Monday, 17 May 2010

A Step Too Far?

Last week, CMS Cameron McKenna announced that it was "outsourcing its entire business support function" to Integron which seems to involve transferring 200 support staff (including IT, HR, Finance, Facilities and Admin) to a newly created service centre. The plan, according to "The Lawyer" is that all nine firms in the CMS network will join suit over the next three or four years. The longer term plan is that the service will be made available to other firms.

I doubt that it will come as too much as of a surprise to find that I have some concerns about this idea - even though Prof. Richard Susskind said that the business case was "compellingly strong" (according to the Law Society Gazette). My concerns are about perception rather than morality - although I do have concerns about appearing to "dump" staff  no matter their length of service or the quality of their work.

What I mean by perception is that the firm has taken the most simple measure of worth in a firm - fee earning. The view from CMS would appear to be "well they don't make any money so they don't add any value". Oh dear. I had hoped that this sort of narrow view had died out in the 90s - sadly not. Law firms are knowledge businesses - they need to supply high quality knowledge and experience to their clients, and be able to suck that knowledge out of the minds of its lawyers so that it can become the property of the firm. To that end, surely the "Learning and Development", "Library and Information", and "Research" departments are very close to the firm's core business. Surely this can be an area in which the firm excels and in which it adds strategic value? Why should an outsourced "Research" department function to the specific good of one firm when the valuable research (now the property of a third party) could be sold more than once?  Given that most law firms have an obsession with billing and fees, how is it sensible to outsource "Accounting and Finance" - surely this needs to be incredibly tightly controlled by the firm. I acknowledge that its not a core function - but my goodness it's important. The next to consider is "Human Resources and Training". I could possibly be persuaded to outsource training - and most firms already do - but is it really sensible to outsource the planning of training? Is it really sensible to outsource the HR function? Surely the management of people is core in any organisation - let alone legal services? Are CMS really suggesting that these departments have added no strategic value to the firm? If the answer is that they have added value - then why on earth are they being outsourced? If the answer is that they haven't - surely that is an indictment of poor management in the past?

Support functions can be part of the firm's strategy - in fact they must be. Strategic value can be added by these functions - and at the very least, the firm should be able to achieve some operational excellence and short term advantage from them. Outsourced functions become part of the outsourcing contractor's strategy - which will be to add value to their firm, not yours. If a function is not work particularly well - manage it better, don't try to outsource the problem to someone else. Perhaps the firm could just outsource the legal work too - then there would be no need to deal with those difficult lawyers?

I'll be watching this one carefully. I do not believe it will work - it might not fail spectacularly, but there is no way that the firm will be in a better strategic position because of it.

Finally - I know that the firm has long term plans to sell the outsourced services to other firms in due course. It's not going to happen - sorry. No firm of equal size will use the service because of worries about dealing with a competitor. No larger firm will use the service because they are still using their own in-house services (a lesson to be learnt there). No smaller firm will be able to afford the fees. I really don't think it will happen - but if it does, if some other law firm starts to use Integron for its 'middle office', how will this filter its way to CMS? Surely this will be another client for Integron? They might not even get a finder's fee.

Outsourcing can be sensible in some cases - but be sure of the strategic value that exists in every area of the business first, and then ensure that the actions you are about to take will actually add value to the business. Outsourcing the entire 'middle office' (to use their term) will cause concerns for all the support staff  - and other staff will be looking to see when the outsourcing axe will fall on them.

A job as a legal secretary at CMS anyone?

1 comment:

  1. Peter

    You may want to read the book Re-imagine! by Tom Peters the uber management guru; it will give you a whole new slant on professional service firms. I shall wait to see what you think.