The Advent of Disaggregation and the Delivery of Managed Legal Services: Part 1

This is Part 1 of a two-part series from Eric Griffin, a director at Counsel On Call. Eric works closely with clients to design innovative and cost-effective legal solutions in a variety of verticals and practice areas.
 

 

As little as 30 years ago, most business corporations were staffed with employees who performed all, or virtually all, of the tasks required to deliver products and services to their customers. Even job functions that were only tangentially related to the end product or service were often performed internally by dedicated corporate employees. The outsourcing of tasks to a third party outside of the corporation was an alien concept.

That world no longer exists. Today, businesses are closely examining their internal processes and work flows to determine how to deliver products and services more efficiently. The ubiquity of electronic information systems, as well as the attendant untethering of skilled labor from local job markets, has led directly to the disaggregation and outsourcing of once purely “internal” and even mission-critical tasks. Whole new industries have arisen to provide managed services to corporate clients. The client can selectively outsource various business functions and focus its internal resources on its core business.

But what about the legal industry? Perhaps because of its inherent conservatism, its reputation as a learned profession, or just due to the widely held belief among attorneys that lawyers are different, the profession has generally been slow to embrace a true managed services model of service delivery. Today, even that is changing.

Actually, traditional law firms might argue that “managed legal services” are exactly the business they are in. A client has a legal problem or project that requires legal resources, and the law firm provides all, or practically all, of the services needed by the client. While this is (in a very broad sense) outsourcing a legal matter, it is not unlocking the potential value that the disaggregation of legal services makes possible. Why not? Because there seldom is any further analysis by the law firm or its client of what discrete legal activities might be further outsourced to providers who can perform high-quality work at a significantly lower cost (or more efficiently) than traditional approaches.

Notwithstanding economic incentives to outsource, forward-thinking and client-focused law firms realize that to truly meet the needs of their clients – who are under enormous and increasing pressure to reduce costs – they should analyze projects to determine what components can be better handled by process (and efficiency) oriented providers. The firm still maintains oversight of outsourced tasks, but the notion that only firm personnel
billing at inexorably higher hourly rates must be down in the weeds and working in areas in which its associates aren’t expertly trained (workflows, business process management, metrics, technology protocols, etc.), makes little sense in today’s marketplace.

In the legal world we live in today, every partner’s role is different than 30 years ago. In-house counsel must focus on business issues, outside counsel on strategy, and the LBPM – the legal business process manager – is the gatekeeper on costs, process, technology, appropriate staffing, and continual improvement. Legal is catching up to the rest of the world with this structure, and there are several verticals that are leading the charge.
 

In Part 2 Eric will discuss specific types of work in which process, efficiency improvements and a new approach are essential.
 

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