Archive for the ‘Outsourcing’ Category

Legal Process Outsourcing statistics

December 11th, 2012 by Altman Weil

This falls under the ‘if you’re not paying attention, you should be’ category.  Toby Brown at 3 Geeks and a Law Blog has summarized a recent report on the burgeoning Legal Process Outsourcing (LPO) industry.  The LPO market is worth an estimated $2.4 billion and is growing annually at a rate of 28%. 

Read it at 3 Geeks and a Law Blog

An update on Legal Process Outsourcing

January 23rd, 2012 by Altman Weil

Legal tech expert and blogger Ron Friedmann has written an excellent piece outlining the latest in Legal Process Outsourcing (LPO) and how BigLaw is adopting some of its key elements in new ways.

“BigLaw prides itself on its artisanal approach.  Few large law firm lawyers would write, much less follow, a playbook or best practices guide.  In contrast, LPO providers stress a systematic approach and cost reduction.  LPO providers rely on industrial disciplines that include process improvement, metrics, service level agreements (SLA), formal governance plans, lower cost labor, detailed playbooks, defined accuracy rates, and frequent progress reports… 

We can now look back to the early buzz about LPO – moving legal work to India – and understand that it missed the main point.  Location matters less than implementing industrialized processes.  India is just one destination for lower cost labor and lower cost labor is just one element of the LPO OS.

LPO providers have grown quickly in the last few years but remain a small percent of the BigLaw market.  LPO impact, however, has been disproportionate to its revenues.  Specifically, we now see wide adoption of many LPO OS elements by BigLaw. ”

Read it at ABA Law Practice Today

Law firm staffers offsite and outsourced

October 19th, 2011 by Altman Weil

Pillsbury Winthrop announced this week that they will move their back office staff to Nashville to reduce costs.

“The firm plans to send back office functions including information technology, finance, new client intake, and word processing to the country music capital by next year.  The move, announced Tuesday, puts Pillsbury on a path blazed by Orrick, Herrington & Sutcliffe, which has housed administrative staff and low-cost lawyers in Wheeling, West Virginia, for almost a decade, and Wilmer Cutler Pickering Hale and Dorr, which has been sending non-legal work and document review to an office in Dayton, Ohio, since last year.”

“It’s a competitive marketplace,” says Pillsbury chair Jim Rishwain. “Law firms need to find better ways to add value to clients in a very difficult economy.”

Also this week, O’Melveny & Myers announced they will cut 75 staffers and move their work to an an outsourcing company.

Read it at The AmLaw Daily

Outsourcing in the USA

June 3rd, 2011 by Altman Weil

Legal process outsourcing, once done almost exclusively offshore in India and elsewhere, is coming to the US, creating job opportunities for American lawyers and a greater sense of security and familiarity for skeptical potential purchasers, according to the New York Times.

“In the United States, outsourcing companies are hiring lawyers from temporary legal services firms or recruiting them directly out of law school. The pay is often comparable to lawyers’ salaries in smaller cities. And the jobs can come with other benefits, like equity stakes in the company and management opportunities that might not be widely available at conventional law firms.”

Sanjay Kamlani, an executive at outsourcing firm Pangea3, says,“If we’re going to deliver a fantastic client experience, the only way to do it is to have an onshore facility.”

Read it at the New York Times

Law firm leaders are confident in face of changing marketplace

May 25th, 2011 by Altman Weil

The newly released Altman Weil Law Firms in Transition Survey 2011 finds confidence high among US law firm leaders in firms of all sizes.

Overall economic performance is rebounding, with two thirds of all firms surveyed reporting increases in gross revenue in 2010 and nearly three quarters reporting increases in revenue per lawyer and profits per equity partner.  Standard hourly billing rates are up significantly this year, with firms reporting or planning a median 4.0% increase in billing rates for 2011.  Continued reductions in overhead costs and the strategic shrinking of firms’ ownership ranks are contributing to profitability.

“If firms are finding their feet again post-recession, it is on new ground with a number of new factors in play,” said Altman Weil principal Tom Clay.  “And although most firm leaders seem to recognize the changes, it’s not yet clear whether they will be able to manage them effectively.”

Following are some selected highlights:

  • 67% of law firms reported an increase in gross revenue in 2010; revenue per lawyer was up in 73% of all firms; and profits per equity partner rose in 73% of firms.
  • Overhead costs were down in 53% of firms in 2010.
  • The amount of non-hourly billing in 2010, measured as a percentage of revenue, increased in 58% of all firms and in 81% of firms with 250 or more lawyers. 
  • Only 12% of firms report that alternative fee arrangements are more profitable than hourly billing. 
  • 27% of law firms de-equitized partners in 2010 and 16% will do so in 2011.  32% of firms made fewer partnership offers in 2010 and 18% will do so in 2011.  Larger firms are more likely to take these actions than smaller firms.  
  • 92% of all law firms plan to acquire laterals partners in 2011. 
  • 87% of law firms are planning to add associates to their ranks in 2011.   Only 18% of firms plan to remove associates this year, down from 42% in 2010.  
  • Only 18% of those surveyed think that reduced associate salaries will be a permanent trend, down from 32% who thought that last year.
  • 60% of firm leaders expect that the increased use of contract lawyers will be a permanent trend, up from 52% last year.
  • 41% of all firms believe that outsourcing legal work will be a permanent part of the new legal market. 
  • 47% of all firms are concerned that they are not prepared to deal with the retirement and succession of Baby Boom lawyers – the top concern identified.
  • 94% of law firms believe that the focus on practice efficiency is a permanent change in the profession - the number one trend identified.
  • Other top trends include more price competition (90%), fewer support staff (88%), more commoditized legal work (81%), more non-hourly billing (75%), and fewer equity partners (68%).
  • Only 16% of firm leaders expect permanently lower profits per partner.   
  • Leaders score their confidence as an “8” on a zero to ten scale when asked about their firms’ ability to keep pace with change.

Conducted in April and May 2011, the survey polled Managing Partners and Chairs at 805 US law firms with 50 or more lawyers.  Completed surveys were received from 240 firms (30%), including 38% of the 250 largest US law firms.

The full survey is available online to download at: www.altmanweil.com/LFiT2011.

New Legal Process Outsourcing survey

May 11th, 2011 by Altman Weil

UK journal, Legal Week, and legal process outsourcing company, Integreon, have paired up to conduct a new LPO survey.  Some of the key findings of the newly released survey of 575 UK lawyers include:

  • Cost is the main driver of LPO, according to more than 80% of respondents.
  • LPOs are being used as cost-saving measures by nearly 15% of law firms and 6% of in-house legal teams.
  • Alternative fees (75%) are used in five times as many firms as LPOs (15%) as a way
    of cutting costs.
  • Lack of consistent quality is the main barrier to using LPO (cited by over three quartersof private practioners and more than half of in-house lawyers).
  • Data security is a major concern, with 40% of lawyers worried about sensitive data being kept beyond the control of their own networks.
  • Litigation document review is the area most suited to outsourcing, say 65% of lawyers in private practice and 44% of in-house counsel.
  • Contract management is an area that 44% of in-house lawyers see as being ready for LPOs, while only 26% of private practitioners agree.
  • Repetitive low-cost work should be supervised by law firms if it is outsourced, say 52% of private practice lawyers. Their in-house colleagues are less convinced, with only 29% thinking this is necessary.
  • Just over half (52%) of private practitioners predict LPO volumes will increase a little in 2011; 41% think it will stay the same; only 1%  think it will decrease.

Read it at Legal Week

“Law Factories”

March 25th, 2011 by Altman Weil

Great new post on 3 Geeks and a Law Blog - every firm should be asking themselves these questions.

 ”Law firms face an uncertain future: competitive markets, intense price pressure, and client demands to change. So they are beginning to ask fundamental questions about the nature of their business. These include what shape should a firm be and how will a firm approach this new market? Will firms be “Law Factories” that provide services to numerous market segments? Or will they be niche players that protect their brands in high-end markets and maybe even spin-off sub-brands for servicing mid-level and low-end markets?”

Read it at 3 Geeks and Law Blog

Layoffs

January 25th, 2011 by Altman Weil

Two stories today show different aspects of the layoff picture. 

In large US law firms, things are looking up according to Law Shucks, a blog that has been tracking layoffs in “BigLaw” since January 2008.

“With all due respect to the 745 individuals affected, 2010 was a modest year for layoffs in our little slice of heaven.  Law-firm layoffs in 2010 fell by a factor of 20 compared to the 12,259 people laid off by law firms in 2009, the worst year on record. Even 2008, when we had no idea what was coming, was 2.5 times worse than 2010, with 1,992 folks losing their jobs…  To put that more starkly into context, those 745 people laid off for the entire year are just eight (8!) more than were laid off in one day – March 9, 2009, the worst day for law firm layoffs ever.”

Read it at Law Shucks 

But for support staff at UK firm CMS Cameron McKenna it’s not good news.  Progress, in the form of an outsourcing agreement with Integreon, will leave many of them out in the cold.

“CMS Cameron McKenna is to either lay off or relocate almost one third of its support staff as a result of its outsourcing agreement with Integreon.  The firm began informing staff internally about the final details of the agreement yesterday (24 January), with 9% of its current back office staff set to be made redundant as a result of the deal.  A further 21% of roles will be relocated to Integreon’s offices in either Bristol or India, with the remaining 70% of the firm’s 363 business services roles transferring to Integreon but remaining in London.”

Camerons’ Managing Partner Duncan Weston explained:

“The changing legal landscape requires constant innovation in the way we do business. This new approach to our business services will give us the ability to focus on our clients and provide a more sophisticated service. It creates greater flexibility to scale support services based on demand, and gives us access to a more advanced technology with the benefits of future investment by Integreon towards building a unified business model. It will also allow us the option to integrate our approach to business services across our international businesses.” 

Read it at Legal Week

Thomson Reuters acquires an LPO

November 22nd, 2010 by Altman Weil

Last week Thomson Reuters (owners of West Publishing) announced their acquisition of Pangea3, a fast-growing legal process outsourcing provider serving corporate legal departments and law firms worldwide. Pangea3 is headquartered in New York and Mumbai, India, and has 650 employees at its major delivery centers in Mumbai and New Delhi.  The ABA Journal commented:

“Thomson Reuters already has about 8,400 employees in India, but this would apparently be the first time the company would be providing legal services themselves, rather than just legal information and consulting services to law firms and other legal providers. The move into providing legal services – and, at least in a small way, competing with its own legal information clients – comes at an interesting time, as the United Kingdom readies to allow companies to invest in law firms next year.

The ABA Journal profiled Pangea3 in October 2007. At the time, newly minted lawyers who joined the company earned a mere $7,000, compared to $160,000 first-year lawyers earned at major U.S. law firms.”

Read it at ABA Journal

Legal blog Above the Law noted the acquisition in conjunction with another recent news release from Thomson Reuters announcing their intention to sell bar exam prep business BAR/BRI.

“So Thomson wants out of the “preparing American attorneys” market, and in on the legal outsourcing market in India…That can’t be good. That simply cannot be a good sign that Thomson evidently thinks there is more money to be made from Indian lawyers doing American legal work than from training American lawyers to do American legal work.”

Read it at Above the Law

On the other hand, bloggers at The Orange Rag  have a positive spin from a MoFo partner:

“Pangea3 has been a valued provider for me, and is an attractive alternative for my clients,” said Jeff Jaeckel, a partner at Morrison & Foerster and head of MoFo’s Washington, DC and Virginia Litigation Department. “We look forward to even bigger and better solutions as Pangea3 joins forces with Thomson Reuters.”

Stay tuned, this should be interesting…

Innovative lawyer staffing models

November 2nd, 2010 by Altman Weil

There’s a fascinating article on lawyer staffing alternatives in today’s Legal Intelligencer — the fifth in their series on the changing law firm order.   It looks at how law firms are competing with LPOs to offer clients lower-priced legal services. Many of the innovations come from UK firms.

“[Lovells (now Hogan Lovells)]  came up with the idea of having clients give it all of the work, as opposed to the portion it had prior, and the firm would manage it with the goal of decreasing the client’s legal spend by 20 percent. All matters came through Lovells and anything below a certain threshold would be sent out to two pre-selected regional firms to handle at a lower cost.”

And..

“London-based Berwin Leighton Paisner took that concept a step further. Rather than utilizing a variety of lower-cost regional firms, Berwin Leighton created one that it controls. Lawyers on Demand is a subsidiary of Berwin Leighton that provides less expensive, though still highly trained, lawyers to serve on an interim basis within a client’s law department.”

The article also notes US firms that have developed a lower-priced tier of attorneys for commoditized work or have created “e-discovery mills” to handle repetitive work.  Another trend arising in the UK and now crossing the Atlantic is that of “professional support lawyers.”

“The role of a professional support lawyer is to serve the firm or a specific practice area by staying up-to-date on changes to the law and assisting or providing drafts of legal documents all in an effort to prevent younger associates from billing the clients for hours spent doing the same thing.”

Read it at The Legal Intelligencer