For many, the new year means a new start. But that is not the case for some major law firms who are still slogging through flagging legal markets. As noted in a recent article featured in The Lawyer, many lawyers still seem to be holding their breath watching uncertain markets in the coming year. The article does point to the impact on outsourced legal services, particularly in the UK legal segment, which is expected to change fairly significantly in the coming year in anticipation of the implementation of the Legal Services Act.
Developments likely to have an impact on the market over the next 12 months include the expansion of the legal process outsourcing (LPO) market, changes in fee models and the impact of the Legal Services Act.
Efficiency has quickly become the watchword for those with their hands on the purse strings at major firms. Whether this means changes to outsourcing policy, client charging or further rounds of redundancies remains to be seen.
Despite the concerns expressed in this piece, many of the firms that we have talked with remain positive on the new year.
Showing posts with label Legal Services Act. Show all posts
Showing posts with label Legal Services Act. Show all posts
Monday, January 4, 2010
Wednesday, December 23, 2009
Temerity in the Face of Turbulence
In a recent newsletter Andrew Hedley, founder of the UK legal strategy consultancy Hedley Consulting, discusses changes set to impact the legal market in the UK (US legal firms are also facing similar pressures). One of the core changes, emanating from the cost pressure on law firms, will be in the law firm structure with the most apposite change being the “significant acceleration in the use of legal process outsourcing for increasingly complex work.”
Hedley’ piece is posted in full below.
"The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic."
-Peter Drucker
The legal sector faces a number of unprecedented challenges in the year ahead. The one with potential to disrupt most widely and deeply is a wholesale move to fixed-fee pricing. Surveys of in-house counsel show that they are resolute in demanding fundamental change over the next twelve months.
Delivering profit from fixed-fee work requires wholesale changes to historic operating models and has far reaching implications.
One inevitable consequence will be the demise of associate lockstep, the process by which salary (and hourly rate) increases are pegged to years of qualification rather than any objective measure of increased ability to add value for the client. Another will be a significant acceleration in the use of legal process outsourcing for increasingly complex work.
An emphasis on better management skills will also be necessary as firms disaggregate the legal process, undertake individual work components at the lowest price point and then reassemble the “legal product” at its point of delivery to the client.
The effect on firm culture, talent management and the psychological contract between partner and associate will be hugely significant. However, these are nettles which must be grasped to emerge from the recession with businesses that are viable in the longer term.
Simply hoping that one can hold out long enough for better times to return is not a strategy. Temerity in the face of turbulence is unlikely to deliver the desired result!
Hedley’ piece is posted in full below.
"The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic."
-Peter Drucker
The legal sector faces a number of unprecedented challenges in the year ahead. The one with potential to disrupt most widely and deeply is a wholesale move to fixed-fee pricing. Surveys of in-house counsel show that they are resolute in demanding fundamental change over the next twelve months.
Delivering profit from fixed-fee work requires wholesale changes to historic operating models and has far reaching implications.
One inevitable consequence will be the demise of associate lockstep, the process by which salary (and hourly rate) increases are pegged to years of qualification rather than any objective measure of increased ability to add value for the client. Another will be a significant acceleration in the use of legal process outsourcing for increasingly complex work.
An emphasis on better management skills will also be necessary as firms disaggregate the legal process, undertake individual work components at the lowest price point and then reassemble the “legal product” at its point of delivery to the client.
The effect on firm culture, talent management and the psychological contract between partner and associate will be hugely significant. However, these are nettles which must be grasped to emerge from the recession with businesses that are viable in the longer term.
Simply hoping that one can hold out long enough for better times to return is not a strategy. Temerity in the face of turbulence is unlikely to deliver the desired result!
Friday, November 20, 2009
A Dynamic UK Legal Segement
It has been another exciting week in the world of outsourcing for the UK legal market.
First, Allen & Overy announced their new outsourcing initiative. The engagement is for litigation support services and structured as a “suite of options [for clients] including offshore outsourcing,” according to litigation support specialist at Allen & Overy, Vince Neicho.
The Allen & Overy engagement is a great example of the growing number of firms who are starting to formally offer outsourcing as a part of their “suite of options” available to clients upon their request.
The second big piece of news out of the UK is word that Lyceum Capital is investing £25 million to fund a new on/offshore legal services vendor Laureate Legal Services (LLS).
This is one of the first big PE deals to come together in the UK as a result of the changing legal landscape and upcoming implementation of the Legal Services Act.
Lyceum managing partner Jeremy Hand provided insight to Lyceum’s investment strategy in the changing legal landscape for our recent book Implementing a Successful Legal Outsourcing Engagement. He is quoted in the book as saying, “In line with our core investment strategy, the legal services sector is large and fragmented, but maintains very high margins. Furthermore, this is an industry where the majority of clients are not happy and partners at law firms typically would not consider their organizations as ‘well-run.’ ” Hand emphasized the importance of firms proactively preparing for the implementation of the Legal Services Act stating, "In this market, the first-mover advantage will be key."+
As capital markets recover, investment opportunities will increase for alternative legal service vendors who provide new and innovative solutions for the delivery of legal services. As these firms seek to leverage first-mover advantage, we may see several similar deals coming together shortly.
+Bell, Michael D. Implementing a Successful Legal Outsourcing Engagement. The Ark Group and Managing Partner, 2009.
First, Allen & Overy announced their new outsourcing initiative. The engagement is for litigation support services and structured as a “suite of options [for clients] including offshore outsourcing,” according to litigation support specialist at Allen & Overy, Vince Neicho.
The Allen & Overy engagement is a great example of the growing number of firms who are starting to formally offer outsourcing as a part of their “suite of options” available to clients upon their request.
The second big piece of news out of the UK is word that Lyceum Capital is investing £25 million to fund a new on/offshore legal services vendor Laureate Legal Services (LLS).
This is one of the first big PE deals to come together in the UK as a result of the changing legal landscape and upcoming implementation of the Legal Services Act.
Lyceum managing partner Jeremy Hand provided insight to Lyceum’s investment strategy in the changing legal landscape for our recent book Implementing a Successful Legal Outsourcing Engagement. He is quoted in the book as saying, “In line with our core investment strategy, the legal services sector is large and fragmented, but maintains very high margins. Furthermore, this is an industry where the majority of clients are not happy and partners at law firms typically would not consider their organizations as ‘well-run.’ ” Hand emphasized the importance of firms proactively preparing for the implementation of the Legal Services Act stating, "In this market, the first-mover advantage will be key."+
As capital markets recover, investment opportunities will increase for alternative legal service vendors who provide new and innovative solutions for the delivery of legal services. As these firms seek to leverage first-mover advantage, we may see several similar deals coming together shortly.
+Bell, Michael D. Implementing a Successful Legal Outsourcing Engagement. The Ark Group and Managing Partner, 2009.
Wednesday, October 7, 2009
Slaughter and May
The banner announcement this week of Slaughter and May’s decision to consider outsourcing legal and legal support services is just one more example of UK firms becoming more public about their involvement in outsourcing.
Several articles on the topic include another from The Lawyer and LegalWeek.
It appears that increasing client pressure and the upcoming enactment of the Legal Services Act in the UK are requiring firms of all sizes and practice focuses to explore alternative service delivery strategies, including but not limited to outsourcing to offshore vendors.
Several articles on the topic include another from The Lawyer and LegalWeek.
It appears that increasing client pressure and the upcoming enactment of the Legal Services Act in the UK are requiring firms of all sizes and practice focuses to explore alternative service delivery strategies, including but not limited to outsourcing to offshore vendors.
Friday, August 14, 2009
UK Openness
I just wrapped up my UK trip. While there, I met with a number of very intriguing firms in the industry. The US and UK have comparable levels of legal services outsourcing, but firms in the UK are markedly more open about it as compared to their US counterparts. I am not sure of the reason for this trend.
While I have a number of theories, I suspect that the upcoming Legal Services Act is influencing firms to be more open about the changes taking place at their organizations.
While I have a number of theories, I suspect that the upcoming Legal Services Act is influencing firms to be more open about the changes taking place at their organizations.
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