Forget scope; this is about philosophy. One of the main findings coming out of our 2012 Global LPO Study is that, while there is a great …"/>

Tactical Legal Outsourcing Is Easy – Strategic LPO Is Difficult

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Forget scope; this is about philosophy.

One of the main findings coming out of our 2012 Global LPO Study is that, while there is a great take up rate, Legal Outsourcing is being used as a tactical weapon, not a strategic solution. While we look for a good time slot to release the Study, I wanted to take a few minutes today to look at the overall subject of Tactical vs Strategic.

Tactical LPO is where a Law Firm or General Counsel uses alternative delivery routes (a captive, an onshore delivery centre, an offshore third party supplier etc) on a project by project basis. Take up and use of Tactical LPO will vary across the organisation, with different Partners/In house lawyers deciding on whether any form of Legal Outsourcing is actually used.

Strategic Legal Outsourcing is where a Law Firm or General Counsel makes a top down decision that it will no longer deliver or invest in key parts of the legal process that are deemed low value add. Across the whole organisation, it will be mandated that defined activities will not be carried out in house, in the traditional method. Going forward, they will be delivered via a partnership (or partnerships) with a lower cost specialist/s, unless there is a business-critical reason why that work has to be carried out in-house.

Unsurprisingly, most law functions have opted for Tactical, with a few headline-grabbing exceptions. However, the opportunity available from Outsourcing is going to be diluted into a “me too” offering unless a Strategic viewpoint is adopted.

Here’s The Warning

While law firms meander towards adoption of Legal Outsourcing, their lunch is being eaten by the LPO suppliers. Savvy General Counsel are skipping the law firms and going straight to the LPOs, and making big savings along the way. By loosening their ties with law firms, the question of who wins the higher value, advisory work is thrown wide open. While it will NOT be the LPOs doing that value-add work, General Counsel are having their eyes opened as to how even the most complex of projects can be led, managed, and measured – and it is very different to how law firms have traditionally, or even currently, delivered them. If a law firm can start to offer that same level of transparency then they will not meet the raised expectations of their customers.

As with most topics, this is a hard one to boil into a few hundred words. Moving to Strategic Outsourcing is never easy. It challenges the very foundations on which law firms have grown and worked so successfully for so many years. But the world is changing and the law firms that recognise that, and embrace it, will have a strategic advantage and an ability to leverage both the threat and the opportunity of Legal Outsourcing.

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