It should come as no surprise to any general counsel that the legal process outsourcing (LPO) market is skyrocketing. The value of the global LPO sector recently surpassed $1 billion and is growing at an annual rate of 32 percent, according to The LPO Program, a New York-based strategic consulting company.
Inside and outside counsel in every industry are focused on finding efficiencies and doing more with less as the law firm fee model continues to shift. As a result, savvy GCs and law firms are changing the way they view the nature of their work. They are doing this in large part by collaborating more closely to make sure that all projects are streamlined and that internal resources, such as paralegals and associates, are used in the most efficient, strategic ways possible. And while looking to outsourcing to achieve their strategic goals and streamline costs is nothing new, some inside and outside counsel are starting to examine this critical solution in new ways.
Today, more than ever, it’s advantageous for inside and outside counsel to move beyond a client-vendor relationship with their third-party service providers and start working with them as true partners. By looking more broadly at the type of support needed over both the short and long term, GCs and law firms can leverage third-parties as true extensions of a department, not simply as one-off support when needed. In fact, only by working in tandem with their third-party providers can legal professionals maximize their investments in these critical relationships. This creates a true win-win for all involved and enables critical cost savings in the law firm fee structure.
For example, for a legal group that must conduct complicated lien searches, its third-party provider should do much more than just scour public records databases and produce a spreadsheet. The service provider should add value. It should help reduce the legal group’s risk, for instance, by using a system that performs automatic, recurring due diligence to eliminate unpleasant surprises like federal tax liens. And they should have a process for consistently and quickly sharing that information with the legal group, perhaps through a web portal.
As you are reviewing your existing third-party provider agreements or considering forming new ones, here are four questions to ask yourself to make certain that you are getting the most out of these relationships and/or elevating them to true partnership status.
1. Does your third-party provider treat your business as their business? Your LPO provider should be proactive about identifying and comprehending your market and business challenges. This is the first sign that they will be willing to go over and above the standard transactional nature of their work with you. How often does your LPO add value? Can they truly contribute new functionality to the tasks you have given them? And most importantly, are they able to anticipate your needs and act as a strategic partner?
2. Does your LPO have the necessary technology? Your trusted provider should be there to free up time for your paralegals, associates and other legal professionals so they can focus more on higher level strategic or project management work. Third-parties, by nature, make you more efficient by taking on work for you. But if your provider has the latest technology tools at its disposal, you will experience an even greater increase in efficiency and partnership.
For example, if inside or outside counsel need to outsource due diligence, you’d be well served by a partner who uses a single, customizable web-based desktop application that enables file sharing, easy storage and serves as a single access point for both inside counsel and vendor. This software should also allow your partner to quickly conduct searches and retrieve records.
3. Can your LPO file quickly and accurately? Your partner should have the right workflow processes and tools to enable them to file with speed and precision, saving you money. For example, do they use a data-entry wizard that minimizes retyping, making subsequent filings quick and easy to create? They should be using an intelligent auditor that automatically checks compliance with the latest filing requirements. Can they file electronically in most states?
4. Can your third-party provider customize information just for you? As a legal professional, you require specific views of the due diligence data collected by your partner. Can your LPO deliver the right information in the right format at the right time? Look for one who has easy-to-use, on-demand reporting tools that offer customized views of important data, both ad hoc and on an ongoing basis. On-demand reporting should provide you with clear, unique views of customized data in electronic form showing only the specific information you want to see. Your LPO should also be able to update you on any changes to that data that could leave your company vulnerable.
Inside and outside counsel can find true win-win situations by working with LPOs that view their relationships strategically. Today’s leading LPOs have invested in technology, training and new processes to simplify their operations and are using the latest software to simplify workflows and reduce duplicative processes that can waste time and lead to costly errors. They should be there when you need them, anticipate your needs and even offer strategic advice. When these factors are in place, legal professionals can rest a bit easier knowing that quality will not be compromised and that the path to a true partnership has been laid out.