Today marks the first anniversary of the American Bar Association’s Standing Committee on Ethics and Professional Responsibility issuing of their Formal Opinion 08-451 Lawyerʼs Obligations When Outsourcing Legal and Nonlegal Support Services.
While we have not seen the tsunami flood of work sent offshore as some predicted, this past year has seen an increase of interest in and implementation of outsourcing. Firms may not be rushing to announce that they are outsourcing (particularly in a down market), but it is being done in increasing volumes. Outsourcing legal services is not part of the mainstream of common law practices yet, but it has gained considerable awareness and credibility in the legal community. Furthermore, we have noted great strides and increasing maturity of the vendors in the space, as well.
Due to quite a number of disruptive economic challenges and the proximity of core law firm functions, legal outsourcing is still in its early to mid-stages of development. Economics, client pressure, and changing dynamics in the legal industry will continue to drive outsourcing trends upward for this coming year and beyond.
Wednesday, August 5, 2009
Friday, July 24, 2009
No One Cares About My Office In Kuwait
This past week there was an interesting article in the ABA Journal - originally appearing in the Legal Intelligencer.
The article notes a trend of lawyers migrating from megafirms to mid-size firms that have more competitive fee structures and lower firm overhead.
According to the article, a departing lawyer was quoted saying, "My experience was it was difficult to engage local businesses with a higher rate structure. There were people down the street that could do the same thing I could at a cheaper rate."
"Somebody from Lansdale didn't necessarily care that I had an office in Kuwait."
Law firms need to better understand what is valuable to their clients - I misalignment of the firm and clients need is disservice to partners in their firm. The debate goes beyond whether firms should have offices in geographically disparate locations around the world.
The primary consideration being, that law firms need to ensure that they maintain low cost structures as to be competitive when working with clients. Otherwise, talent my jump ship... hopefully not the Kuwait.
The article notes a trend of lawyers migrating from megafirms to mid-size firms that have more competitive fee structures and lower firm overhead.
According to the article, a departing lawyer was quoted saying, "My experience was it was difficult to engage local businesses with a higher rate structure. There were people down the street that could do the same thing I could at a cheaper rate."
"Somebody from Lansdale didn't necessarily care that I had an office in Kuwait."
Law firms need to better understand what is valuable to their clients - I misalignment of the firm and clients need is disservice to partners in their firm. The debate goes beyond whether firms should have offices in geographically disparate locations around the world.
The primary consideration being, that law firms need to ensure that they maintain low cost structures as to be competitive when working with clients. Otherwise, talent my jump ship... hopefully not the Kuwait.
Wealth of Flexibility
When facing uncertain times, traditional wisdom says to put your money into hard assets. (Note that gold continues to peak over $900+ this week). But when organizations are facing uncertain times their best asset is flexibility.
Across the legal industry we have seen a number of firms making “FTE adjustments” while recently some firms are actually hiring (albeit small) numbers of lawyers and support staff. (It helps when you have a client portfolio.) A major challenge in a fluctuating economy is the variability of the workflows and uncertain levels of litigation moving through the pipeline.
For firms facing these challenges, the "gold” is being able to take on work as it comes, but not retain large fixed costs to do so. Flexibility has long been a great strategic consideration when outsourcing to an onshore vendor (staffing firms) or offshore vendors (legal outsourcing firms).
As we continue to see how the economic situation shakes out, flexibility is the name of the game. The lean and highly-effective practices will benefit the most as the economy picks up steam.
Across the legal industry we have seen a number of firms making “FTE adjustments” while recently some firms are actually hiring (albeit small) numbers of lawyers and support staff. (It helps when you have a client portfolio.) A major challenge in a fluctuating economy is the variability of the workflows and uncertain levels of litigation moving through the pipeline.
For firms facing these challenges, the "gold” is being able to take on work as it comes, but not retain large fixed costs to do so. Flexibility has long been a great strategic consideration when outsourcing to an onshore vendor (staffing firms) or offshore vendors (legal outsourcing firms).
As we continue to see how the economic situation shakes out, flexibility is the name of the game. The lean and highly-effective practices will benefit the most as the economy picks up steam.
Saturday, July 18, 2009
EquaTerra Survey Findings: Outsourcing Up
The following are some of the most recent findings by the research group EquaTerra. While the survey findings are focused on more general outsourced services, it does demonstrate that the first movers are now engaging outsourced solutions to survive the lengthening economic downturn.
Demand for Outsourcing Increases as Organizations Seek to Cut Costs – EquaTerra 2Q09 Survey: The latest EquaTerra’s 2Q09 Advisor and Business/IT Service Provider Pulse Survey cited an increase in the demand for global outsourcing services from organizations seeking options to reduce operational costs. The survey also revealed that the ongoing economic slowdown has shifted the key aim of majority of outsourcing buyers from realizing competitive advantage to surviving in this environment. Stan Lepeak, Managing Director of Global Research for EquaTerra, stated that the current economic conditions have made cost savings the key reason for outsourcing services.
Among the key findings, about 46 percent of EquaTerra’s client-facing advisors reported increased outsourcing demand and about 65 percent of outsourcing service providers reported continued growth in their new deal pipeline during 2Q 2009. Moreover, about 58 percent respondents stated the current economic environment as the reason behind the increase in outsourcing, reflecting a quarter-on-quarter increase of 20 percent. Additionally, majority of respondents cited transition-related issues as the leading reason behind the failure to meet clients’ outsourcing objectives.
One interesting point to note are the "transition-related issues" cited by survey respondents. Based on our experience, these types of challenges are a result of a number of factors, but primarily poor planning in the front end and lack of continued management support after the deal. Therefore it is important to take a holistic perspective at the earliest stages for sourcing engagements.
Demand for Outsourcing Increases as Organizations Seek to Cut Costs – EquaTerra 2Q09 Survey: The latest EquaTerra’s 2Q09 Advisor and Business/IT Service Provider Pulse Survey cited an increase in the demand for global outsourcing services from organizations seeking options to reduce operational costs. The survey also revealed that the ongoing economic slowdown has shifted the key aim of majority of outsourcing buyers from realizing competitive advantage to surviving in this environment. Stan Lepeak, Managing Director of Global Research for EquaTerra, stated that the current economic conditions have made cost savings the key reason for outsourcing services.
Among the key findings, about 46 percent of EquaTerra’s client-facing advisors reported increased outsourcing demand and about 65 percent of outsourcing service providers reported continued growth in their new deal pipeline during 2Q 2009. Moreover, about 58 percent respondents stated the current economic environment as the reason behind the increase in outsourcing, reflecting a quarter-on-quarter increase of 20 percent. Additionally, majority of respondents cited transition-related issues as the leading reason behind the failure to meet clients’ outsourcing objectives.
One interesting point to note are the "transition-related issues" cited by survey respondents. Based on our experience, these types of challenges are a result of a number of factors, but primarily poor planning in the front end and lack of continued management support after the deal. Therefore it is important to take a holistic perspective at the earliest stages for sourcing engagements.
Sunday, July 12, 2009
Fronterion Texas Bar Article: Technology & Outsourcing
Check out the July Texas Bar Journal featuring an article on legal outsourcing titled, Outsourcing & Technology.
The article hits on some of the core considerations with technology issues for successful legal outsourcing engagements. Of course we may be somewhat biased after authoring to article.
If you have any questions or comments on the article, please join in the dialog about outsourcing and technology by writing us at blogger@fronterion.com
The article hits on some of the core considerations with technology issues for successful legal outsourcing engagements. Of course we may be somewhat biased after authoring to article.
If you have any questions or comments on the article, please join in the dialog about outsourcing and technology by writing us at blogger@fronterion.com
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