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The Outsourced Alternative

25.11.2010

Make or buy decisions have long been an important element of the strategy of creating and capturing value in management theory and practice – and such decisions have traditionally been given little thought by managers in the legal sector. However, the announcement this week that partners at city firm CMS Cameron McKenna have voted to outsource much of their support function to Integreon confirms that this is an issue the profession is starting to address.

The Historical Perspective

There are concrete reasons why, in the past, law firms have not sought to outsource a significant part of their values chain. Aside from the unhelpful assertion that anything ‘not invented here’ is not worthwhile pursuing, lawyers have been (at times justifiably) concerned about the quality of the service they will receive – and thus pass on to their clients – from outsourced providers. In a profession where service is both the deliverable and the hallmark of quality and reputation, this is understandable. This was, in the early days at least, often backed up by certain individual negative experiences.

Since law firms claim to view their people as their most valuable resource, a high degree of loyalty to people is only to be expected. However understandable the concern about possible job losses in the move to outsourced service provision, this needs to be balanced against the opportunities which can arise for the staff concerned. Many support staff (Finance, IT, Marketing etc) have professional skills and qualifications which are under-valued in a law firm – they are rarely treated as equals by the lawyers. But in a specialist organisation, providing Business Process services to law firms, they will be managed by specialists who understand them, and can manage their careers – indeed as outsourcing grows, their prospects may be far better “outside” than “inside” the firm they service.

The Outsourced Alternative

Legal Process Outsourcing clearly does offer very real and tangible benefits, not least for the firm’s management. Outsourced providers specialise in their industry, and can offer technical skills and capabilities that would be difficult to bring in-house. Time and resources at partner level are scarce, and outsourcing the day-to-day management of the support functions frees up time for the firm’s management to attend to strategic questions, such as how best to deal with consolidation within the market. This also allows partners to really concentrate on business development, which will only become more and more the focus of their role.

Ultimately, such make or buy decisions must be determined by the question of value. Will outsourcing legal processes allow firms to deliver an equivalent (or better) service, at a lower cost to both the client and the firm, than that which is currently provided?

These are questions that individual firms need to answer, in response to their specific circumstances. That clients perceive that they will receive greater value from such arrangements is demonstrated by client pressure on firms to move in this direction. We would also argue that the benefits in terms of the opportunity cost of management time; efficiency savings; and, ultimately, law firm profit improvements will make outsourcing a crucial alternative for firms across the sector in the coming years.

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