By Ron Friedmann and Renay Rutter
This article was first published in the September – October 2008 issue of the Association of Legal Administrators’s Legal Management magazine, Dealing with Documents: The Pros and Cons of Outsourcing – How outsourcing can slash payroll & facilities costs, reduce turnaround time, and boost in-house secretarial careers (PDF)
For years, law firms have improved financial results mainly by growing revenue through strategies such as lateral recruiting and investments in marketing. More recently, smart firms have also focused on improving operating efficiencies and controlling costs. One key strategy has been to reduce or eliminate secretarial overtime, increase the ratio of secretaries per lawyer, and centralize document processing and other support services. This achieves savings, but comes at the expense of disrupting traditional lawyer-secretary and other long-established staff relationships.
Administrators have options, however, to reduce costs with less disruption. Numerous firms, especially ones with 200+ lawyers, now outsource document-processing. Enabled by easy modern telecommunications and collaborative Web technology, outsourcing offers several benefits: it reduces cost without sacrificing quality or confidentiality; improves turnaround time in document processing; and preserves important working relationships. In fact, freeing secretaries from high volume or complex document processing tasks enables them to perform more like executive assistants, which is better for both lawyers and secretaries. Outsourcing can also free other support staff and administrators to focus on higher-value work and improve their job prospects.
This article looks at the pros and cons of outsourcing, how it works, and how it recasts the role of support staff. It also explains the law firm administrator’s pivotal role in executing these changes and maintaining greater operating efficiency.
FROM TRADITIONAL TO GLOBAL
Traditional secretarial relationships – one-to-one or two-to-one ratios – are “high-touch,” with the secretaries stationed close to attorneys. This enables ongoing and close relationships and excellent client familiarity. When personalities match, the relationships can be highly productive and satisfying. (Of course, if personalities conflict, life can be difficult for both).
The benefits of this traditional approach come at a price. Secretarial and document processing services are typically the third-biggest cost, after associates’ salaries and rent. The direct cost for a secretary in large urban area is about $85,000 per year (including salary and benefits). There are additional costs such as hiring, training, supervising, and covering leave.
Operationally, the traditional model also presents three big challenges. First, administrators often must over-staff to provide service for peak demand. That means excess capacity when demand is average. This is a recipe for inefficiency, idleness, job dissatisfaction and attrition. Furthermore, staffing beyond a 10- or 12-hour day is a challenge. In other words, the traditional model is nine-to-five, while the increasingly global practice of law has become 24×7. Of course, overtime provides additional coverage, but it is expensive and not feasible for round-the-clock coverage.
Second, secretaries must be generalists, which sometimes results in a lack of immediately available specialized support. The right match between a lawyer’s business requirements and secretarial skill and experience is a matter of luck. Administrators face so many constraints that it is virtually impossible properly to pair secretarial skills with lawyer requirements.
And third, supervision is bifurcated. Secretaries divide their loyalty between administrators who hire (and can fire) them and the attorneys to whom they are assigned. This problem is compounded by the widely understood but little discussed problem that many lawyers refuse to rate secretaries unfavorably, which hobble supervisors’ ability to take remedial action.
WORK GROUPS & DOCUMENT CENTERS
To manage capacity more efficiently, some forward-thinking administrators have tried new working models. One example is a centralized document processing staff (e.g., support stations on each floor) for labor-intensive or specialized tasks. Another is small secretarial teams to serve groups of lawyers. Teams are most effective where attorneys’ output is a joint work product. The team approach facilitates specialization, provides opportunities for career advancement, and can create motivating peer pressure.
These new approaches have resulted in lower secretary-to-lawyer ratios, but also caused some disruption in previously exclusive, long-term relationships between partners and their secretaries. Beyond disruption, firms may experience the unintended consequence of reduced productivity and job satisfaction for some lawyers. Junior associates often must compete for secretaries’ time: When two or more lawyers share a secretary or even a pool of secretaries, the junior ones often do not get the services they need because the senior ones demand – and receive – a disproportionate share of the staff’s time (see Figure 1). Associate satisfaction and client service can suffer.
Changing Ratios Affect the Size of “Time Slices” that Lawyers Get:Stretching the ratio leaves associates with too small a slice to use, so they must fend for themselves.
In some secretarial sharing situations, some lawyers, typically junior ones, get so little attention from secretaries that it is like not having one at all.
Just as outsourcing solved several law firm management problems decades ago, it can solve the secretarial problem. A bit of history…. Law firms began outsourcing administrative jobs like payroll in the 1970s. Over the next decade firms broadened outsourced tasks to photocopying and mailing, travel arrangements, and food service, for example. Those were followed in the new century by outsourcing more knowledge-intensive tasks such as litigation support (document production and management) and legal research, some of it to offshore support centers.
By outsourcing document processing and other routine tasks, firms can save money and free secretaries for higher-value work. This reduces cost and allows around-the-clock support. Substantial cost savings come not only from lower labor costs, but also matching specialized skills to tasks, tailoring resources to capacity, eliminating overtime, and streamlining workflows.
Administrators pursuing the outsourcing option should find a vendor that offers domestic as well as offshore document processing centers. The dual-shore approach provides the option to work through domestic contacts to assign tasks to offshore centers. This way, staff interacts primarily with the U.S.-based staff, which handles job intake and in turn assigns work to centers in fully vetted offshore locations, while closely monitoring deadlines and quality control.
A dual-shore approach allows more flexibility than single-shore. Some firms and administrators may elect to use only the onshore option. Others may find that after a period of adjustment, dealing directly with offshore personnel is easy. With delivery centers in multiple time zones, administrators can be assured of business continuity, an increasingly important concern today. Moreover, they can elect around–the-clock service without running a graveyard shift in any location. (Seasoned administrators certainly know the challenges of staffing the midnight-to-8 am shift!)
Law firm administrators have a choice of several established outsourcing providers today. Firms typically use a combination of consultants, internal resources, and vendor expertise to analyze workflow and cost efficiencies and develop a customized plan to meet the firm’s long-term needs. With the right vendor, firms can be sure to have a flexible, customizable, and scalable solution. “Scalable” means that the “team” assigned to a firm can grow to meet unpredictable demand on short notice.
The positive financial impact can be significant when deploying the right administrative services solution. A firm with over 800 lawyers, for example, should save roughly $2 million per year.
One result of outsourcing both highly specialized “one-off´ tasks and routine labor-intensive tasks such as document processing is that the secretaries are able to focus on higher-value job responsibilities such as relationship management, workflow management, global knowledge management, drafting documents, and billing. They become more akin to executive assistants with potentially higher pay, greater prestige, and more advancement opportunities. Figure 2 illustrates a conceptual way to think about how outsourcing can significantly alter the mix – in ways favorable to all involved.
RECASTING THE ROLE OF SECRETARIES & SUPPORT STAFF
When low-value tasks are outsourced, in-house secretaries can focus on higher-value tasks, enhancing their prestige, satisfaction, and opportunities for advancement.
ADMINISTRATOR’S PIVOTAL ROLE
The role of the law firm administrator in outsourcing ranges from fairly black-and-white quantitative tasks such as a cost-benefit analysis to high-touch change management initiatives. Here are the key steps administrators should follow:
- Research the firms that provide outsourcing services—the vendors—and work with them to analyze the potential costs and benefits and establish a budget for the outsourcing project. Some administrator will retain legal market consultants in addition to relying on their own staff and vendors for analysis.
- Evaluate the options, narrow the field, and then recommend and select the vendor. This involves educating and presenting the cost-benefit analysis to partners or a management committee. Administrators can naturally expect to face objections about changes in relationships, productivity, confidentiality, potential conflicts, quality, and comfort. The right preparation should suffice to overcome these objections.
- Plan the transition. The transition process can be gradual, and therefore not difficult to manage. Outsourcing can start small and grow according to a plan, and be fine-tuned as it progresses. Once the program is in full swing, the administrator must manage, evaluate, and adjust it as necessary. Finally, the transition involves managing new job descriptions, expectations, and training of in-house support staff.
A top-notch outsourcing vendor will advise and assist the firm administrator in making presentations to partners, and “engineering” the transition within the firm, even helping to reallocate tasks within the in-house support staff, based on their experiences with other law firm clients.
The change management work can be a delicate task because it involves changes in how both lawyers and secretaries work. Delicate does not mean hard, though: Initial resistance to outsourcing often melts as all involved see the personal and institutional benefits.
Practicing law is partly about building relationships. Successful lawyers value and protect relationships, not only with clients, but also with their support staff. Administrators must nurture these relationships but, at the same time, fulfill their imperative to control costs.
The lawyer-secretary relationship is already undergoing change in progressive firms—sometimes disruptive—as law firm economics tighten and the supply of experienced legal secretaries shrink. Smart outsourcing can save money and reduce administrators’ headaches. At the same time, it involves some transition work to make everyone comfortable and minimize disruption to lawyer-secretary relationship. Beyond any short-term cost savings and operational improvement, outsourcing can enable re-thinking secretarial and other support roles. Administrators who go down the outsourcing path can increase both lawyer and secretarial job satisfaction.