This month marks the 25th year of Mattern & Associates being in business. Over the past two and a half decades, it goes without saying that we have seen the field of outsourcing go through a multitude of changes – some good and some not so good. Here are just a few things I have learned as well as suggestions for addressing a few areas that can be improved.
1. The Role of Outside Expertise
When I wrote the initial business plan for Mattern in 1997 and circulated it among some of my trusted colleagues, the overwhelming feedback was, “Why do you think law firms need assistance with their outsourcing? The vast majority of firms choose a vendor and are satisfied with their outsourced operation.”
I knew many firms were oversold, overcharged, and underserved. I was on the vendor side at the time and knew firsthand, having sold and implemented outsourcing prior, that outsourcing providers could offer firms a great deal more value.
As in most businesses, the initial reaction was to handle projects like outsourcing internally and, so, were reluctant to engage outside expertise. We started with an early win with Pepper Hamilton where we achieved significant savings and improved the terms. In legal, news of success travels fast, and soon more firms realized they ‘don’t know what they don’t know’ and wanted to turn to outside expertise as well. We were off to the races.
2. The Shift to Hybrid
One of the most obvious changes to law firm operations over the past two decades is the recent shift to hybrid operations. Hybrid working is something most firms would have said would never happen, but of course, extraordinary circumstances breed extraordinary change.
Hybrid operations might be here to stay – but they are also continuously evolving. Firms that try to mandate specific days for their return to office only achieve a 49% compliance rate, while at the same time Cushman & Wakefield reports that 75% of firms will be trying some form of hoteling.
The other significant change that is impacting operations because of the pandemic is attorney technology adoption. Faced with no alternatives, lawyers learned the required technology to make remote working possible.
Administrative support services, for instance, sit in the crosshairs of these multi-various changes and many firms are re-visioning how these functions are fulfilled in ways no one would have imagined.
Just as when Mattern first began 25 years ago, firms will try to assess their administrative functions on their own initially, and it will be moderately successful. The firms that want to optimize its impact, however, will turn to outside expertise.
3. Labor is Key
Back in 1997 when we got started, there wasn’t much to outsourcing an office services operation. You needed equipment, some staff and basic operational guidelines. There was no real technology, MFDs weren’t networked, and so it really came down to the labor onsite and how they were supported by the off-site management team.
While technology plays a larger role in today’s operation than 25 years ago, a successful operation still comes down to the quality and expertise of your onsite staff and how they are supported by the off-site management team. The outsourcing companies that recognize that and truly offer it are the ones that are successful.
4. The Small Got Bigger and the Biggest Got Smaller
For the first 10 years of our existence, Pitney Bowes Management Services was the dominant player in the domestic marketplace with the most law firm accounts. That is no longer true. For a variety of reasons, the market is much more fragmented and several smaller players that were not even a factor 10 years ago are major players in the market. In fact, according to a Deloitte study, flexible sourcing models, with interchangeable or multiple service providers, is now becoming the mainstay for most clients. This outsourcing trend has been consistent over the past two years, with clients describing their strategies as “multi-vendor” and “multi-sourced.”
5. Equipment Manufacturers vs. The Rise of the Dealers
Taking a step back and looking at the outsourcing marketplace, you would think that the equipment manufacturers would dominate in this marketplace since most outsourcing contracts still address a firm’s equipment needs and their supposed advantages in offering better terms and pricing.
That is not the case. The majority of contracts we negotiate today do address equipment, but it is often supplied by another entity–quite often a dealer, which was unheard of a decade ago. The terms, pricing and service offered by the dealers are often much more desirable than what the equipment manufacturers and outsource providers can offer. Just as the smaller outsource providers have become much more dominant, the same is true of the dealer network.
6. Technology and Planning
As firms adapt to the new hybrid workplace with distributed means of providing support to attorneys and staff, technology will be critical to creating a cost-effective, efficient workflow. To do this planning, it is essential that firms gather as much information as possible prior to implementing any workflow changes.
To know how to evolve your firm’s administrative support model, for instance, we start with data to create a benchmark of exactly what work is being performed by whom, where and at what cost. To do this, we use RevelationLegal.
With RevelationLegal, we can define what percent of, say, a specific attorney or admin’s hours are spent on word processing functions. Similarly, we can define the same for copying, scanning, printing materials and any other admin function we define. Powered by technology, not only can we start grouping these administrative functions, but we can add a layer of cost to determine how much each task costs the firm per hour and determine where the best location for the task to be performed is and who best to perform it.
We can then analyze the data and make recommendations as to what operational changes would optimize the firms’ resources, skillsets and cost.
A second piece of technology comes into play once we’ve analyzed and designed a new, optimized framework to make sure we answer these questions: How do these support elements, wherever they’re located throughout the country, how do they receive work from the attorneys? What does that work submission look like?
We like BigHand for this. BigHand is a job submission tool that allows work to be routed to the right support staff at the right cost to the firm and monitored through completion. Output reports can be used by management for visibility of key metrics like work type, volume, capacity and utilization for informed resourcing and productivity decision making.
While knowing what is currently happening and monitoring the implemented changes is a start, the correct analysis of the data and the benchmarking is critical to knowing whether to improve in-house or outsource this function. Too many firms have outsourced the wrong functions or did so incorrectly only to regret the decision and must restart the process.
7. Missed Opportunities
One of the biggest missed opportunities of the past twenty (20) years is the fact that outsourcing vendors have allowed their services to become commoditized. This has allowed firms to make a price-based decision on a service that shouldn’t be based on price. That is part of the reason that 67% of firms report that outsourcing has not made a significant impact to their firm’s operational performance.
Firms are willing to pay a premium for services, if the services are provided in a premium way: trained onsite employees, backed up by trained replacements, supported by a management team that is constantly trying to make the client’s operation more cost-effective and efficient and not trying to sell them additional services.
Another ramification of this commoditization is the prevalence in the legal community of the acceptance of mediocrity of outsourced services. There is nothing wrong with holding your service provider accountable just as your clients hold your firm accountable. Having detailed service levels in place and monthly reporting that will hold your providers accountable are just sound management practices.
8. Starting from Ground Zero
Many firms at renewal time simply extend their contracts without taking a fresh look at the market and how the services in their own firm are being performed and how well they are provided. This is especially critical post-pandemic. Every contract renewal should be examined as if it had never existed and the firm was building it from the ground up to meet the needs as they currently exist.
Needs change— sometimes quickly and dramatically. Not only that, but vendor offerings also change to adapt to these service gaps. If your firm’s support models don’t adapt to new, key workflows, unsatisfied users will be the result. Surveys, focus groups, individual meetings with key end users are all critical to finding out their needs and structuring your systems appropriately.
9. The Next Ten Years
What will the next 10 years bring to the field of outsourcing? Great question, and if they are like the last ten, there will be dramatic changes in store. Some of my predictions are:
- The only people working for a firm will be attorneys: There will be a day, sooner than you think, that the only employees of a law firm will be the attorneys themselves. All office and administrative services along with the C-levels will be outsourced.
- Firms will have only one physical location in a headquarter city mainly consisting of conference spaces and hotel office spaces. Geographic consideration will be a non-issue.
- The only costs that firms will recover will be hard costs.
- Shared office and administrative services between firms will become more and more common
We are honored and grateful to have been a part of this industry for the past 25 years and hope that our impact as a business has positively affected the relationships between law firms and their service providers. The next 25 years looks to bring a great deal more change than the previous, and outside expertise will be even more needed than ever before. To that end, we look forward to continually expanding our relationships and the value we provide to our law firm clients as well as the service providers in the market. As the market rapidly changes, service providers come and go and pivot and expand. We are excited to see what that brings and to help firms navigate the right solution for their business.