Sudip Julian Workshop Presentation 23 3 10

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TCS-CVDFK Workshop on 23/03/2010

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Sudip Julian Workshop Presentation 23 3 10

  1. 1. Is Outsourcing the Future for Law Firms? March 2010
  2. 2. “I really get this but my partners would never accept it” FD Top 15 firm “Even billing is personal – it couldn’t be outsourced” Partner Top 20 firm “We don’t do outsourcing here!” Partner, Top 25 firm “Interesting idea but it only makes sense for large businesses” Managing Partner of Top 50 firm The Macro view – a bold assertion The Micro view – why, how, who and what
  3. 3. Bold Assertion for SMEs “Do you have a desk with a little more resonance when I thump it?” “10 years from now it will make no more sense for SMEs to run their own back offices than to set up their own banks.”
  4. 4. Recognise this? 4
  5. 5. You tell me! Could earn higher fees Earns no fees! 5
  6. 6. What if you could turn the way you run your business on its head? 6
  7. 7. The outsourcing value proposition Today Transformation Future 5% • Efficiency Strategy • Process Performance • Governance 25% Enhancement • Consolidation • Technology 30% Transactions • Standardisation 40% • Flexibility Administration From now…….. ………to Efficient Organization Highly transactional, tactically focused Able to focus on strategy, not tactics Innovation constrained More capable of creating new value Capacity limited Trained resources on demand Cost saving potential capped Reduced, predictable cost to serve Hard to transfer risk Enhanced risk management capacity Responsive rather than proactive Forward looking Multiple providers to manage One stop shop business partner Protecting and maximizing your margin
  8. 8. Powerful Aggregation: Full Service capabilities for Legal Services 1 IT Services 6 • Outsourcing Solutions • Enterprise Solutions • Technology Solutions Business Process Outsourcing External Prof Services Suppliers •KPO •HRO & Payroll Finance •Analytics SALARIES •F&A Marketing Risk & Compliance Partners @ 5 Human FeeREarners H Resources Information Systems Quality Assurance 2 • Compliance Information • Security Services IT Infrastructure Admin • Infrastructure Outsourcing • Network Integration • Hardware Support and Customers Installation • Infrastructure Management • Database Services 4 3 Asset Based Solutions Legal Process Outsourcing • IT Products Paralegal Services • Product Based Services • Legal Support • Corporate Law & Practice Practice Management • Intellectual Property Services • Client Opportunity Management • Finance • Conveyancing • Matter Management • Credit Control • Patent Services • Time & Expense Capture • Compliance, Reporting • Billing • HR and Talent Mgmt • WIP Management • Client Self Services
  9. 9. What could law firms outsource today? Back office • Finance and accounting • Reconciliations • Payroll • Management reporting and analytics • IT Middle office • General office • HR processes and analytics • Facilities • Information support and analysis • Training programme management Front office • Sales, marketing and event planning • Document generation and secretarial • CRM support • Document Review for Disclosure • Due diligence • Legal research • Contract management • IPR management
  10. 10. Illustration – two Law Firms Support Potential No. of costs savings Savings T/o (£M) No. of Equity (£50k to from BPO per EP (£K) lawyers partners £80k per (25%) lawyer) (£M) (£M) Firm A 60 190 60 9.5 2.4 40 15.2 3.8 63 Firm B 30 120 24 6.0 1.5 63 9.6 2.4 100
  11. 11. What will push the legal sector towards Outsourcing?
  12. 12. Prof. Richard Susskind’s Evolutionary chart for Legal Services Bespoke Standardised Systemised Packaged Commoditised
  13. 13. Push Drivers in the Legal Sector Driver Reason Anecdotal evidence Falling prices Client buying power and sophistication •RBS recently calling for its panel firms to set up Mexican wave arrangements •Calls for less FE gearing Commoditisation •Evershed’s LPO •Irwin Mitchell’s interest in Commercial Alternative billing arrangements Property •Evidence everywhere Uncertain workflows Recession – double dip? Too early to tell Impact of coming public sector cuts Too early to tell Impact of coming changes to FS Too early to tell regulation etc
  14. 14. Pull Drivers in the Legal Sector – improving quality of Vendors and Services Specialist providers – especially LPO and Integreon KPO CPA Legal Exigent Eversheds? Global BPOs with SME offerings TCS/CVDFK Others? Growing understanding and interest Many firms are carrying out reviews amongst law firms PWC law firm survey report 2009
  15. 15. Law Firm Outsourcing – PWC Law Firm Survey 2009 Top 10 11 - 25 25 - 50 51 - 100 Doing/ Doing/ Doing/ Doing/ Discussing % Total % Discussing % Total % Discussing % Total % Discussing % Total % IT -Infrastructure 50 / 22 72 13 / 22 35 23 / 30 53 17 / 5 22 -User Support 0 / 40 40 22 / 11 33 33 / 26 59 5/5 10 Accounting processes 0 / 33 33 0/0 0 8/8 16 0/0 0 Payroll 33 /33 66 33 / 0 33 44 / 19 63 50 / 5 55 HR Processes 0 / 33 33 0/0 0 0 / 17 17 0/0 0 Secretarial 33 / 17 50 13 / 13 26 21 / 24 45 11 / 26 37 Appetite for 41 21 37 21 outsourcing
  16. 16. Disintegration of Law Firms Partnership management Back Office Middle Office Front Office •Advice •HR •Accounting •Representation •Marketing •Seminars •Client relationships •IT •Research & Training •Document review •CRM •Due diligence •Knowledge •Facilities •Mexican Waves BPO and ITO HRO and KPO LPO
  17. 17. Typical law firm structure PARTNERS FEE EARNERS REVENUE TEAM DEPARTMENT HEADS SUPPORT TEAMS •Documents •IT •F&A •HR •Marketing •Knowledge SUPPORT TEAM •Facilities Typically strength of revenue and support team would be similar, having a lean partner strength and a heavy fee earners/ support team
  18. 18. New World ? PARTNERS FEE EARNERS Lega i ng ourc l SUPPORT Proc Outs IN HOUSE ess O cess u ts o l Pro BPO BPO urcin Lega g Lean-cost effective structure that benefits from outsourcing
  19. 19. Typical law firm structure New World ? PARTNERS PARTNERS FEE EARNERS REVENUE TEAM FEE EARNERS DEPARTMENT HEADS Lega i ng ourc l SUPPORT TEAM SUPPORT Proc Outs •Documents IN HOUSE ess O •IT cess •F&A u ts o •HR l Pro •Marketing BPO BPO urcin •Knowledge Lega SUPPORT TEAM •Facilities g Typically strength of Revenue and Support team would be similar, Lean-Cost effective structure that lean Partner strength and heavy Fee Earners/ Support team benefits from Outsourcing
  20. 20. What will stop the legal sector from Outsourcing?
  21. 21. Assuming there is a business case : perceived risks mitigation Perceived risk Description Mitigation Performance • Will outsourcing deliver? • Track record • What happens if it doesn’t? • Thorough due diligence • Benefits, confidentiality, internal • Customer references security, communications, language, • Six Sigma performers quality control and systems concerns • Staged, low risk implementations Control • Will management lose control over key • Detailed SLAs business functions? • Real time on-line performance measurement and transparency • Strong governance structures • Collaborative approach People • Effect on the “personal” and culture • Businesses must be efficient • Ethics of off-shoring jobs and redundancy • Global marketplace & free trade • Lawyers distrust process • Lawyers will experience the benefits • Skills loss • UK economy needs real jobs Transition • How difficult, time consuming and risky is • Experience and expertise the transition? Is it worth the effort/risk? • Staged, low risk implementations
  22. 22. Done with, not done to! The best outsourcing is a strategic partnership focussed on continuous improvement
  23. 23. So how does it work? 23
  24. 24. Well, not like this…
  25. 25. Finance and Accounting Process Outsourcing Roadmap High 4 2 Financial Planning & Analysis Budgeting & Forecasting Fee earner reporting Statutory Reporting Cashflow analysis (Risk, Domain Skills, Lead-Time) Financial Reporting Fixed Asset Management Complexity SAR compliance Direct / Indirect Bank & Account Tax Services Reconciliation Tax Advisory & Planning Tax Receivables / Collections Processing Billing / Invoicing support General Accounting / Ledger Payables / Payroll and PAYE compliance Disbursements Travel & Expenses Bank posting Low 3 1 Low Benefits (Labor Cost & Quality) High
  26. 26. Outsourcing - Flexible Business Models Typical Outsourcing Model Direct third party outsourcing model • Lift and shift • Outsourced FTEs • Wage Arbitrage & Process Excellence • Arms length outsourcing • SLA Based Operations Management Hybrid Outsourcing Model • Maximize right-shore leverage • Leverage BPO expertise and process re-engineering • Retained staff embedded in outsourced team Shared Service Centre model Outsourcing options: • Established and owned by customer • All in-house • Joint venture with other customers • All outsourced • Operated independently for multi-users • Hybrid • Complete end –to – end SSC design • Bespoke Implementation • Potential to realise value In-house model • DIY Captive/in-house model • Services to third parties? • Potential to realise value • Customer retains ownership and operational control Joint Venture/Outsource model Potential to offer services to third parties • Leverage Supplier strengths and reputation • Collaborative set up • Services to third parties? • Potential to realise value
  27. 27. So are you going to let this wash over you? 27
  28. 28. Uha, too difficult!
  29. 29. Thank You

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