|Image [cc] Richard Aird|
As the legal landscape continues to shift, law firms are looking for every possible advantage to mitigate risk and maximize opportunity. That includes outsourcing of support functions like the law library. As information is nearing a complete shift to digital and information needs become more diverse, extending to functions like business development and finance, firm managers are facing some difficult questions:Do you adopt a greater self-serve information model and risk overwhelming attorneys and staff who are running lean and mean already? How do you balance the cost and complexity of information technology and information resources to gain the benefits of automation and access? How do you optimize information to help satisfy existing clients while attracting new ones?
As firms examine the options that will help them answer these questions and others, outsourcing has come to the forefront. As CEO of a company that has built a successful business around Managed Services (aka Outsourcing) for law libraries, we firmly believe what we espouse: Outsourcing is a very useful and appropriate business tool that helps firms focus more effectively on their core business. We also believe, and we are not reticent to say so, that there are times when it's not a good idea.Although outsourcing has come a long way in terms of acceptance and understanding, some apprehensions and misconceptions persist. To that end, I want to debunk five myths about outsourcing, based on questions we get asked most frequently by law firm management. And I want to finish by turning the spotlight on important benefits of outsourcing that often take a back seat to the ‘usual suspects’ of efficiency and cost savings.
1. Outsourcing is less expensive.As for cost savings, I would like to begin by saying that outsourcing isn’t always cheaper, at least not in the short run, because of simple and obvious economics—the cost of severance and because the outsourcing company doesn’t work for free! There will be a management fee in addition to absorbing the cost of the outsourced staff's compensation, including benefits as well as "grandfathered" paid time off, etc. In almost every outsourcing scenario we have encountered, LAC Group has worked closely with firms to ensure that affected employees have the same or similar benefit packages and salaries.
However, in the long run, outsourcing can be cost effective. After one-time costs are paid out, the financial and managerial responsibilities are handed off to the outsourcing firm. The financial burden of attrition, salary increases, bonuses, benefits and other employee expenses such as workers’ compensation and professional development are borne by the outsourcing company. The client company pays one invoice to one outsourcing provider and everything else, including service level agreements and meeting agreed-upon targets, is part of the outsourcing agreement.Bottom line: Outsourcing initially costs more, but when done correctly and efficiently by the outsourcing provider, long-term fees and costs are stabilized and predictable. And it becomes the outsourcing company’s challenge and value proposition to deal and perform with fluctuations.
2. Outsourcing disrupts morale and brings down the firm’s culture.Yes, it can, but like any other change it can be managed and controlled. In our experience, and contrary to popular belief, law firms spend more time considering and outright worrying about the reactions and feelings within their organization than they publicly acknowledge. In the 28 years of LAC Group's outsourcing experience, every client of ours has worked diligently to make the transition as humane and thoughtful as possible.
Many employees view outsourcing as a betrayal of their loyalty. Yet the decision to outsource is always a business decision and it is never personal. It can be an admission that the organization is not able to properly manage and support that group. It may be that the outsourcing provider offers greater efficiency, not strictly in terms of people, but due to better use of technology, better restructuring of workflow and processes, more capable recruiting and hiring practices and greater flexibility in matching resources to needs, no matter how often they change.
3. Outsourcing means sending work to far-away places.This may be outsourcing's most persistent myth, but it's not necessarily so. Outsourcing today takes many forms, which doesn’t always mean sending work to another country. In my experience, not only have we kept jobs at home, in many of the outsourcing arrangements we are involved in the work is done on site, in firm offices. Often “our” employees work seamlessly and side-by-side with firm attorneys and staff, the only difference being where the person’s paycheck comes from. Increasingly, outsourcing may involve work done virtually by individuals working from home.
It’s also important to note a related outsourcing myth, which is that all current staff will lose their jobs. That’s not usually the case, and if some reduction in staff is required, we can assist with placement of anyone who may be outplaced.
4. Outsourcing denigrates wages and devalues the employee who is outsourced.In LAC Group’s experience, matching wages and continuing to provide a total compensation package with benefits is usually a condition we have to meet. While we can’t always match the scope of benefits offered by large, multinational firms, we can and do offer a competitive package. When we take over an operation or a function, matching salaries and honoring the privileges of established employees is often a condition.
In addition, the outsourcing company can offer better soft benefits such as greater support and mentoring, as well as opportunities for advancement and professional development. At LAC Group we pride ourselves on the fact that offering these advantages contributes to our very low attrition rate. Our people are very important, so we strive to reward them professionally and financially.
5. Outsourcing turns permanent jobs into temporary assignments.Nothing is forever. No one’s position remains static year-after-year—technology and globalization have made that a truism for everyone in the work place. Working for a reputable outsourcing company is neither better nor worse as a career move than a “permanent” position within a law firm.
Sometimes outsourcing is temporary, as in the case of disaster recovery. For example, a major university library system hired us after an unforeseen disaster which required additional staff for an assignment that would be long term, but not permanent, and the workload would diminish over time. The people we placed were aware of this, and as needs changed we lost some to attrition and some were moved to other clients and projects.
On the other hand, many of LAC Group’s outsourcing contracts are over 10 years old. That’s become a lifetime in today’s work environment! But does it mean these contracts remain the same every year? Not at all. Contracts are reviewed regularly and compared to the current market. This keeps us on our toes as we have to make sure that we continue to deliver value, quality and service excellence. All outsourcing contracts should be able to stand up to this level of scrutiny. In my judgment, any arrangement where this isn't happening ought to be revisited.
The Unsung Advantages of OutsourcingOften the drivers behind an outsourcing decision are to streamline operations and save money. And when the primary goal is saving money, there’s no denying that sometimes the work goes offshore to places with lower wages. Yet in my experience, even when law firms come to us seeking cost savings, other benefits end up being more desirable to them. Those benefits are expertise and agility, and I call them the ‘unsung heroes’ because they get so little public mention.
Expertise and AgilityRegarding expertise, I don’t mean to imply that firm librarians are not experts. However, firms are finding it increasingly difficult and impractical to keep specialists on staff for all their information needs, which have become much more dynamic. In addition, many firms are not committed to the kind of training and development that’s needed to ensure their library staff can stay ahead in today’s big-data world.
As for agility, the one underlying skill we all need today is flexibility and openness to continuous change, because that’s the new normal! Outsourcing is one way law firms can be more agile in responding to, and developing strategies for, changing demands and expectations of clients, competitors and markets. They can scale up, down and sidewise as needed, often with not much more than a phone call. While this concerns some librarians, the truth is that they can gain their own advantages, leveraging outsourcing for their own personal and professional flexibility.
Outsourcing is a valuable tool, albeit one with the proverbial double edge that can cut both ways. Separating myth from reality gives law firm leadership, and law firm librarianship, the knowledge they need to view outsourcing realistically and use this tool wisely.