disaggregation, LPO, and reintegration stuff amongst all my law fi rms’. They increasingly look to their law fi rms in hope that they can fi ll the general contractor role. But law fi rms generally don’t have legal project managers to manage disaggregation, LPO, and reintegration of work. Let’s face it, law fi rms are struggling with their own internal project management, e.g. for alternate fee arrangements—sometimes they make money, sometimes they don’t, and they often don’t know until it’s too late. And so there’s this kind of friction where legal departments are looking to their law fi rms to manage LPO, but the law fi rms don’t have the requisite expertise, and hide their lack of expertise under the guise of all sorts of reasons for why LPO won’t ‘in my practice’. So the GCs have grudgingly taken it on themselves, but they can only take the journey so far. And the LPOs, frankly, we didn’t help ourselves because in my view we didn’t adequately engage with and train law fi rms, and secure their support. I really think we didn’t do ourselves any good, as an industry, by shouting out to GCs ‘we can save you loads of money by not using your law fi rm’. What we should have done was become trusted partners of the law fi rms who then over time came to see LPO as a “value add” to the economics of their business. That in turn could improve fi rm profi tability, but more to the point, it could save their clients more money, which savings GCs could reallocate into other areas of legal spend to help their business. Hence my conviction that at heart there is great alignment between legal departments, fi rms and LPOs.
Is this the next evolution in LPO: the outsourcing of business practices within law fi rms?
I started Elevate Services specifi cally with the goal of helping law fi rms become more effi cient to help them meet the ‘new normal’ needs of legal departments. That means helping them with project management, budget management, AFAs, and disaggregating the process work from the value added advisory work, LPO, and then re-integrating the work. I think law fi rms need help with all of this— 90% of the law fi rms I work with
tell me they know alternate fee arrangements are not going away, but they’re bad at developing project plans and budgets, and they just don’t know how to manage their resources in order to meet the budgets they’ve told their clients.
Those fi rms that have embraced LPO intelligently have managed their own pace of transition from ineffi cient, highly leveraged pyramids to much leaner, sleeker, more advisory style law fi rms. In those cases, LPO is most certainly not ‘moving up the value chain’. That is what the experienced lawyers at those fi rms are doing. Rather, LPO at those fi rms is focused on the systematsation and effi ciency of the non-value added work.
In that regard, is LPO only then best suited to large law fi rms? Which segments of the profession do you think it benefi ts most?
I don’t think it’s a question of size for fi rms—it’s a question of the nature of their legal work. Some small fi rms are great users of LPO services because they’re using it for the right type of work. There are some large fi rms that aren’t using LPO at all and you wonder why they aren’t. It goes back to the earlier question of will LPO move up the value chain: it’s not about moving up the value chain or what size the business is; it’s about horses for courses—the right people doing the right work.
Some of my earliest clients at Integreon were innovative small law fi rms. A lot of them knew they couldn’t compete with the opposing council in terms of muscle or resources so they had to out-think them. They did this by thinking diff erently about how they went about their work.
Conversely, I remember a partner from one of our big clients in Australia telling me they were going to lose important corporate work to a smaller, nimbler law fi rm unless they were able to do the work diff erently. The way they addressed this issue was to craft an AFA with the client, which they could aff ord to experiment with because they decided to use LPO to radically reduce cost of non-value added work.
The common feature of both these examples was the business or client driver that made them think diff erently about the way they delivered their legal service—not their core legal service, but the support of their core legal service.
It’s almost like a process of injecting some additional business savvy into the legal profession?
I don’t mind refl ecting on this question: I’m not a lawyer so how was I fortunate enough to build the biggest LPO provider in the world? I did it by basically listening to clients and doing the common sense thing. Perhaps unfashionably, I think legal is one of the most entrepreneurial professions in the world. While the institution of a law fi rm is hard to change, when you speak with individual lawyers, they’re very innovative and business savvy. It’s not an issue of them not knowing what to do or them not being innovative, but often they don’t know how to ‘get there from here’. This is something law fi rms and corporate legal departments are starting to change: they’re facing the reality of the ‘new normal’, deciding to ‘work diff erently’: hiring legal project managers using LPO.
What do you say then to those who have ethical concerns in regards to not having a lawyer do work that was traditionally done by lawyers? Are the ethical concerns surrounding LPOs valid?
Lawyers cannot brush aside or try to fi nd a way to work around the ethical obligations associated with LPO. If the ethical obligation of the lawyer is to put the client’s interest fi rst, is it really in the client’s best interest to have a law fi rm resource a document review on Friday evening by asking which fi ve associates are free because they need to review a due diligence fi le by Monday, rather than starting with the three associates that have the expertise and experience to do the work most effi ciently? It’s an extreme example that we all know sometimes happens, but it’s no more extreme than the stories you hear about LPOs in India staffi ng a document review with people who have never done legal work before, which we have all heard about. My point being,
11
MAR–MAY 2012
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