Competing on Process: LPOs Pushing Law Firms?
Last week I read with interest Jordan Furlong’s blog post The evolution of outsourcing. He notes that though LPO is “in its relative infancy, legal process outsourcing has already had a huge impact on the legal services marketplace”.
Jordan focuses on two effects outsourcing has on the legal market:
“The first affects LPOs themselves: they now need to move their value proposition beyond cost savings in a market they helped to make more sophisticated. The second affects everyone: the legal profession’s response to LPO is having an unexpected effect on how legal work is distributed and how legal resources are allocated.”
Working for an LPO provider, I agree that that simply offering lower labor cost is not enough. I see my company and other established LPOs working hard to improve processes, introduce technology, increase efficiency, reduce cost, and achieve better outcomes for the lawyers whom they support. Personally, “I’ve put my money where my mouth is” twice. First, I joined an LPO three years ago. And second, I recently made a switch inside my company and now focus “legal operations consulting” to help do exactly that.
Jordan was perhaps even more prophetic than he realized when he wrote that “a surprising number of law firms are adopting — and adapting — the outsourcing model themselves.” Last Thursday, Legal Week published Taylor Wessing set to create arm in Cambridge for standardised work.
The article reports that the Anglo-German law firm will set up “an affiliated corporate services business to offer clients standardised work.” Their goal is to offer lower-cost options for routine work such as corporate due diligence. Eventually “it is likely that the firm will offer the service to third parties, including other law firms.” The firm may also partner with an IT outfit to streamline work.
“Adopting the outsourcing model” as Jordan suggests is exactly right. From the limited information I have, it sounds like the firm’s Cambridge unit will be a captive LPO.
I think this development is good news for the legal market. It further validates that law firms must respond to corporate pressure for (1) options, (2) lower cost, and (3) process improvements. Given that I’ve been writing about process improvement for a long time at this blog, I am glad to see more action toward that goal. Of course, I also see it as an explicit endorsement of the LPO approach.
Until recently, the corporate law market was served almost exclusively by in-house lawyers and large law firms. Today, however, clients can choose from among boutiques, regional law firms, LPOs, and now, law firms as LPOs. This choice and competition foster innovation and drive costs down – good news for clients. Firms like Taylor Wessing that innovate benefit. And LPOs benefit because in a diverse world of providers, I see LPOs as having the skills, experience, know-how, technology, and global platform to win a good share of the work to support lawyers.
I published a variant of this post last week at the Integreon blog, LPO Now Driving Law Firms?
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