Outsourcing is and continues to be an important part of law firms business model because of its cost effectiveness.

Transcription

1 March 22, 2010 Last week I had the opportunity to attend my first Virtual Legal Tech online tradeshow sponsored by ALM Media Properties. Complete with exhibit halls, crowd noise, webinars, networking lounge, chat rooms, lobbies and my own personal briefcase to collect show freebies. I was very impressed that many of the webinars included a video feed as well as the usual presentation slides outlining their particular topic of discussion. VLT presented a new webinar on the hour throughout the day. I attended a number of sessions including the Use of ediscovery Technology in Federal Court, Outlook Integration, Concept Searching and Developing a Comprehensive and Legally Sound Social Media Policy. The most beneficial webinar for my particular interest was a great discussion of 2010 Law Firm Outsourcing presented by Kevin Iredell and Jennifer Blessman on behalf of The American Lawyer and ALM. I found the following points of particular interest: Outsourcing is and continues to be an important part of law firms business model because of its cost effectiveness. The trend is continuing for law firms to outsource more functions than in previous years. Biggest risk factors include identifying a quality vendor, sustaining quality of work and maintaining the security of sensitive information. Key drivers for legal outsourcing: budget considerations, improve client service, increased workload driven by clients, replacing or reducing headcount, ability to work around the clock, response to decreased workload. Legal functions outsourced: trial and presentation graphics, e-discovery, litigation document review, paralegal and legal assistant support, intellectual property support, word processing and transcription, business research, statutory or case law research, commercial document review, deposition summaries, due diligence support as well as contract drafting, review and document preparation. I am attaching the free download of slide presentations I received from ALM. The complete survey is available for purchase at ALM Legal Intelligence: Surveys, Lists & Rankings. Cathy L. Ribble, CP

2 2010 Law Firm Outsourcing Virtual Legal Tech March 18, 2010 Kevin Iredell, Vice President Jennifer Blessman, Research Director

3 About ALM LEGAL INTELLIGENCE The mission of ALM Legal Intelligence is to provide customers with comprehensive information on the legal marketplace, law firms and the business of law.

4 More Research. More Insight. More Business. Syndicated Surveys & Studies Including the Survey of Law Firm Economics, the Law Department Compensation Benchmarking Survey Individual List & Rankings Including the AmLaw 200, NLJ 250 & Global 100

5 Survey Objectives & Methodology Objective: To examine firms experiences and uncover insights about outsourcing programs. Focus: Outsourced legal work as well as operational and administrative functions, including work related to document management, IT support and finances. Methodology: Web-based survey sent to law firm professionals who have input into the outsourcing process.

6 Key Findings Outsourcing is and continues to be an important part of law firms business model Despite a challenging economy, firms were more likely to outsource more functions in 2009 previously years, and this trend continues into 2010 Why? Cost effectiveness and economies of scale Biggest risk factors identifying a quality vendor sustaining quality of work maintaining the security of sensitive information IT is non-legal functional area with greatest propensity to be outsourced Outsourcing does not always mean offshore

7 Law Firms & Outsourcing Initiatives Firms Outsourcing in 2009 Not sure, 3% 40% report having outsourced more functions in 2009 Did not outsource 45% Outsourced 50% Used an outside consultant to help with the decision process: 23%

8 Top Factors in Risk & Importance Percentage who have outsourced a function, then brought it back in house: 43%

9 The Geography of Outsourcing

10 Non-Legal Outsourcing Key Drivers Reduce / control operating costs 67% Resources not available internally Respond to increased workload Focus on core competencies 50% 47% 43% Non-Legal Outsourcing helps firms more effectively allocate resources and focus on core competencies. Streamline processes Introduce new / upgraded capabilities Free internal resources 37% 37% 43% Replace/reduce headcount 30%

11 Non-Legal Outsourcing Non-Legal Functions Outsourced INFORMATION TECHNOLOGY Maintenance/repair Training 4% Help desk Application development Network or hardware support Full I/T outsourcing ADMINISTRATION Business dev or marketing 3% HR and Benefits 3% Secretarial support 7% Library/research services 7% FINANCE Payroll processing General accounting Billing and collections 3% Tax preparation Mail Room, messengers Printing / reprographics Off-site records storage 17% DOCUMENT MANAGEMENT 18% 14% 25% 26% 29% 27% 25% 24% 29% 38% Percentage of firms very/somewhat Satisfied with Information Technology outsourcing: 57% Document Mgmt: 56% Finance: 50% Administration: 42%

12 Legal Outsourcing Key Drivers Budget considerations 77% Legal Outsourcing helps free up manpower : Improve client service Increased workload driven by clients 40% 63% Keep attorneys working on billable projects rather than basic drafting and administrative matters. Replacing or reducing headcount Ability to work around the clock 40% 30% Clients requesting a firm outsource some percentage of their legal work: Response to decreased workload 20% 33%

13 Legal Outsourcing Legal Functions Outsourced Trial and Presentation Graphics 59% E-Discovery Litigation Document Review Paralegal and Intellectual Property support Word Processing & Transcription Business Research Statutory or Case Law Research Commercial Document Review Deposition Summaries Due Diligence support Contract drafting, review, and 48% 48% 45% 43% 43% 41% 41% 38% 31% 31% 30% Outsourcing into 2010 Percentage of firms intending to outsource more legal work: 44%

14 Key Takeaways / Learnings Outsourcing can help firms can often take advantages of economies of scale, freeing up staff resources so that they can concentrate on more complex work. Data hosting has moved out of the firm and now more frequently to vendors in order to mitigate legal risks and transfer the costs and cost savings to the client directly. Staffing and using project management consulting is better coordinated with in-house. Monitoring the quality of work is an important part of the relationship We outsourced our help desk function to an outside vendor in July It has been a very successful project, and we attribute it to careful planning with the outside vendor, constant communication with the vendor, and multiple communications with firm.

15 Respondent Demographics Respondent Titles C-level/ President/ VP 15% Partner 15% Director level 12% Firm Administrator 12% Sole Practitioner/ Owner 10% Paralegal/ executive staff 8% Managing Partner 7% Attorney 5% I.T. Director 5% HR/ Placement/ Prof'l Dev 5% Business Development staff 3% Other titles 3% Discovery specialist 3% Firmographics Average gross revenue of firm: $112 million Average # full time attorneys: 220