Outsourcing: Enhancing Your Firm’s Resources and Client Value

This article appeared in the September 2017 issue of Legal Management Magazine.

The market for legal services has changed.  Staffing models are substantially different from a decade ago, mergers & acquisitions continue to disrupt operations, and what is most common across all firm sizes and geographies is the need to deliver more client value with fewer resources.

With 70% of law firms outsourcing a portion of their back office and 45% considering outsourcing (see 2016 Mattern & Associates Cost Recovery and Middle Office Survey) more middle office functions, it is clear that outsourcing is one of the tools firms are leveraging to succeed in the new legal market.  This is because, when executed correctly, it can be an excellent management tool to increase service levels, broaden talent and manage costs.  These were some of the persuasive reasons behind Am Law 100 firm, Fox Rothschild, and regional powerhouse, Sandberg Phoenix, regarding their firms’ decisions to outsource initially 10-15 years ago.

Suzanne Homel, Senior Director of Administrative Services for Fox Rothschild, oversees the firm’s facilities, the firm’s national support contracts, real estate information and more, and comments: “The value of outsourcing then–and now–is the flexibility and continuous level of service and expertise it provides our firm.  Law firms have very specific back of the house needs, and in the absence of cross-training investments, if one or two in-house staff were to call out sick, this could put our attorneys in a bind.  The decision to outsource was to enable continuous, skilled and flexible service to our attorneys and, therefore, our clients.”

Jeff Feltz, Director of Finance and Facilities for Sandberg, adds, “I look at the firm’s operations as having two clients:  internal and external.  The goal is always to provide better service to clients; however, often the way to achieve that is through providing important efficiencies to the internal clients, i.e. the firm’s attorneys. With outsourcing, we were looking to gain efficiencies for the firm that could help drive more value into certain key support roles.  For instance, by removing copier tasks from our legal secretaries, they could provide more valuable support to the firm’s attorneys.”

Would these firms do it again?  The answer is yes; each firm has recently gone to market to investigate and deploy outsourcing services–and in the case of Sandberg, to increase outsourced services–at their firms.  This article will look at some of the key benefits as well as pitfalls to avoid. Ultimately, these insights illustrate how outsourcing can enhance the stability and culture of your firm and provide better client service in the new market for legal services.

The People Part of the Equation:  Staff and Service Partner Management
The most important part of dealing with an outsourced operation is the people—this includes how to best transition in-house staff, culturally assimilate outsourced staff, and how to get the most out of your on-site manager relationship. 

Firms need to be staffed with resources knowledgeable in their specific job function, the nuances of a law firm (structure, deadlines, etc.), and the ability to adapt to firm culture.  For most outsourced operations, this will lead to a mix of absorbed firm employees, current service provider employees from other locations, and new hires.  This mix will ensure the proper blend of legacy firm operational intel as well as the best practices and process improvements of the service provider.

Suzanne comments, “One of the most important things for Fox Rothschild was to retain a sense of family.  This means, when transitioning our in-house staff, we made sure to keep our in-house folks with us and keep them whole.  That was important to us.  Now, as part of the outsourced team, we have put a career path with enhanced training and mobility in front of them while always including them in all Fox Rothschild social activities to keep that family appeal.”

Jeff adds that at Sandberg, their outsourced staff often goes that “extra mile.”  The firm’s copy center operates officially until 6:30 pm; however, one of the firm’s attorneys had an emergency copy job—after 6:30 on a Friday evening–that required delivery the next morning to the plaintiff’s attorneys.  “We have an emergency service number to call in these situations, and one of the persons in the work center went the extra mile and hand-delivered the required documents.”

Additionally, the service providers’ on-site manager will be an important piece of a successful operation.  The first-level of off-site management ensures that the on-site staff has the resources to fulfill all contractual obligations.  An open dialogue between the Site Manager, the Regional Operations Manager, and the client will determine whether the operational foundation is built for success.  The service provider needs to engage and motivate the staff.

A communication breakdown here can cause an engagement to go wrong.  At Sandberg, the firm’s initial outsourcing service partner was acquired by a large organization, and communications with the partner began to deteriorate.  Jeff says, “By the time the partner began to respond to our needs, we had already decided to go in a different direction—and it was too little too late.”  Rather, Sandberg took the opportunity to fully investigate the market.  Jeff adds, “We didn’t have the bandwidth to run the process internally, so we had Mattern run the RFP.  Through this process, we verified how we could substantially improve our service levels, and we brought in 3 of the leading competitors in for face-to-face interviews.  We wanted to ensure that connection and responsiveness from the beginning—and at the end of the day, we decided to increase our outsourcing services in new areas.”

Key Service Provider Tips:  Implementation and Reporting (SLAs)
To ensure implementation success for the firm, ask your potential provider about taking a “swarm” approach to overstaffing the operation during the implementation period.  Also, shadowing and documenting of procedures during the run-up to transition is critical as unforeseen circumstances occur during the first week of any new operation (existing manuals go missing, key hires decide not to transition at the 11th hour, etc.).  It will provide your firm peace of mind to know your provider is prepared to overcome any hurdles that may arise.

Following a successful implementation, the only way to gauge ongoing performance is to measure key metrics, and audit compliance back to contractual obligations.  The contract needs to be well-structured with defined service levels, regular reporting on those service levels, and penalties for missed compliance.  Additionally, the contract should identify head-count, requirements for staff placed on-site (training, legal background, etc.) and any credits due to the firm for staff underages.

Key Service Provider Tips:  Access to Technology/Innovation
If your current or potential service provider has not adopted automation, or is not proactively bringing innovation to the firm, then the firm is not getting the true value of an outsourcing engagement. 

Suzanne adds, “We meet monthly with our service provider as schedules permit; during these meetings, our outsourcing partner not only provides utilization statistics to me, but also are able to keep me informed regarding new print services and technology ranging over 150 pieces of equipment.  This is a tremendous added-value, both in terms of our knowledge-base, time-efficiency and assisting my managerial role with data.”

Ultimately, these insights illustrate how outsourcing can enhance the stability and culture of your firm and provide better client service in the new market for legal services.  When done properly, the engagement will bring a high level of service with engaged, motivated, and trained employees, while freeing the firm to concentrate on its core competency of providing first-class legal service to its clients.

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