I’d planned to address LPO Project Risk at a later date, but recent events (a hurricane, an earthquake, a summer seemingly spent visiting A&E) made me think again about how to deliver successful LPO Projects and how The LPO Program is constructed to address Risk.
From it’s inception The LPO Program embodied a “Risk Based Approach”. As a “glass half full” personality, I continuously have to force myself away from the significant upsides of Legal Process Outsourcing and capture the issues around “What Could Go Wrong?” during an LPO Project.
However, after over $5bn worth of outsourcing deals I certainly do have the battle scars. Over the last 15 years I’ve seen projects go badly wrong so I was determined that anyone using The LPO Program was guided through the risk minefield ahead.
[Interestingly, this approach (though not the actual risks) is equally suited to the LPO Suppliers, Legal Services Suppliers, and Legal BPO Providers who sign up.]
When taking a Risk Based Approach my two golden rules are:
- Make sure your Risk Analysis evolves with every stage of the project; and
- Look as far ahead as possible, but don’t ignore the short term
Dealing with Risk Analysis Evolution first, you need to:
- establish a list of risks (you’d think this was stating the obvious but many projects don’t take this basic step),
- make sure that everyone has signed off on them and recognises them as a complete list of credible risks (this is equally obvious, equally rare, and actually harder to pull off), and
- ensure that there are genuine mitigating actions against all of them (strangely, this is the easier part).
Weekly risk reviews can work as part of the project team meeting. Usually such frequency breeds complacency and participants prefer to focus on the immediate issues, so I recommend every 2-3 weeks presenting a fresh perspective on the risk.
The good news in all of this is that the risks for one law firm or legal department are very similar to those for other law firms or legal departments. Each risk will have different weighting or importance within a specific organisation but, without any complacency on my part, they are unlikely to have any brand new risks that the world has not faced before.
The LPO Program clearly lists these risks and shows at which stage of the project each risk becomes more relevant (i.e. when it has to be recognised and when it has to be addressed). This list of Project Risks, therefore, ensures that the Project Team are looking at the risks at the appropriate time, addressing them timeously and in line with the potential impact of the risk event actually happening.
Gradually the “Project Risks” (i.e. those affecting the success of the LPO project) will be taken over by “Operational Risks” (i.e. those affecting the ability of the law firm or legal department to deliver its services), with “Transition Risks” bridging the gap.
For many law firms the first risk to address is that of Project Confidentiality. While this may start with formal actions such as Non Disclosure Agreements (within the Project Team and Advisors and Suppliers), the real area to address is what happens if word of the LPO project does filter into the wider firm. For large-scale outsourcing by an in-house legal team, the same issue applies.
At the right stage your LPO supplier/partner will take on more of the risk but it is essential to remember that the responsibility for delivery and the outputs remains with the law firm/legal department. Only suppliers who are capable of providing that risk mitigation approach should even be on the long list of potential suppliers (which is another element of The LPO Program).
In the coming weeks we will look at the Disaster Recovery/Business Continuity Planning basics that all suppliers should have in place. Feel free to email me if you would like this in advance (or to discuss any other matter), though please forgive me if I don’t respond immediately – I will be too busy looking at the National Tornado Forecasting website.