Beyond Traditional Back-Office Outsourcing

While traditional back-office outsourcing has been prevalent for years (think production services, fax, mail & hospitality), firms are increasingly adopting the outsourcing model for additional functions such as document processing, library services, administrative resources, and certain components of accounting.

Many of the traditional arguments for outsourcing apply for these additional services:

  • Guaranteed performance levels via SLAs
  • Subject matter expertise
  • Recruiting
  • Cross-training
  • Back-fill and utilization
  • Engaged staff
  • Career path for the employees
  • Financial penalties for non-compliance

Additionally, many firms have decided that the remaining components of the law firm back and middle office are subject to outsourcing due to their non-billable nature, repeatable task-based nature, and the ability to be centralized with the accompanying benefit of labor cost arbitrage (moving
some functions to a lower cost environment).  Moreover, technology has allowed end-users to interact with these functional areas in a transparent manner via ticketing systems and real-time tracking.

Firms continue to strive for a lower ratio of staff to attorneys.  Increasing document processing capability via an outsourced partner allows firms to realign their secretarial ratios (or to shift secretarial support toward billable paralegal-type functions).  Utilizing the outsourced partner for overflow or weekend work reduces the amount of permanent staff the firm needs to carry in order to deliver the same level of service (not staffing for peaks).

In the area of administrative resources, firms are now able to shift repeatable tasks such as time entry or expense management to a lower cost environment.  Virtual Assistants are a valuable resource when presented in a “pay-for-consumption” transactional model.  Once again, the firm does not need to carry the burden for a full-time employee (FTE).

Library services has seen an increase in technology, the movement of less hard-copy materials, and less transaction requests with the advent of online resources.  Thus, an area that once required more personalized service has shifted towards a model that lends itself better to outsourcing.  Firms no longer need to carry the financial burden of acquiring its own subject matter experts as they can leverage the provider’s programs and best practices (and access to their SMEs that have exposure to many different law firm environments).

Finally, aspects of accounting (AP and AR) such as imaging, posting, indexing, and reconciliation are repeatable in nature and technology allows the tasks to be performed remotely. It is hard for many firms to justify the expense of data entry or clerical-type tasks in major metropolitan areas when they can be performed off-site with the same or better quality at a lower cost (guaranteed with SLAs, increased service hours, and financial penalties).

The law firm outsourcing market continues to evolve.  “Middle office” functions are increasingly in play, with pressure expected to continue as firms are forced to do more with less.  Expect more firms to consider alternative approaches to delivering a higher-level service to their clients at the same or lower cost.