The lowest investment I’ve ever seen a Law Firm make to establish a centralised delivery centre, of any more than 50 people, is about $3m – and that is on the cheap side. I’d love to know how much Baker & McKenzie or Clifford Chance invested to establish their offshore delivery centres.
This topic was brought to light by the Bingham McCutchen story in the ABA Journal about centralising back office activities in Kentucky.
I’d start by congratulating Bingham for a bold move, affecting 250 people. The article opened with the line “become(s) the latest major law firm to centralize its back-office legal services in a facility far from its expensive big-city attorney offices”. The actual facts are that, in the US, very few have taken this step, which places Bingham in pioneer territory.
My questions for any Law Firm going down this route are as follows:
- Do you have the capital to invest in doing this properly. As I’ve said $3m would be cheap, and I’d suspect that Bingham are spending significantly more. (And do you not have revenue-growing activities, now in 2012, that would grow top line revenues more?)
- Do you have the patience to wait up to 12 months even to get the first people working there?
- Do you have the further patience to wait many more months/years to hit optimum delivery levels?
- Will your service have commercial guarantees around price and quality that it will underwrite back to your firm?
- Are you aware that, in all other areas of back office centralisation by corporates, efficiency levels almost never match those of the outsourcers
- Are you prepared for the ongoing investment in people, processes, and technology required to maintain effective delivery costs and quality – it is a never ending journey!
I ask all these questions because the stronger commercial LPO suppliers will:
- Fund the establishment of a back office function for you
- Enable you to leverage their existing delivery capabilities
- Delivery world-class service costs and quality within months
- Guarantee the quality and cost of the work – paying penalties for any failings
- Remove or reduce the need for ongoing investment
- Look seriously at taking your staff over to their business
- Offer you and your customers a choice of delivery locations – in-house in the traditional format, onshore, or offshore
Use of 3rd party LPOs is not the right solution for all Firms. However, the “Build It Yourself” model is significantly more limiting and expensive (in the short term and long term) and provides no guarantees of results.
With clients I go in with an open mind – the solution has to fit their culture and strategy. But with a blank sheet of paper, I become a purist! Back Office is not something that law firms should be worrying about. There are people that can do it a lot better, guaranteed. It is the value add areas that the law firms should be focussing on.
As ever, contact [email protected] to set up time to discuss your options with me.
Here’s the article: