PIPL - Practice Area Legal Services Sourcing

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Procurement of Legal Services
Scope and Aspects for Consideration
Goals: Efficiency, Effectiveness, Excellence
Dr. Sanjeev B. Ahuja
Managing Director
sanjeev.ahuja@piplinc.com

2. Overview
Background
Market Opportunity
Legal Process Outsourcing
Structured Models
Way Forward
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3. Background
Why procure legal services at all?
Objectives may include strategic, financial, and operational imperatives, aimed at
lowering legal spend, improving the return from such spends, optimizing the legal
function, and improving the processes to support the business
Essential Cautions
• Maintain control throughout the engagement process
− Preserving its professional privilege, client confidentiality, rights/liens on data
assets, access by foreign law enforcement and intelligence authorities, and
preserving capabilities for e-discovery/search/analysis of all artefacts
• Mitigate the global risk of procuring sensitive legal services from 3rd parties
− Ensuring regulatory compliance, information security, data protection, client
confidentiality, and damage containment
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4. Market Opportunity
How has the industry changed?
Today’s £ 25B liberalized/open market for legal services represents an
unprecedented opportunity, allowing clients to look into Audit/Tax/Advisory,
Insurance, and other professional service providers instead of law firms.
Other Alternative Business Structures
• Loosely federated networks of specialist lawyers now address full spectrum
of geographies and jurisdictions, internal/external clients, expertise areas,
industry sectors, and functional specializations
• Seamless integration with legal service providers’ resources, processes, and
billing systems further improves efficiencies and productivity
• Technology can be used to further reduce costs and streamline workflows,
online S2P/P2P systems integrate end-to-end procurement processes and
contract life cycle management, business social media platforms allow close
collaboration, and access to data enables useful analytics and reporting
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5. Legal Process Outsourcing
Has the legal process outsourcing industry matured?
LPO market in 2013 was c. $1.4b with CAGR of c. 30% and projected to grow to
$8.6b by 2020. Outsourcing non-core legal activities facilitates higher resource
utilization for cost effectiveness, driving profitability and leaving in-house counsel
to focus on tasks which are high-value in nature.
Burning Issues
• Challenge is to grow sufficient technical legal skills in-house, given limited
availability of resources and associated costs.
• Capacity planning with elasticity requires matching demand/supply profiles
• Preserving institutional knowledge while designing scalable resources
requires characterization of core competencies and areas of expertise, in
order to distinguish between high value and commoditized areas
• Provisioning client-facing and internal legal services means distinguishing:
− Requirements for legal counsel, negotiation support, contract drafting, etc., from
support needs for DB mgmt, eDiscovery, KM, and production of support collateral
• Outsourcing brings with it industry standards and best practice with SLAs
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6. Structured Models
Which engagement model is suitable?
Loosely referred to as “partnering” with a law practice, an engagement model for
legal services can take on one or more from among several options, from simple
augmentation with 3rd-party resources, to asking a provider to build, operate and
transfer back a legal support unit, and possibly even acquiring a captive law firm.
Moving away from Traditional T&M
• Pricing models are moving away from blended rates to pay-for-performance,
unbundling based on task/experience/expertise, committed retainer/resource
with draw-down, on-demand resources at take-or-pay over a fixed period,
fixed price or fee caps, and “success”-based bonus/incentives
• Competency models will allow clear stratification across skill type, level,
experience and availability of resources; a basic driver for any agreement
• Operating models, whether preferred, multi-source, or ad-hoc open up
options for optimization, including leverage from economies of scale
• Governance models keep the focus on performance assurance with
measurable metrics, accountability, and push for continuous improvement
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7. Way Forward
What does “good” look like?
Whichever type of legal services are procured and irrespective of an engagement
model, success is predicated on focusing with acuity on key objectives. Unless
performance is quantifiably measured it is unlikely to come up to expectations.
Characterising Value
• “Value” must be characterised in terms of metrics that are meaningful to the
business, from lowering legal spend, improving the return from such spends,
optimizing the legal function, and improving business support processes
• Define a strategy to derive target value and map out an execution approach
on the back of that to ensure optimal sourcing, resource utilization, and
steady contribution to business profitability
• Identify practical but incisive mechanisms to track, evaluate and re-align
delivery to evolving objectives, while proactively managing relationships with
providers to ensure that any divergence is caught early and curtailed
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8. Contact Progressive Intelligence, Ltd.
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