9/2/11

The Unanswered ILTA Questions

At the ILTA Conference, I participated on the “Offshoring and Outsourcing: What It Means for Your Firm and Your Job” panel. First-off, I was privileged to be on the panel with Jordan Furlong and Kevin Colangelo. They are very smart, engaging and knowledgeable presenters. Per the ILTA suggestion, we went with an alternative presentation format, keeping our talking-head comments and slides to a minimum. We had prepared a number of questions just in case our audience didn’t have any. Well – they had a lot of them so we did not get to any of ours. However, we had some good questions. So I thought it would be fun to pose the questions and add my thoughts. Feel free to add your own thoughts to this list.
1. Legal Process Outsourcing (LPO) isn’t only or even primarily about lower costs; it also about doing things differently. How is LPO work qualitatively different than lawyer work?
Is it? I feel this is very much a (dark) gray area. LPO web sites list services like drafting documents, writing patent opinions, and other lawyer tasks. These may be on the commodity end of the scale, but when performed by lawyers, they are lawyer work.
2. Which is the right prism through which to view outsourcing: lower costs or higher value? Can it be both?
Right now there is a tremendous focus on lower cost. In the long term there will need to be a balance. The use of standards and quality driven processes by LPOs should contribute significantly to value. Law firms would do well to emulate this approach.
3. What are the specific implications of LPOs and outsourcing on law firm IT departments?
  • A) Your jobs will be impacted, both directly (by potentially being outsourced) and indirectly (when IT systems move there too).
  • B) Your data will be involved. IT will face new challenges when data and functionality move outside your firm – whether this is in the cloud or not.
4. What are the specific implications of LPOs and outsourcing on law firm libraries?
Let’s just say "legal research" is on the list of LPO offerings. Librarian staff should have a high level of concern when LPOs enter the picture.
5. What are the specific implications of LPOs and outsourcing on law firm KM efforts?
KM already suffers from the silo effect, where knowledge is cordoned off in to various buckets. LPOs will extend your silo challenge outside the firm in systems, content and process. For example – how will enterprise search respond when data is move to an external (not cloud-based) system?
6. The front-office impact: how will LPOs impact the production, delivery and pricing of traditional “lawyer” work?
LPOs are already driving prices down. I fully expect them to expand their offerings over time, further impacting price and delivery.
7. The middle-office impact: how and to what extent should firms outsource functions like IT, KM and library services?
Firms should continually evaluate their internal services against the value of moving them to lower costs options. By doing so they can focus their limited resources on the “core” functions that truly differentiate them in the market.
8. The back-office impact: is there any reason for law firms to continue to employ full-time accounting and HR services people on site?
Again, evaluating this should be a continual effort. Obviously some functions will be better suited for out-sourcing than others. Already firms segregate basic accounting and HR functions and move them to administrative floors in their space or even lower rent locations.
9. How should firms rethink their entire talent strategies (recruitment and retention of both lawyers and non-lawyers) in light of LPOs?
I recently read an article on KM in the HR space that noted there are 4.2m unfilled jobs in the US right now. So we have a skills crisis, not a job one. I suggest any positions that are difficult to fill should be the ones a firm keeps internally since these are the generally higher value ones.
10. Outsourcing demands that firms have serious internal conversations about AFAs. How do you start those conversations, and how do they end?
All AFA conversations need to start with the client. Their needs must drive the conversation from start-to-finish.
11. AFAs, in turn, demand that firms have serious internal conversations about compensation. How do you start those conversations, and how do they end?
Profits, profits, profits. One idea firms should consider is to start shifting portions of comp to rewarding profitable behavior instead of hours and revenue. Perhaps this portion might reflect the portion of non-standard fee arrangements a firm has.
12. How do you have the outsourcing conversation with clients? Which side of the cost/value continuum do you emphasize?
Be very careful about offering a solution before you know the problem. Clients have different pains and needs. Know your out-sourcing story, but only present it when it solves a problem the client has and focus it on cost or value as appropriate.
13. How should in-house lawyers respond to this? What new skills will they have to develop in order to “right-source” their work and manage the process?
Their conversations with outside lawyers should no longer be about hours and rates. Try shifting the conversation to scope and deliverables. Clients are expecting law firms to work differently, so must they start doing the same.
14. Winning generals learn to adopt and adapt their opponents’ best strategies. What could law firms do to adapt and adopt outsourcing strategies?
Get over their ‘commodity’ fear and embrace the fact that all work contains commodity-level tasks. Then they can honestly evaluate what to keep internally and what should be out-sourced
15. What should be the law firm/LPO relationship? Partners? Collaborators? Competitors? Sworn enemies?
I’ll quote Ray Norda and suggest we need some type of "co-opetition" where we work collaboratively when appropriate, but do not let that stop us from competing aggressively when the situation calls for it.
16. What types of work, if any, should you never outsource?
This one is easy – Relationship building.

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