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Offload the Workload: How Outsourcing Can Increase Profitability

  • Legal Operations
  • 4 Mins

Law firm profitability is not exactly languishing. Many law firms, especially larger ones, are making very comfortable margins. But law firms are rather like whales: if they stop moving, they sink.

Cutting The Cost Of Legal Practice

Because there are challenges to profitability, and no law firm can afford to assume that the revenue marker will just keep rising. Challenges like more discerning (one might say demanding) clients. Corporate legal departments who consistently challenge traditional billing practices. Clients in regulated industries who insist on better law firm security and governance. A general commoditizing of legal services. These are just a few of the industry challenges that are big concerns even for the well-heeled AmLaw 100.

There is no great mystery around the areas where law firms can increase profitability: getting more clients, retaining and growing existing clients, cutting salaries and benefits, and streamlining business processes. 

Cut Cost, Not Quality

The challenge of cutting costs is really to achieve it. It’s all very well for the partners to announce they’re cutting salaries on the document processing team, but in fact how is that going to work?  Will they lay off newer hires in favor of the most experienced people? Will that leave enough team members to do the job? 

How about if the most experienced people lack the right technical skills, and the new hires are more technically advanced? And while we’re at it, who’s going to oversee layoffs and new hires? If the firm is cutting salaries and benefits, will it stay competitive in tight labor markets? And how are they going to know if the savings are legitimate, or if a gutted document processing team is producing substandard work that will lose cases and clients?

You can ask similar questions about any business function. How do you change people and processes, so you save money without sacrificing necessity?

Benefits of Legal Outsourcing

This is where legal process outsourcing comes in. Expert outsourcing helps you to effectively manage people and processes to reduce costs while maintaining high quality. 

Increase or Reduce Legal Resources As Needed 

Start with an outsourcing provider that offers a comprehensive portfolio of law firm services. Look for a wide range of middle office and back office services; administrative, reception, and hospitality support; records management and information governance; law library and research; M&A and contract support, project management, facilities, eDiscovery and litigation services; technology deployment; and legal marketing.

Yes, that’s a lot of services and no firm adopts all of them off the bat. But you will want to start with the services you urgently need now, and grow into more. Why choose four or five different outsourcers when you can work with a single outsourcer that provides all these services and more? 

Adopt services as you need them. When you need and want to add new ones, your outsourcing framework and relationships will already exist.

Immediate and Long Term Legal Needs

Work closely with your outsourcing provider so they thoroughly understand your firm’s culture and business objectives. Engage your outsourcer help you to prioritize your immediate and long-term needs. 

For example, take the document processing scenario discussed above. Instead of haphazardly shrinking the team without controlling quality, engage outsourced document processing teams. Your outsourcer should hire technically sophisticated team members from lower-priced labor markets, and pass on the expertise and savings to you. The right outsourcer will also train currently and in the future, so the team uses proven technology to carry out their mission. Quality control software reports to the outsourcer and to you, so you can see precisely how well the team is performing. 

Another example is adding records management and information governance. Work with your outsourcer to replace an unwieldy records management process with a highly efficient records management function. From there, you can grow into the next level of information governance, where you are not only keeping your data safe but also profiting from the competitive information you are discovering.

DIY works for the Home and Garden channel, not so much for law firms. Partner with your outsourcer and bring that revenue home. 

If you found this blog informative, you may enjoy reading ALSPs Best Business Practices or The Epiq Angle Blog.

The contents of this article are intended to convey general information only and not to provide legal advice or opinions.

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