I have written previously about Orrick’s centralized “Global Operations Center” (“GOC”) in Wheeling, WV. The Aug/Sep 2004 issue of Law Firm, Inc. has a good follow-up article (“Location, Location, Location”) about the GOC. 

Orrick has cut annual operating expenses by $5.6 million by consolidating tech support, operations, finance, and benefits in a central facility in West Virginia. Moreover, the article reports that Orrick is considering offering support to other law firms through its GOC. Chairman and CEO Ralph Baxter says “If we can organize it in a way that provides other law firms the assurance of confidentiality and reliability that they would need, we think we’ve got something there that would be a huge benefit to firms around the country.” COO Douglas Benson qualifies this by saying that the firm would work with joint venture partners to offer such a service.

Certainly there is a market for outsourced services to law firms. For example, the same issue of the magazine reports in “Let Someone Else Do IT” that 130-lawyer firm Herrik Feinstein has outsourced its technology support to Union Square Technology Group. Providing GOC services to other firms would presumably offer Orrick several benefits: incremental revenue, lower unit costs for technology (because of higher volumes), and external forces that instill a disciplined approach to running its operations. But there are potential disadvantages as well: distraction from the core business of law and putting the needs of paying customers ahead of the firm’s own needs.

I applaud Orrick for continuing to think innovatively but on balance, believe that the distraction-factor of re-selling internal services outweighs the potential benefits. I think the firm would obtain greater benefit by devoting time and energy it might spend on selling GOC service to a potentially more lucrative purpose – creative applications of technology and processes to further differentiate and elevate the firm’s competitive position. It’s hard to beat the profit margin of law practice and I think that any speculative or unusual investment a firm makes should be focused on supporting and growing core client service with its traditional margin rather than on an ancillary business that would have no impact on clients and likely carry a lower margin than fee-paying legal work.