I have seen numerous examples of law fi rms retaining or winning business because they have agreed to ‘work diff erently’ with LPO and I am afraid I have seen just as many examples of fi rms losing business because they have refused to do so. Those that refuse to do so typically think of LPO in one dimension: simply a reduction in their revenue. Commercially savvy fi rms acknowledge it is as a reduction in their revenue, but also see it as an opportunity to improve their profi tability through even greater reduction in their cost. And the smartest fi rms are using LPO as an alternative resourcing lever, alongside other tools such as legal project management, to allow them to experiment with billing their clients on an Alternate Fee Agreement (AFA) or value-basis, thereby decoupling their revenue from their costs and making a step-change improvement in their profi tability.
LPO is just one tool that will allow the whole legal ecosystem of law fi rms and corporate legal departments to actually shift costs from non-value added functions to invest in the value added functions they really care about: risk avoidance, risk litigation, compliance training, contract management, and better management of their commercial obligations. When that happens, people will stop thinking of LPO as ‘the nanobots that are devouring legal’ and will start thinking of it as a positive enabler that allows legal professionals to really focus on being a lawyer and that also has a meaningful impact on the fi rm’s and their clients’ business.
LPO is a hot topic now partly because it is viewed as a valuable tool to meet the ‘same or more for less’ challenge facing GCs, and there are a number of successful case studies, but the truth is there are not many people with the ‘general contractor’ expertise to successfully implement and manage. Corporate legal departments want to fi nd the holy grail of ‘can we stop spending money on non-value added things and start spending on value adding—trouble is, I just know how to run a legal department; I don’t know how to operationalse this
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