The outsourcing guide

It is now commonly accepted business practice to adopt outsourcing as a means of refocusing organisations on core matters, reducing non-core operational risk, improving quality and staff morale and reducing cost. Although law firms have been relatively slow on the uptake to date, the legal sector can still take advantage of outsourcing and offshoring. Magic circle giant Clifford Chance has led the field by moving back office and secretarial support to its own office in India, in order to carry out much of the company's administrative work. The outsourcing programme is expected to yield more than £9.5m in annual savings. Similarly, Pinsent Masons announced a deal to offshore its bulk typing and transcription services as part of a move to change the role of its secretaries.

Lawyers and their support teams exist to serve their clients' requirements. Clients' requirements are always satisfied directly by lawyers in a personal relationship. The success of any law partnership is dependent on the successful delivery of services to clients by all the lawyers in the firm. However, at the moment a series of challenges have surfaced which has made this more difficult: escalating costs; lack of office space; backlogs in letter production and documentation due to staff shortages; the necessity of using temporary staff to alleviate short-term staff shortages; changes to the Legal Services Bill and a lack of qualified staff. Legal process outsourcing is undoubtedly an option that can help law firms address key challenges, but only if done correctly.

So how can a firm best go about using legal process outsourcing to their advantage?

- Minimise set up and management time. If getting an outsourcing arrangement right requires too much effort or time from fee earners, the direct cost savings will be lost, and it will lead to much in-house frustration and a lack of buy-in from key people. For example, dictation per minute/per line is hugely time consuming (in terms of set up and constant management) for the law firm. Fee earners should be spending their time on their core activities, servicing clients and billing for these services and not on the firm's outsourcing contracts. It should not be expended on systems changes and personnel issues. When an outsourcing relationship is set up, this potential pitfall must be avoided.

- Implementation needs to be evolutionary. The implementation of an outsourcing strategy need not be the cataclysmic, big-bang scenario that some might suggest, but an evolutionary process leading to business transformation. This needs to be characterised by a lack of redundancy for permanent back office staff, the implementation of progressive systems and the contracting of a UK company to manage the offshore relationship. By developing an outsourcing relationship that maximises the benefits of an offshoring strategy while minimising day-to-day disruption, the impact on the firm can be managed effectively.

Changes should be implemented gradually, rather than wholesale changes in one go. This will win over sceptical internal audiences who would not respond well to sudden large-scale disruption. In addition, focusing on areas where firms may already have high attrition, use temporary resources or have unacceptable documentation backlogs is potentially the best place to start an offshoring strategy, in order to increase service delivery with no reduction in UK headcount.

- Choose the correct processes to outsource. It is crucial to choose the correct processes to outsource, as well as the correct location to send these processes to. The multishoring model means different types of process can be sent to different locations. An example of a process not to outsource is customer contact - this is something that is core to all law firms' businesses. Secretarial work is a particularly good process to outsource as it allows in-house secretaries to focus on becoming paralegals - performing value-added tasks rather than the audio and copy typing that can be performed offshore. The offshoring of some basic secretarial services allows in-house secretaries to focus on higher-value, client-facing roles and provides them with an opportunity to fulfil their potential. This drives staff satisfaction and ensures quality staff are retained in-house, and attrition is lowered.

- It is vital to look beyond the cost savings. Focusing purely on cost savings would be a mistake. Service quality and convenience must be high on all lawyers' agendas. A common sentiment among lawyers seems to be, 'I do not care what it takes, just do it now and get it right first time'. This may be applicable to a lawyer's demands of their back office and equally of a client's demands from a lawyer. Outsourcing provides a means whereby a firm's support staff raise their game. By outsourcing the mundane day-to-day work to an environment where service delivery can be instilled via a contractual relationship (including weekend working or 24/7 working), in-house support staff will do more interesting and higher value tasks and therefore staff retention will increase.

- Planning and implementation must be done correctly from the outset, in order to maintain UK headcount and increase margins. Focusing on the back-office, mundane client business support functions, and the commoditised, non-client-facing repetitive legal processes (e.g. bulk conveyancing and initial contract drafting) can realise significant tangible and intangible benefits for UK law firms (including significant cost savings).

In terms of cost savings, a London law firm employing four secretaries will incur a cost of about £150,000 a year (including all ancillary benefits, bonuses, sickness and national insurance, etc). Typically, but dependent upon the individual department, around half of this work will be copy and audio transcription. If the copy and audio typing is performed offshore, a firm can expect to save £50,000 per year. Additionally, financial savings are accrued from a variable costing model whereby offshore support staff are not directly employed by the UK law firm and therefore the UK firm only pays for work completed. The overhead savings go beyond the salary differential. By moving the workload to another location, a firm can realise additional benefits in terms of office accommodation, either by closing offices (or downsizing), or by fitting more fee earners into office-space previously occupied by secretaries.

- Communication is key. To achieve success within an outsourcing arrangement it is vital that everyone involved understands the rationale behind the deal, the benefits, the approach and the timetable. In conjunction with this, open and honest communications with the law firm at large, will leave everyone well-informed of the firm's intentions. Offshoring is a realistic and cost-effective opportunity, but only if it is the right process that is outsourced, to the right partner, in the right location, in the right way.

Paul Aggett is chairman of Magellan Consultancy Services.