This article is the first in a four-part series on implementing a corporate legal process outsourcing (LPO) solution. It provides an overview of corporate legal service delivery transformation.
You read it online every day: Increasing regulations and litigation costs are driving corporate legal budgets through the roof. As a result, companies are seeking legal spend reductions and asking their legal departments to figure out how to operate more effectively and efficiently. Service delivery approaches that worked for corporate legal teams in the past can no longer sustain the vision and requirements for the future. To address these concerns, corporate legal departments are increasingly looking to legal process outsourcing (LPO). However, in implementing an LPO solution, corporate legal departments need to determine not only what areas they want to source, but also the right time to implement such a solution — i.e., before, during, or after internally transforming existing processes.
Corporate legal service delivery transformation
As organizations have evolved and become more complex, so too have their service delivery needs for functional and business support processes. Generally speaking, service delivery transformation (SDT) seeks to help organizations in their efforts to create a flexible, scalable and efficient service delivery model — one that can enhance enterprise value by enabling cost-effective growth, supporting strong internal controls and compliance, and providing consistent global service delivery. Through SDT, organizations can evaluate the range of service delivery options — insource vs. outsource, onshore vs. offshore — to develop and execute a tailored strategy that addresses long term organizational needs.
Figure 1: Role of corporate legal department in legal service delivery business model
Corporate legal departments are no exception to the SDT paradigm and, in fact, have a significant opportunity to implement such improvements to their modes of service delivery. Corporate legal departments play a specific role in the legal service delivery business model (see Figure 1). In this model, outside counsel is used primarily for legal tasks requiring the most significant level of specialized legal knowledge and experience (e.g., legal opinions). Interestingly, in an effort to remain competitive in the maturing LPO market, many outside counsel law firms are beginning to adopt LPO provider methodologies in terms of lean, processes and program management. In some cases, law firms are even seeking to form partnerships with LPO providers. This trend, and other similar shifts in the marketplace, stem from the increased demand by corporate legal departments for low cost, but high quality, efficient legal services. Legal work that requires less specialization (e.g., typical contract drafting and negotiation for the business) remains with corporate legal resources, some of whom may be organized under a shared services model. Finally, repeatable, transactional legal tasks requiring less specialized knowledge are sourced to lower cost LPO providers.
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