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?

Outsourcing Revisited

With the announcement from Slaughter & May that they are "in talks with an LPO [LegalProcess Outsourcing] supplier", the legal world is again aflame on the subject of outsourcing.

I have already written once on this subject (here) and James Dunning had more to say on the subject (here), but I remain concerned that the notion is not always going to be thought through by some firms. The implication from some of the press coverage is that "if Slaughters are doing it then it's mainstream and so we should all be doing it...". Let me just set down some of my concerns:

• Slaughter & May are not yet outsourcing anything. They are "in talks" with a supplier. That can mean anything, or nothing.
• I wrote before about client concerns. How will a client feel about work being outsourced? What safeguards will be retained? Consider a medical example. A routine piece of surgery can, one might argue, be carried out anywhere since its simple and so should be carried out as efficiently as possible - which might mean in a small local hospital, or a private clinic. That's fine unless something goes wrong. I'd prefer to pay a little more to have a procedure done in a large teaching hospital so that, if the less that 1% chance of failure occurs, I will be surrounded by highly trained (and so expensive) people who can step in and take over. The same is true for a "simple" client matter. 99 times in 100 there will be no problems - but what will happen in those 1% cases? Who will be there to step in and sort things? How quickly will the lead lawyers find out that there is a problem.
• Consider this too - how often has a client told you that a piece of work will be simple - only for you to find that it's not? How commoditised can legal work - especially that of the largest firms handling the more complex tasks - be?
• How will the data protection act apply. My (somewhat limited) understanding is that special measures will be required if private or personal data is to be processed outside the EU (or EEAA). Will outsourced "partners" have full access to the matter files? Can they perform adequately if they do not? I know of firms where the partners (that's the partners in the law firm - sorry for the confusion) have concerned about secretaries from other departments having access to files - never mind employees of different companies.
• How will outsourced work be fitted into staff reviews and bonus considerations? How will departments react to not being able to pad hours on "grunt work"? At what point will the law firm's "value added" come into the process? I'm not sure how happy I would be to receive a bill from a partner briefly reviewing outsourced work and stating "it's fine".
• How will the law firm control the outsourcing third party. What skills will be required to manage the relationship. I'm sure that legal knowledge and training will not help much - so who will manage the liaison?

This is not to say that I think outsourcing is a bad thing. It is probably a good thing - but care must be taken before jumping onto the bandwagon. It needs to be the right thing for your law firm and you need to be absolutely sure that you fully understand what benefit the firm and its clients will receive.

The blame game (again)

I know - I said I would stop blogging about blame. I'm starting to realise why the press enjoy filling their pages with these stories.

Nevertheless - I read Lucy Kellaway's column in the FT this morning and thought that she summed it up very well. As she points out there have been some very strange theories about the reasons for the recent decline - notwithstanding that most commentators thought that some kind of reaction was coming (even it they were incorrect, mostly, about the severity of the "market adjustment").

She quoted Richard Layard, which led me to read his piece about "...less selfish capitalism". I was very taken with his points about private interest versus what he calls "positive sum activities". I think it is true that we have been obsessed with the self  - and been able to wallow in this self interest to the detriment of consideration for Society as a whole. Sorry if this sounds very socialist. How about - reducing self interest in favour of the interest of the organisation as a whole. Perhaps commercial enterprises will be happy with that?

I have also been looking into another Lucy Kellaway recommendation - "The Ethical Executive" by Hoyt and Hersey. I think one of the tag lines sums it up well "Good intentions are not good enough".

Now there's a thought to live by.