Anyone can see that the legal industry is in the throes of a transformation. No longer are law departments automatically sending all their work straight to their law firm. Instead, they are more frequently taking a bespoke approach—deciding how to best deliver each type of work. Some is still going to law firms and more is getting done in-house, but many legal services traditionally performed by law firms or in-house resources are moving toward a model where third-party providers—often referred to as alternative legal services providers or ALSPs—are engaged to perform a variety of functions. This move delivers cost savings and scalability while still conforming to a client’s internal policies and risk standards.
While it is gaining traction, this type of outsourcing is not new. For many years we have helped law departments take advantage of outsourcing and managed services, and learned to respect the potential pitfalls and make the service productive. A successful outsourcing engagement is dependent upon several key components. We’ll discuss three crucial areas that can have a large impact on an engagement.
Defining “Success” and “Value”
“If you don’t know where you are going, you’ll end up someplace else.” —Yogi Berra
Knowing what constitutes “success” or “value” is a critical driver of the entire engagement. A high-potential managed service can be sabotaged from the start by not clearly defining what success or value looks like or—worse yet—leaving that definition to be stated later by people that may already feel threatened by the engagement. The value the client wants and the ALSP brings needs to be defined by the client’s senior management from the outset. This will serve as the foundation of the engagement architecture and be brought to life during the sales and launch processes as well as throughout ongoing governance.
Even if the client is only interested in savings or “getting the work done” and the engagement is hitting those stated goals, the ALSP should look for ways to add value to the client’s organization. For instance, through detailed reporting and an eye toward increasing value, the ALSP may be able to suggest deployment of alternative staffing models, such as a steady-state team that flexes up at year or quarter end. The ALSP may also come to understand which contracts or contract provisions represent heightened risk to the client, even if it is not stated in the client’s initial definition of value. The ALSP and client can then collaborate on how to address these risky contracts or contractual provisions, thus furthering an important organizational goal that falls outside of initially stated goals.
“There is nothing wrong with change, if it is in the right direction.” —Winston Churchill
The client’s senior leadership typically makes the decision to engage an ALSP, but as the message moves through the organization, it can quickly become a point of worry to members of impacted teams. For business stakeholders who have long-standing relationships with the legal department, any change can be frustrating. For the legal team, they may be asked to build out the needed engagement materials and provide training to the ALSP—all while continuing with their normal duties. All of this has the potential to create stress and frustration.
Much of the frustration can be mitigated by developing a thorough change management process. An effective change management program will have at least the following components:
- Client leadership should communicate that the ALSP has been engaged, why they’ve been engaged and what will be asked of the organization. The client’s leadership team should be ready to address any questions that arise.
- The ALSP should be a visible presence at the client and be closely aligned with the client’s legal team. The more the initiative is viewed as a partnership designed to achieve specific organizational goals, the more likely it will be adopted and used.
- Hold frequent trainings for users of the services. Hosting one mandatory training session and then turning users loose will lead to non-adoption. Providing multiple trainings ensures that all users are properly trained, allows the users to experiment with the service and provides an opportunity for the ALSP to gather feedback.
- Provide a transparent communication structure. Offering a forum for users to ask questions and obtain answers from knowledgeable people will increase the “stickiness” of the engagement.
- At launch, revisit the initial communications with frequent follow-up communications at certain milestones.
- Incorporate ongoing governance of the engagement to track performance, adoption and other factors with an eye to identifying and filling gaps that are leading to underutilization of the services.
Setting Expectations on Engagement Launch
Knowledge transfer at the start of a new engagement often requires a significant investment of time from the client. Clients—especially those going through an outsourcing experience for the first time—may fail to understand the initial time commitment. This can make it challenging to accomplish one’s “day job” while also forwarding the launch of a managed service.
Even in industries with a higher level of standardization there will be nuanced, client-specific policies and procedures that must be documented prior to launch to ensure little to no distinction between the practices of the internal legal team and those of the ALSP. Clients know so much about the business, their contracts and “who’s who” at the company that they underestimate the complexity of the day-to-day operations. ALSPs must reasonably document and communicate the support required from the client during the early phases of an engagement. This starts by being transparent and establishing clear and realistic expectations during the sales process.
To mitigate the risk of early delays, clients should, prior to launch, identify appropriate internal subject matter expert(s) to support early phases of the engagement including development of playbooks and process maps.
Equally critical is to facilitate a culture of open communication, collaboration and accountability. This typically requires that the client’s senior management set the tone including appropriately messaging the need for the engagement to the internal team and the expected support of existing subject matter experts.
Outsourcing of legal services can bring tangible, positive benefits to clients including cost savings, scalability and even improved SLAs. Achieving those benefits, however, requires a level of experience and expertise that is often greater than what the client may have initially foreseen. Anticipating where those additional needs may arise, and being prepared to manage through them, is the clear difference between success and failure.
Patrick Hennessey is a Director at Morae Global. He has almost a decade of experience in managed legal services in a variety of roles including negotiating contracts, managing teams of negotiators, deploying engagements and cultivating productive relationships with clients in a variety of industries and geographies. He is a licensed attorney in both Texas and in front of the USPTO with extensive experience drafting and negotiating intellectual property license, research contracts and commercial information technology agreements.
Chris Cahn is a Managing Director at Morae Global. He has more than 18 years of experience assisting global institutions with regulatory change, contracting, technology and data-driven initiatives. Mr. Cahn is a licensed attorney in the District of Columbia with experience in contract life-cycle management, derivatives documentation systems, tech-enabled contracting and the creation and management of client/contract reference data.