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Reducing Big Law Overhead: Just Cut? Or Re-Think?

Legal demand is flat and large law firms face price pressure. So management has cut Big Law overhead to maintain profits. Above the Law published a graphic summarizing 2013 first-half cutbacks. In the second half, I found 17 ATL reports on AmLaw 100 firms that cut secretaries and other staff.

We can’t see what happens behind the curtain, but staff cuts likely occur without re-thinking lawyer support. So when I see announcements about new approaches to support, I like to learn more. In mid-November, I read the press release Bingham McCutchen LLP Selects DTI to Provide Document Processing. Bingham operates a low-cost service center in Lexington, KY.  I was intrigued that it nonetheless entered into a business process outsourcing (BPO) agreement with DTI Global for document production support. Via a public relations agency, I learned more from Christopher Aronson, President, Knowledge Solutions, DTI Global:

“We at DTI recommend a multi-site solution or resourcing approach to clients when certain conditions apply, including:

1. The operation is mission-critical and requires 100% uptime.
A multi-site operating plan adds significant redundancy enabling true 100% uptime performance. From a business continuity or resiliency perspective, the platform is never down-even in the event of a local or regional outage. Workflow design is critical here, DTI workflow solutions eliminate any staff redundancies-ensuring the team is equivalent in size to a single site solution.

2. The personnel are highly specialized.
Often times it is not the most senior positions in an organization that are the most challenging to resource. A great example is Legal Word Processing – Document Processing personnel. Identifying folks that have the legal experience, combined with the application proficiency necessary to be successful is a challenge in any market. The need to resource for 24 hour coverage only adds to the challenge. While the marketplace for information technology, accounting and human resource professionals are often quite deep – even in the smaller US markets, these functions that are unique to large law firms emerge as a greater challenge.
Adding a second market to an operating platform can enable clients to gain access to an additional pool of talent. It is important to leverage the local wage pool at all levels-from the experienced manager to the entry-level professional. This ensures advancement and replenishment at the junior level-two critical factors to maintain excellence and wage balance.”

All large law firms should consider the operational issues raised here: business continuity, workflow and process design, 24 x 7 support,  the best location to obtain specialized skills, and staff career paths.

With so many Big Law cutbacks , I am surprised that more firms have not pursued outsourcing solutions.  Perhaps we will see more.

BPO is just one type of legal outsourcing; another legal process outsourcing (LPO). On this front, DTI  announced around the same time DuPont Engages DTI to Provide Offshore Managed Document Review.  Naturally, I also asked about this.  Mr Aronson explained:

“We currently have 150 seats in Manila, and we have significant room for expansion. We can resource projects up to 200 FTEs within a matter of hours thanks to our proven team of employees and contractors. While document review is the primary service line in our Manila center, we also offer additional services in this facility such as contract drafting and review and various IP support services.”

As firms continue to face profit pressure, I believe that they can deploy BPO services to reduce lawyer support cost and LPO services to improve client service and value.

  1. Richard Granat

    Ron:
    Your are right, Outsourcing is not just about cutting costs.It is about designing a process that takes advantage of different organizational strengths. Manufacturers learned this a long time ago. Law firms are just catching up. If you think if a law firm as part law factory, outsourcing makes a lot of sense.