and outside of their organisations. Services sourced outside of the organisation can be delivered both on and offshore. This shift to the aggregation of legal services is a sharp departure from the traditional legal services model in which attorneys offer bespoke legal advice within a discrete function area.

The recent deal announcements by WilmerHale and CMS Cameron McKenna exhibit prime examples of how these trends are being integrated in landmark deals and the legal landscape.

More information is available on the Legal Futures website.

Wednesday, May 26, 2010

Tempered Outlook Turns Into Upswing?

In the Business Standard, the article Legal Process Outsourcing on Firm Footing highlights some of the increased activity in the Indian legal outsourcing sector. After several years of chimera-like growth in Indian LPO markets, work capacity never truly lived up to expectations. Recently tempered, the market is now poised for growth and the current outlook appears to be more closely aligned with the state of the industry.

Further, the multi-shore and onshore components of legal outsourcing noted in the article directly parallel the observations made in the Fronterion 2010 Global Sourcing Study. As reported in the Global Sourcing Study, approximately 8% of delivery personnel for the top 17 LPO firms are based in the UK and 10%, on average, are based in the US.

According to the study: Some 75 per cent of outsourcing vendor executives surveyed by Fronterion said at least some of their clients had expressed an interest in onshore delivery, while 24 per cent of vendor respondents reported a significant number of their clients were interested in onshore delivery. A further 82 per cent of outsourcers said their clients were interested in hybrid solutions – a combination of onshore and offshore outsourcing – with over 41 per cent of outsourcers reporting a significant interest in the hybrid-shore delivery model.

For more information, Legal process outsourcing on firm footing is available online.

Tuesday, May 25, 2010

More on Minter

The Lawyer also reported additional details on the Minter Ellison outsourcing offering. It’s been announced Lewis Silken is a prominent client.

The interesting aspect to note is the high-level nature of the services performed – including the reported hands-on approach by Minter’s senior litigation partners. Perhaps it may be better to classify this as a “delegation,” such as the delegation to a regional firm opposed to a proper LPO engagement. Law firm delegation is very common for major City firms and popularized by the Lovells “Mexican Wave” approach.

LPOs work, act and perform services in a fundamentally different way than traditional law firms and thus legal outsourcing vendors create a unique value proposition.

CMS Camerons: Act II

The Lawyer reported additional details on the CMS Cameron McKenna outsourcing arrangement with Integreon. The piece reported on some of the internal issues that are arising with such a massive outsourcing initiative that will potentially touch all aspects of Cameron’s support functions.

The article highlights the importance of change management, which is a critical component of a successful legal outsourcing engagement. While most LPO deals do not constitute such a monolithic decision and to date all LPO deals have been supporting legal professionals and rather than transferring law firm staff to an LPO vendor, proper change management functions are a must.

Key issues include engaging an appropriate number of stakeholders both within and outside of the organization as well as designating a champion role in the initiative. We do applaud Camerons, and more specifically Tony Wright, for positioning himself as a senior, respected figure within the firm to champion the engagement.

We will continue to watch this deal with interest as it goes forward through the due diligence phase. The ability to discern core from the non-core and strategic from the non-strategic issues is at the heart of every outsourcing engagement. As noted in the article, Osborne Clarke found certain functions to be better retained internally. More details are available in my book Implementing a Successful Legal Outsourcing Engagement where Osborne Clarke is featured as a case study. The core vs. non-core decisions will be unique for every organization and, undoubtedly, Camerons will come to their own conclusions.

One thing is certain, you can’t outsource change management and you can’t outsource effective governance.

Monday, May 17, 2010

Minter Ellison's Kiwi Offering

Another significant LPO story broken by The Lawyer this week is the front-page coverage of the new offering of outsourced legal services by the Australian Minter Ellison from their New Zealand offices.

It will be interesting to follow this announcement and the uptake by UK law firms. According to people familiar with the matter, Minter has several prominent UK law firms signed up for their services.

I was also quoted in the piece about the advantages and disadvantages of law firms offering LPO services.

Michael Bell, managing principal at outsourcing consultancy Fronterion, said the firm might experience issues around the “scaleability of resources”, adding: “The unique thing about LPO specialists is that they’re process-based. Private practice has the advantage that it understands how firms work and can recruit better talent.”

More details are available at The Lawyer.

Orrick and the Death of PPP?

The firm Orrick Herrington & Sutcliffe recently announced that they are no longer publically providing their annual profit per partner numbers used in industry rankings such as those performed by the American Lawyer.

While firms’ reporting mechanisms are not major differentiators, we do applaud firms that are now starting to take a longer-term perspective of their organization than the annual profit per partner rankings. A longer-term perspective allows for more strategic planning and market innovation (which may include, but is not limited to, further investment in longer-term investments like outsourced legal services initiatives).

More details are available in an article featured in ABA Journal.

CMS Camerons News Round-up

This past Friday, The Lawyer broke the story of the largest outsourcing deal for legal support services to date with UK 20 firm CMS Camerons. While the Camerons deal is more focused on the legal support services than traditional LPO services, the deal is significant for two reasons.

The first notable aspect is the sheer size and duration of the arrangement. The details reported by The Lawyer state the contract size to be £600 million for the duration of 10 years. The scope of the outsourcing arrangement includes nearly all legal support services for the firm including “IT, HR, finance, business development, communications, knowledge management, facilities management and administration services.” It’s also reported that close to 200 current Camerons personnel will be transferred to Integreon. While Osborne Clarke made headlines with a similar deal with Integreon in early 2009, the Camerons deal is a “whole other kettle of fish” according to persons knowledgeable of the matter.

The second significant aspect of the Camerons deal is that it illustrates that when an onshore arrangement helps to clarify the outsourcing decision. When orgaizations remove the offshore component (including ethical and jurisdictional issues), firms are able to see more clearly what they are proficient in performing and what, in fact, is better performed by a third-party. Once these determinations are made, the on/offshore component is simply another step in the solution development process.

For more details on the release please see the following news round-up:

The Lawyer


Bar & Bench

Thursday, May 13, 2010

Recession sends onshoring up the agenda

Fronterion was also noted recently by Managing Partner magazine regarding the implications of our 2010 Global Sourcing Study. The article highlights a number of issues including the alternative career path available to UK lawyers at onshore legal outsourcing centers as well as the piqued interest in UK firms for onshore and on/offshore hybrid legal outsourcing engagements.

I was also quoted in the piece regarding the average savings differential between on and offshore legal outsourcing solutions. Here is the quote from the article:

Fronterion managing principal Michael Bell said that onshoring could reduce legal spend by up to a fifth (21 per cent) per outsourced head, compared to an average of 50 per cent in destinations such as India. However, onshoring as an alternative could effectively sidestep “many of the problems associated with sending legal week overseas”, including different regulations and negotiating time zones, he explained.

Wednesday, May 12, 2010

Novak Druce Centre Newsletter

Serveral articles in the Novak Druce Centre Spring 2010 newsletter are worth reading. Christopher McKenna, the director for the center, commented on strategies firms should consider as they become part of the global market. This article addresses the broad view of globalization rather than detailed “how-to” strategies. Determining a personal and firm philosophy about “professional service firms” (legal outsourcing providers, in particular) comes before designing working relationships with them. One thing is clear, though, as we’ve been saying at Fronterion all along, status quo is not satisfactory in a global marketplace any longer.

Another article titled “Run With The Gazelles But Eat With The Lions” by a leading academic expert on the topic of legal outsourcing, Mari Sako predicts the upcoming influences on international law firms. Here are several key quotes:

“Innovation in legal services is also about discontinuous changes. What the economist Joseph Schumpeter wrote a century ago is still relevant today: discontinuous change happens as a result of five things: the introduction of a new product or process, the opening of a new market or source of supply of intermediate goods, or a new organization design. For law firms, discontinuous change is happening as a result of his last two factors - new sources of supply and new organizational design.”

“But remember the old adage: ‘Run with the gazelles but eat with the lions’. That combination of the abilities to move fast and at the same time to identify where the value chain will be protein-richest will be key. Law firms take note.”

Saturday, May 8, 2010

Revised, Albeit Tempered Outlook

A recent article published in IP Frontline authored by Evalueserve co-CEO Alok Aggarwal details a revised, albeit tempered market outlook for the burgeoning LPO industry.

Due to mixed service lines, varied geographical delivery, lack of official reporting and general transparency the legal outsourcing market; it is hard for many people to get their arms around the LPO market. Compounded by the challenges of projecting market growth for a previously non-exist marketplace understanding legal outsourcing can be daunting.

I believe that hesitant adoption (relative to the early fantastic growth projections) onshoring and offshoring does not reflect the lack of potential in the industry for corporate legal teams and law firms alike. Rather, there are many legal, ethical and firm-integration issues that make LPO adoption slower than comparable forms of outsourced services. Furthermore, the legal profession and related industries were often the hardest hit in the recent economic volatility.

However, forward-thinking firms are now taking a serious look at legal outsourcing as they recognize the value-add (read profitable for law firms) aspect of outsourced legal services.

It is Fronterion’s goal to educate, inform and guide law firms and general counsel so they can take told of the many advantages of legal process outsourcing, while still maintaining a tempered view of the marketplace as reflected by the recent market outlook published by IP Marketline.

Monday, May 3, 2010

WilmerHale: Washington Post

Firms are leveraging new ways of working to be more efficient. So, it’s no surprise WilmerHale's plan to move organizational support services to a less expensive location was further reported by the Washington Post today. WilmerHale plans to open a “business services center” in Dayton, Ohio. Initially, the center will handle technical support services, but the article states on-site document review capabilities are expected to be offered in the near future. Will other large law firms choose onshoring over offshoring their lower level legal and legal support services? We’ll have to watch and see.

Note that I was quoted in the Washington Post article which is now available online.