What’s next for the legal back and middle office? A conversation with Brian Schare

What’s next for the legal back and middle office? A conversation with Brian Schare 2021-08-05T20:07:56+00:00

Rob: Brian - First thing I want to hit you with is what do you see with law firms’ back and middle office functions in the coming months?

Brian: Thanks Rob, thanks for having me and good morning everybody. I think if anyone believes they can predict what would really happen in the coming months, they have a bridge to sell you, but I will do my best to be responsive. I think it’s clear that the pandemic has accelerated the thinking around the typical law firm support model. It has allowed us all to take a step back and think about the model.

One thing we know for sure, as long as the appropriate technology framework is in place, people in the back and middle office in our firms can work remotely. I heard from several of my peers, and I have been in pretty close contact with a large group of my peers in large law firms, and we are having the same experience.

If the technology is good, and the technology is there, we do have the ability to have the back and middle office not only working but also being effective and in some cases being even more effective.

In the coming months I will tell you that people in back and middle office positions - and I will make a blanket statement that most of my comments or maybe all my comments are not as Schulte Roth & Zabel leadership but they are my personal feelings - but I will tell you what Schulte is doing in certain cases, in the coming months we are preparing for our support folks - both in back and middle office - to continue to work remotely as we go on. We are preparing for that, we are expecting that, and we see no reason to deviate. 

I will also say Rob, does this change the model in the future? Will NY firms or firms based in NY or in large cities go the way of some of our firms we have seen in the past, like my former firm Orrick moving their back office to West Virginia or to another location to a different city or different part of the world? Potentially, but I think it is too soon to tell what is going to push our firms.

Rob: Great comments there and just to take off on one. You are talking about the Orrick situation of Wheeling in West Virginia and you see that there is a possibility that may expand going forward when firms examine their back office. Do you see that going down the outsource path - using a 3rd party vendor or firms doing it on their own in - I’ll say- remote locations for a lack of a better term?

Brian: Good question – First of all you have to do the analysis. The analysis is twofold, first part is how much money can I save? At the end of the day what is the arbitrage here? Does it make sense for the firm? The bigger part of the analysis is the service level and will the service level be affected one way or another by doing something like a Wheeling or outsourcing of some kind. Once you make that decision it is a lot easier to go to a company that already has the infrastructure in place, and you can just plug and play as opposed to developing your own. When I was in Orrick, we developed our own and it took a lot of time and a lot of effort and a lot of money.

Rob: So, you think the advantage of already being in place even though it is being outsourcing, you know depending upon the numbers, really makes some sense there?

Brian: I do. My firm is a very different firm, we are, essentially 90% of our employees are in one office. We have two smaller offices outside of NY, so if we had 50 offices around the world, I would see more of an appetite for something like this. I do not see this being a solution for a firm like mine, but I see it being a solution for larger firms that are much more far from that.

Rob: Again, great points. A couple of weeks ago we had a conversation about the secretarial function and the impact and where it was going before this whole situation and where it’s at now. Can you share those thoughts?

Brian: Sure, I don’t think this will be a shocking to anyone on this call but the law firm or legal secretary model has been under siege for years, many years now and that is really based on technological advancement that have been put in place. Lawyers are doing more and more of word processing and other secretarial work themselves because frankly it is more efficient to do it that way.

It made me think of back in the 90’s. I have been in this business for a long time, back in the 90’s I was in a firm called Donovan Leisure, for those who have been around long enough may remember Donovan, who eventually got acquired by Orrick, at the time we just put our word processing system in place and our associates were just starting to use it and the chair at the time was very concerned to have lawyers working on word processing, assignments and typing own briefs and things like that and said our clients will never pay in a million years for lawyers to be doing word processing.

Well fast forward and that is basically how this all works now and that is one of the reason why the secretarial position is not what it was because the typical assignment done by secretaries are being now being done by either the lawyers themselves or other parts of the infrastructure, so this has been an issue for all of our firms for a long time but the pandemic has really accelerated that.

The secretarial area has been a lot more difficult for any secretary to really connect with their lawyers and do the things that they need to do on a day to say basis by being remote but that being said they have the ability to answer phones, they have the ability to put in expense report, they have ability to word process when necessary, it’s all there from a technology standpoint. The question is what are the lawyers, how are they reacting to it? What is their experience been?

What we are finding in my firm is that the lawyers are looking to be trained in technology more now than ever before, so they are relying on our training department. I anecdotally heard that one of our lawyers reached out to our training department and said, “Look, I have been using Microsoft Word forever but I really do not know the ins and outs, can I sit down with you guys for an hour or two and really be trained in some of the more complicated parts of Word so I can do some of this myself.”

We are seeing this more and more. What that is doing is elbowing out or boxing out the secretary from the traditional assignment. That all being said, I think that it’s something we are trying to do at our firm is give our secretary the opportunity and ability to get trained and be the tool. They are for the most part, an excellent professional part of our population, they have been around a long time and they have a lot of knowledge about the firm and are smart people. How can we re-purpose them and retool them by either training them or thinking outside the box a little bit and utilize them maybe a little different then they have been utilized before and that’s the challenge and we feel as a firm - that this a challenge that is on us as well as the secretary to make that happen.

Rob: OK, got a couple of comments I am going to work in here. First one, do you see the secretarial functions being outsourced?

Brian: We have already seen that in some areas – I know that some companies like Epiq which Schulte uses, has a resource center that houses individuals out of their Atlanta location that are able to do the basic secretarial functions -  answering the phones, the paperwork, the expense reports, those types of things - and I know other service providers have that as well and I see that as a real interesting area for firms to consider.

The days of meeting the person right outside your office, I think we knew those days were over for a while, but the pandemic surely proven that.

Rob: Right.

Brian: Take all of these comments with a grain of salt, they are all very broad, absolutely there are certain types of firms, firms that focus strictly on IP Litigation and IP generally might use there secretaries a little bit differently and may need that secretary sort of connected at the hip with the lawyer. I think there are a lot of caveats to what I just suggested, and it really depends how you work. It is also generational thing; lawyers that are a little older and grew up in a certain way, again I don’t want to date myself to much, but I started I a year that began with an 8.

Rob: Right out of high school, right?

Brian: Right out of nursery school. Back in those days as soon as you graduated law school and you started with a firm, I was with Paul Weiss at the time, a secretary was hired for you. You- as a first-year lawyer - had a secretary assigned to you, hired for you specifically and the secretary was actually used in a very different way. Things are a lot different from X years ago, but not in every practice certainly not in every firm.

Rob: Another comment, and a question that I also had – how do you envision supporting this remote workforce both equipment wise and service wise? We are getting involved in a lot of firms that are looking to redo output because it was all in their office obviously people are not there right now, how do you service them for the print, copy, scan functionally.  We are doing a lot of projects along those lines there but what are your thoughts on that area?

Brian: It was a bit of a challenge. We were fortunate enough to have some foresight a few years ago and we provided PC and laptops to every lawyer in the firm and to various members of our staff - some paralegals all of our senior records types, so that infrastructure was there and we have had no issues with that.

Where we found that we needed to hustle a little bit is with all the staff that have never worked remotely before and were not issued laptops and how do we get them online;  let’s make sure they have the right technology at home to use our Citrix capability and we hustled for about week before we decided to pull the plug on being in the office and that has worked out fairly well. But as time went on we did realize that there were certain capabilities people needed whether that was a lawyer, or legal assistant or someone else that is, whether that is a multi-function printer, or other types of hardware and frankly we provided it.

If there was a need we took it by a case by case basis, and we provided it to the individual and that has worked out for us. For huge print jobs/scan jobs we have  very small, when I say small we have 3-4 people in our building in NY and also Epiq they are employed by Epiq who will do those jobs and get it to our lawyers whether by FedEx or messenger depending on job. We have been circumventing the issue by using a Band-Aid type of solution as opposed to giving people the ability to print thousands of pages at their own desk at home.

Rob: I want to talk about virtual law firms. What do you have in place for billing? Does your finance department have employees that handle the billing or is this the sole responsibility for your secretary at your firm?

Brian: We have a CFO that runs this area – our accounting department is mostly responsible in dealing with that, the secretary plays a liaison type of role with the lawyer when the questions come up. It mostly sits with our accounting departments and billing coordinators we have there.

Rob: OK, virtual firms- we had a conversation about this about two weeks ago, is this all leading and obviously being accelerated now to a virtual law firm environment?

Brian: I don’t think so Rob, I think that many of us have been through huge changing events over the course of our careers.  Looking back at 9/11 or the Great Recession and now what’s happening with the pandemic and recessions generally--every time people said this is going to be the moment when everything is going to be turned on its head and this is going to be the moment where, especially now we hear people don’t need office anymore, it’s just a huge expense, what’s the point, let’s go to a different kind of model.

I think the answer is somewhere in between. I think that as a vaccine is developed at some point so we can have the peace of mind to return to our offices without worry, but I don’t see the day where you don’t have real interaction between lawyers and others in the firm – if you don’t have that I think it will hurt the firm.

I think it depends on the firm– there are some with 8,000 lawyers and it doesn’t matter where you are in the world at any given time but when you have a firm that has a large number of lawyers in one office like I do so much of the information, training and mentoring happens on the spot, in the office, on locations. I’ll tell you without that, you sort of lose a little bit about yourself as a firm, lose a little bit about what that culture is.

Sometimes people throw culture around as a shield or something people hide behind I think law firm culture is critical in survival of the law firm and if that doesn’t continue then what do you have just a bunch of people working out of their home and I don’t see that being a good thing for firms. But with that all being said maybe the footprint of real estate is not what it needs to be now. Unfortunately for my firm we signed a huge lease a couple of years ago. Some of our peers that are in planning phases post lease signing and now planning what these office look like and I don’t envy them because it is a lot of guess work and very expensive guess work.

But at the end of the day this virtual law firm there is a purpose there, there is a reason to have firms like Axiom, but at the end of the day I am not seeing all our firms going that way, I just don’t see it. Law firms are a little different then consulting firms or accounting firms where a lot of accounting firms and consulting firms spend their time at clients. Law firms spend their time in the office, and I think there is a big difference there.

Rob: Well speaking from the consulting side, obviously the client visit which is always part of our mix, and who knows when that is going come back, possibly post vaccine or something like that so we had to adopt to get that information and intelligence in other ways and obviously with technology it is much easier but there is definitely a shift in the model.

Brian: We are not hearing from our clients that we are not meeting with them and that to me is important and if they were demanding that we would of course figure something out but to me this is all about the firm and making sure the talent  is being developed and moving up the ranks in the right way and are being cared for is a huge part of what makes law firms what they are.

Rob: Absolutely. Hard to believe but we are coming up on our 30 mins here but just as a wrap up. Any thoughts you want to share on what law firms back and middle office are up against coming up?

Brian: Yes, I think that what we should really be thinking out here with the pandemic in the background is what are we learning? What are the things that we are doing as a firm because of this unprecedented event? How can that make us better, stronger?

One of my peers calls it making lemonade out of lemon, I could pin point , I can’t tell you how many examples of always having the thought we were going to get the product or application of try to move the firm through something but there was not a lot of support, a little inertia involved and all of a sudden now we did it and we did it in a week. 

We got it out there, and people are using it, we want to take these concepts and ideas and continue to use them post pandemic and not be afraid to shake thing up a little bit. In terms of the whole outsourcing, I think there will be a lot more discussion at firms about outsourcing and it is something that while we are not a huge outsourcer I did sit down and think about it outside of what we are doing with Epiq on the copy, mail and fax, we have outsourced knowledge management individuals, part of our IT infrastructure on help desk and some of the back end of our DMS. There are firms and I won’t mention names, but a large NY firm has outsourced its whole IT department and seems to have a good experience with that.

I don’t see us doing something quite that drastic but I do see part of our analysis going forward, if we do have an opening or we do have a need or have someone who is resigning and needs to be replaced. The question will be firstly - do we need to replace and secondly if so, can this be done by a resource, another vendor or direct hire? I think that has to be part of analysis otherwise I don’t think we are learning much from this.

Rob: Great points. When we think of the next 6 months and what our clients are doing, some firms are considering bringing outsourced services back in house, they feel they would have more control over it and that is fine for them and they are making that decision. But I think any outsourced functions and this is to the service provider out there, we are taking the position and the clients are taking the position that we want as much flexibility over those arrangements as possible because who knows, if we sat here 6 months ago and said hey you were going to be in this type of situation, you would have sat and laughed at me. You can’t make this stuff up and really the flexibility over equipment comes into play and flexibility over staffing. I think that will be the key for the next couple of years.

Brian: I agree, I think that will be interesting in contract negotiations going forward in terms of this stuff because it is going to be pushing the outsourced vendors maybe to paces they haven’t gone before in terms of flexibility. One of the reasons to outsource is because of that flexibility.

Rob: Exactly.

Brian: Sometimes you’re not buying what you think you are buying. I think there needs to be put a lot of thought around that aspect, otherwise what’s that point. If you are locked in what’s the point?

Rob: Great, we are up against 10:30, I would be remised if I didn’t as you because I see your mug in your background there, the Mets playing their 60-game season.

Brian: It has been very difficult time for baseball fans. I know Rob you like your Philly’s. I have been watching more re-runs of the 1964 World Series than I care to admit. But look it would be nice to have something else to watch then just Netflix at night, so I am looking forward to baseball season.

Rob: On that note, we are going to come to a close, I want to be respectful of everyone’s time. Brian thank you very much, great input. Until then stay safe, stay smart. Take Care.