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Outsourcing Makes Sense
 Outsourcing has evolved from a niche management tool to a mainstream, strategic weapon vital to the health of a firm’s bottom line.
Outsourcing, in the broadest sense of the word, is the transfer of select business functions or components of business processes to an outside contractor.Many law firms are turning to external suppliers for outsourcing everything from case management to payroll processing.
Why do firms choose to outsource certain technical functions to begin with? Recently, senior partner managers began to question the way they were doing business. They began to ask themselves: Why are we negotiating with vendors? Why are we expanding functions and managing tasks that can be achieved more cost-effectively by factoring them out? Why do we continue to handle tasks that, if outsourced, would give us the time and money to focus on other value-added legal and business areas?
Today, the question isn’t whether a law firm should outsource, but rather, what functions they should choose to outsource. Firms outsource for many reasons. They usually want to reduce overhead costs, increase efficiencies, refocus critical resources, improve shareholder value, focus on core competencies, gain valuable information technology and remain competitive.
In today’s fast-paced world, outsourcing contributes to the ability to develop innovative processes and for existing law firms to save time and money in new ways, while also adding service and support. Additionally, outsourcing opens up the resources of a firm (attorneys, employees and time) and makes them available for work on other matters and the creation of new revenue-generating business.
Keep in mind that providers of technical resources are eager to offer outsourced services. How to manage your outsource dollars:.
• Determine which of your technical competencies need to be managed in-house and which technical activities should be outsourced. This needs to be determined on a case by case basis.
• Align outsourcing with overall firm business and client strategy.
• Use outsourcing to support transformation strategies such as large case management and new business.
• Evaluate, compare and select the best vendor to support you in the outsourcing effort.
• Monitor vendor performance and evaluate financial savings.
• Review your success ratio as cases and contracts end and explore competitive offers.
Almost any activity beyond an organization’s core competencies is now considered a candidate to be outsourced. If a third party can do the work as well or better than internal resources at a reasonable cost, few technical and business processes are off limits.
The “pay as you go” approach is especially attractive to law firms who are just beginning to explore the outsourcing and may not be able to accurately predict the level of services they are likely to consume.
Outsourcing can be an extremely complex and complicated undertaking. Each facet of the exercise needs to be carefully considered and properly executed. There is little margin for error if full value is to be obtained and risks are minimized. The potential benefits are well documented.
Outsourcing of technical support should be designed and developed as a win-win situation for both parties. Whether it develops into a long term partnership depends on mutuality. Any outsourcing relationship should be based on a prudent, rational, open exchange between the firm wanting to outsource and the organization or expert wanting to handle the outsourcing. There should be no rush to judgment, and no artificial deadlines for completion. All of these considerations increase the chances for success and the return on investment for both parties. The potential returns can be significant, and are likely to grow over time as the parties explore and expanded working relationship.
Leveraging third-party expertise for non-core legal activities is simply smart business in our complex, competitive and increasingly global legal world.
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