Live from the ACI Legal Process Outsourcing conference in NYC. Session: Initiating an Offshore Legal Services Operation, a presentation by Nancy Laben, Deputy General Counsel, Accenture.
Laben has, as a lawyer, negotiated many outsourcing deals over 15 years. Five years ago, she was involved in setting up a captive LPO. It works for us. Manages 400 lawyers as Deputy GC. We expect to grow but we can’t keep growing at same rate because of economics and span of control. So I am looking for the next new thing – outsourcing may be it.
What factors should you consider when deciding to outsource? This is my GC / user perspective. You have to have measurable processes to prove success. A lot of prep is required. Start by defining business requirements (what is your scope?). Is it one project or a strategic relation? Must also define risks.
Be prepared for change management. If outsourcing affects your team, they must understand the new goals and impact on them. Communicate clearly what the rationale is and expectations are. For example, is it about cost or doing a bigger volume of work. I start with quality and figure out how I can get that level. Don’t expect a Lexus at Yugo or Nano (Tata) prices.
Make sure you have the right cultural fit – does the outsourcer understand how you want your work done. When I ask how do you work, I don’t want to hear “Anyway you want.” I need to know what the intrinsic culture of a supplier is. I need to make sure it fits. I am especially interested in supplier flexibility.
Communicate your priorities to the vendor. Don’t do a wish list; make clear what the requirements really are. Most LPOs disclaim that they are providing legal services. So how does that fit with the required legal Q&A. Be sure you understand how this could affect legal privilege.
There is more value if you see beyond mere vendor relationship. Seek synergies, understand where your interests and vendors align. Work toward a real partnership. Assess future scalability. Know the cost of managing the outsourced relationship.
Accenture is metric driven, so we look at base case that includes all our costs. We look at cost by function and level, including recruiting cost. Have a realistic view of the quality your inhouse department provides. Most don’t measure this – if you don’t how can you compare to an LPO? If you are asking for more quality than you currently provide, you should at least know you are doing this.
Trust is critical. If you change your mind, tell your supplier.
Choosing a provider: Start with referrals; consider reputation; look at 3rd party benchmarks; ask your law firms (especially those with a positive view of LPOs); check with chambers of commerce (some, particularly in NY, track outsourcing).
What goes into RFP? Avoid something too long. Key terms and conditions: confidentiality. service levels, metrics, reporting, conflicts checking, privilege, security, and export control, termination provisions, background checks of team, hours and time zone availability, audit rights, compliance with local law, volume discounts, rates, expenses. Accenture wants “completed enclosed” service providers (dedicated center). Understand depth of vendor bench.
I just came back from India to visit with LPOs. I was very impressed generally with security (and Accenture focuses on this in its business) .
How should you conduct due diligence? Reputation, referrals, financial strength, insurance, facilities, certifications, disaster recovery, data security, training, how employees are evaluated, quality, litigation history, technology in use. If tech is important, bring a tech expert for due diligence. Get a micro look at vendor work processes. Understand how LPO hires and retains its employees. Don’t overspecify. Attrition may be ok if work is highly proceduralized.
Accenture’s own legal outsourcing initiative: Five years ago we found a shift in our business and we had our IPO. We needed to figure out how to measure lawyer productivity and increase it. Our own lawyers were not happy with spending so much time on low value work. We considered India we thought (five years ago) it was too immature. We decided we could not buy ready-made services so we would have to build. We set up a small team (<10) in Mauritius. Metrics: timeliness, quality, types of contracts reviewed, utilization (productive hours worked), total volume, amount of savings. I would expand if I could but the amount of legal talent in Mauritius is limited – we are big employer of choice there. We save $55k per month over US operations.
Why not expand? We are now looking at India LPO because market has matured. We will set up our own in India if we don’t find a vendor we like.