Page 141 - MASTER COPY LEADERS BOOK 9editedJKK (24)_Neat
P. 141
Leaders in Legal Business
Kicking and Screaming
In or around 2006, it was not law firms but corporate legal departments that were the first proponents of
LPO. Back in these early days, a cocktail of incredulity with a dash of disdain was the tipple of choice for many
a law firm partner when confronted with the LPO elevator pitch. Biglaw executives would protest that LPO was
win-win-lose: win for the firm’s clients, win for the LPO provider, and yet lose for the law firm. This viewpoint
presupposes the adequacy of two hypotheses that simply do not hold water any longer: the zero-sum game (the
more the client loses, the more the law firm wins) and that every penny of revenue generated by an LPO provider
is a penny of revenue lost by the law firm. In any event, these first couple of years can be characterized, perhaps
somewhat harshly, as the phase where law firms were dragged “kicking and screaming” into the arms of LPO
providers. On a case-by-case basis, in-house counsel started to advise their outside counsel that in order to retain
their corporate client business they must begin to utilize LPOs. In fairness to Biglaw, this phase of forcible
reluctance has largely passed and did so fairly quickly. Whether the great recession was the dominant catalyst or
merely a sidebar to a change in partners’ mind set is a debate for another day.
Checking the Box
Law firms have many constituencies, but their clients always come first. Large firm clients are, by and
large, cost-sensitive in-house counsel. Firms can gain both a perception and actual advantage with clients by
making clear they understand and are responding to the cost pressures facing their clients. In-house counsel
muscle-flexing manifested itself not only in ad hoc requests that their outside counsel use an LPO provider, but
also in the increasing prevalence of Requests for Proposals (RFPs) asking outside counsel whether they had
relationships in place with LPO providers. Law firms responded in turn by undertaking selection processes of
their own to choose one or more preferred LPO providers. The end result was that when asked the question in an
RFP, law firms could respond in the affirmative. This is the “checking the box” phase. Many of the firms during
this phase were simply looking to place a check in the box, and once a master services agreement was put in place
between the firm and the LPO provider, it was considered a job well done with no further action required. Many
firms today are struggling with how to navigate the transition from the “checking the box” phase into the phase
that follows: “strategic collaboration.”
Strategic Collaboration
In 2011 my employer Integreon commissioned research tracking the adoption of LPO among law firms
and in-house counsel. While a minority of firms seemed to worry that using an LPO might send clients the wrong
signal, the results of the research showed such fear to be unfounded. A significant majority, about 75 percent, of
both in-house and law firm lawyers believed using an LPO did not “diminish the brand.” Rather, those that
embraced LPO were perceived as cognizant of the cost, efficiency, and quality demands of their clients, and
consequently appeared to gain a competitive advantage. A small yet growing number of innovative law firms have
begun to publicly acknowledge their relationships with LPO providers. These firms are at various stages of the
journey that can be termed as “strategic collaboration.” The end of this journey, one that arguably no firm has yet
reached, is when LPO solutions are so closely integrated into the firm’s overall value proposition that they are
simply viewed as part of a suite of reengineered solutions that the firm provides to its clients across all its practice
groups. This requires firms to embrace LPO at a strategic level, welcoming the LPO provider into the firm, lifting
open the hood, and working with the provider, as Professor Richard Susskind would say, to “decompose” legal
functions, map out “as is” workflows, and then reengineer the processes to incorporate LPO best practices,
technology, and lower cost labor.
The theory behind strategic collaboration is not rocket science. The premise is that the whole is greater
than the sum of the parts. Contrary to early concerns that LPOs would compete directly with law firms, it has
become abundantly clear to those firms embracing strategic collaboration that the most effective legal services
134
Kicking and Screaming
In or around 2006, it was not law firms but corporate legal departments that were the first proponents of
LPO. Back in these early days, a cocktail of incredulity with a dash of disdain was the tipple of choice for many
a law firm partner when confronted with the LPO elevator pitch. Biglaw executives would protest that LPO was
win-win-lose: win for the firm’s clients, win for the LPO provider, and yet lose for the law firm. This viewpoint
presupposes the adequacy of two hypotheses that simply do not hold water any longer: the zero-sum game (the
more the client loses, the more the law firm wins) and that every penny of revenue generated by an LPO provider
is a penny of revenue lost by the law firm. In any event, these first couple of years can be characterized, perhaps
somewhat harshly, as the phase where law firms were dragged “kicking and screaming” into the arms of LPO
providers. On a case-by-case basis, in-house counsel started to advise their outside counsel that in order to retain
their corporate client business they must begin to utilize LPOs. In fairness to Biglaw, this phase of forcible
reluctance has largely passed and did so fairly quickly. Whether the great recession was the dominant catalyst or
merely a sidebar to a change in partners’ mind set is a debate for another day.
Checking the Box
Law firms have many constituencies, but their clients always come first. Large firm clients are, by and
large, cost-sensitive in-house counsel. Firms can gain both a perception and actual advantage with clients by
making clear they understand and are responding to the cost pressures facing their clients. In-house counsel
muscle-flexing manifested itself not only in ad hoc requests that their outside counsel use an LPO provider, but
also in the increasing prevalence of Requests for Proposals (RFPs) asking outside counsel whether they had
relationships in place with LPO providers. Law firms responded in turn by undertaking selection processes of
their own to choose one or more preferred LPO providers. The end result was that when asked the question in an
RFP, law firms could respond in the affirmative. This is the “checking the box” phase. Many of the firms during
this phase were simply looking to place a check in the box, and once a master services agreement was put in place
between the firm and the LPO provider, it was considered a job well done with no further action required. Many
firms today are struggling with how to navigate the transition from the “checking the box” phase into the phase
that follows: “strategic collaboration.”
Strategic Collaboration
In 2011 my employer Integreon commissioned research tracking the adoption of LPO among law firms
and in-house counsel. While a minority of firms seemed to worry that using an LPO might send clients the wrong
signal, the results of the research showed such fear to be unfounded. A significant majority, about 75 percent, of
both in-house and law firm lawyers believed using an LPO did not “diminish the brand.” Rather, those that
embraced LPO were perceived as cognizant of the cost, efficiency, and quality demands of their clients, and
consequently appeared to gain a competitive advantage. A small yet growing number of innovative law firms have
begun to publicly acknowledge their relationships with LPO providers. These firms are at various stages of the
journey that can be termed as “strategic collaboration.” The end of this journey, one that arguably no firm has yet
reached, is when LPO solutions are so closely integrated into the firm’s overall value proposition that they are
simply viewed as part of a suite of reengineered solutions that the firm provides to its clients across all its practice
groups. This requires firms to embrace LPO at a strategic level, welcoming the LPO provider into the firm, lifting
open the hood, and working with the provider, as Professor Richard Susskind would say, to “decompose” legal
functions, map out “as is” workflows, and then reengineer the processes to incorporate LPO best practices,
technology, and lower cost labor.
The theory behind strategic collaboration is not rocket science. The premise is that the whole is greater
than the sum of the parts. Contrary to early concerns that LPOs would compete directly with law firms, it has
become abundantly clear to those firms embracing strategic collaboration that the most effective legal services
134
