Rich pickings

Outsourcing and offshoring are buzzwords that have been circulated by certain parties in the legal profession as 'the next big thing'; the perfect business solution to all those administrative nightmares. It is the proverbial silver bullet that will kill all those expensive fixed back-office costs and ensure future commercial existence in the global marketplace. The business mantra for the 21st century is an easy one to learn '“ 'outsource, cut costs, increase profits, survive'. But is it really that simple? Does outsourcing really work? The practice of a business (or individual) turning to an off-site resource for support is not new. You would not think to deliver your own parcels, clean your own office, or design your latest brochure, so why would you type, invoice, archive files or answer the phone when someone (or something) can do it faster and more cheaply?

Pick and mix

The rapid spread of broadband with its always-on high-speed access to the internet has opened up the office door to a global sweet shop of services, from which the legal firm can now pick and mix. New companies are springing up to meet this huge increase in demand, located both in the UK and abroad. Call centres, IT support, website design, transcription services, secretarial support, data storage, invoicing and factoring are just some of the tasty morsels on offer. Some companies will gorge themselves on this new diet and rapidly get indigestion. Others will abstain and slowly starve to business death. The smart firm will analyse those parts of its operation that can be outsourced and snack accordingly.

Cascading effect

One element of the business mix that is already coming to prominence is the delegation of specific parts of a large firm operation to smaller operations, further down the legal food chain. Informal arrangements between law firms have existed for many years. Smaller firms with lower cost bases can help deliver a particular project for a client. One such example has been the relationship between the Prudential funds and three participating law firms; Lovells, Cripps Harries Hall and Knight & Sons. The property deeds and all the documentation for any property instruction are scanned and stored electronically and all precedents are shared between the firms electronically. 'While it is particularly useful for firms based in the City of London, it could also work for large firms based in other major financial centres around the UK where there is a significant difference between the cost of their services and law firms outside those areas,' says Michael Stevens, senior partner at Cripps Harries Hall LLP.

Optimum allocation

Best business practice advocates optimum allocation of finite resources '“ in a law firm, the fee-earner must be freed up to maximise revenue by removing all other non-productive distractions. Sue Bence, a partner with Leigh Day and Co, specialist personal injury solicitors with one of the country's largest clinical negligence and human rights teams, is a firm advocate of outsourcing and was an 'early-adopter' of the practice in-house. 'It has made a huge difference to the running of my particular department, increasing both efficiency and output. It does not necessarily suit all areas of law or practice, and those with sophisticated case management systems and fairly repetitive processes or low revenue work will probably not see much gain. However, for those practising in the higher value personal injury market, in family or in criminal law, I can see huge advantages '“ the fact my team no longer needs to train or use temporary secretaries is a massive bonus. As a firm, we feel it is important to look into the ethics of the situation before setting up any form of outsourcing arrangements. We have been at pains to ensure that the people who do our outsourced work have proper pay and conditions, including ergonomic assessments of the way in which they work.'

Size matters

It is a paradox that outsourcing seems to work best in a small to medium-sized enterprise (SME). Existing staff can be retrained and utilised much better in a small operation. Rather than being made redundant, the worker can move departments, be promoted or take on new roles and responsibilities, leading to personal empowerment and a stronger long-term position within the firm. Moving the existing staff skills-base upmarket is a simple and effective way to increase productivity, improve profitability and enhance company value. Shedding staff is the least efficient and most disruptive scenario, especially for large-scale employers, with its associated lay-off costs, negative publicity and lowering of morale. Sometimes, the redundant employee can move to the outsourcing supplier, an elegant switch that has obvious and immediate benefits for all parties. This is often dependent on geographical considerations, but the trend is growing and, with teleworking becoming a viable and attractive option, it will be an important factor in the future successful application of outsourcing.

The perfect marriage

There is a truism that 'the more you invest in a marriage, the more valuable it becomes'. The same certainly applies to the relationship between legal firm and outsourcing provider. There does appear to be a 'best-fit' between client and off-site provider. A possible lonely hearts ad might read: 'Flexible, fairly slim, open-minded, but experienced legal firm with too much work and not enough time, seeks like-minded partner with a view to partnership and long-term commitment '“ distance not a problem, prepared to change old habits and embrace the new if required.'