1st Feb 2009
LEGAL COST CUTTING DRIVES INTEREST IN OUTSOURCING
Law firm outsourcing spreads from support services to standard legal
processes
Pressure within law firms to cut costs is driving a renewed interest in
outsourcing some areas of business, according to new research from princeOMC (www.princeomc.com),
a leading legal outsourcing consultancy.
Despite 91.7% of law firm Managing Partners declaring that the downturn is
driving them to streamline their business processes, more than three quarters
claim that they would never outsource any aspect of their specialist legal work.
However, the outsourcing of commoditised elements of legal service delivery
(typically document review work and the assembly of standardised documents) is
becoming more commonplace.
The research polled over 100 clients and in-house counsel at FTSE100/DJIA30
businesses and law firm leaders in the UK and US. The news for the legal
industry was resolutely grim, with 75% of in-house lawyers saying they were
facing budget reductions of, on average, 11% and one third planning to reduce
the number of law firms they use. Within law firms the picture was similarly
tough, with over 80% reducing or predicting a reduction in head-count and 78%
expecting static or falling revenues in the next twelve months.
The impact of the downturn on law firm’s perceptions of outsourcing or
offshoring parts of their business has been mixed. Whilst more than 50% of
in-house lawyers think that law firms should use offshoring to cut costs, more
than 70% of law firm partners say they have no plans to offshore or outsource
any of their legal processes.
However, on closer analysis it seems that outsourcing of support services is
increasingly in favour, with over 36% of law firms polled having already
outsourced, or are currently actively considering outsourcing IT, over 43% word
processing and 30% knowledge management. Over 45% said they would be considering
their finance function and a highly significant 61% said they would be finding
new ways to source commoditised legal support.
Jack Diggle, a partner at princeOMC, said: “In a downturn you’d expect all areas
of outsourcing to be of interest, but it seems that the industry’s long-standing
resistance to offshoring elements of legal work is withstanding even these tough
economic times.
“What we are seeing, however, is an increasing drive towards outsourcing support
services and commoditised legal work. There’s pressure from clients to cut costs
and also a need for greater internal efficiencies as headcounts fall. Moving
some commodity aspects of the business to low-cost locations seems like a
logical move in this market. It raises the question of how much do law firms
really see themselves in the ‘specialist’ rather than ‘commodity’ end of legal
service delivery.”
-ends-
For more information:
Patrick Herridge
Parys Communications
Tel: +44 (0)7977 151401
Email: pherridge@parys.com
About princeOMC
princeOMC (www.princeomc.com) is a specialist legal industry outsourcing
consultancy. Working with leading law firms it offers consultancy and management
around offshoring back office resources and specialist legal services whilst
minimising risk.
princeOMC’s lead consultants have over 30 years of experience in large scale
professional services outsourcing and offshoring projects working with
businesses such as Goldman Sachs, JP Morgan and Deutsche Bank. Their
unparalleled understanding of the benefits and problems of offshoring mean that
they can maximise the returns on sourcing projects whilst minimising the risk.
princeOMC can offer law firms expertise and advice on all areas of process
outsourcing, including Business Process, Legal Process, IT and Knowledge Process
outsourcing.