Centers of Excellence: Managed Services Trends Taking Hold in the Legal Vertical

Forward-thinking law firms and law departments are looking beyond internal staffing and cost-reduction strategies, and are pursuing custom-tailored solutions for service delivery. By using outside providers to deliver services, leading law firms and law departments can place a greater emphasis on their core business. This enables organizations to focus on areas that are the most strategic and differentiating to their clients.

Cost pressures, new competitors, emerging technologies and evolving workforce dynamics are influencing an industry that is now increasingly embracing change in different ways. Corporate law departments are methodically building and systematically delivering work in-house while still being pressed and challenged to find ways to deliver greater efficiency to further reduce spending. Law firms, however, are navigating different headwinds as a result of outside counsel spend decreasing and new competition for talent arising in the form of alternative legal service providers and software vendors.

As our latest white paper, “How Centers of Excellence Are Accelerating Efficiencies Across the Legal Landscape" explores, leading organizations are examining new and innovative ways to approach critical back-office operational functions, such as procurement, billing, research and IT services. By empowering leaders to streamline or leverage alternative administrative support, forward-thinking organizations are benefiting from increased efficiencies and agility, and are better equipped to handle rapidly changing business and client environments.

Making the Back Office Someone Else’s Front Office

Law firm leaders and general counsel that have tested out managed services strategies are benefiting from increased nimbleness and the expertise of external service providers. Over the last decade, for instance, law firms have opened shared services centers in low-cost domestic and overseas markets to centralize functions like billing, help desks and IT. Similarly, law departments are increasingly outsourcing operational processes – from contract and invoice review to discovery services – with one-third of chief legal officers planning to increase the amount of work they send to third-party providers this year.¹

Centers of Excellence (CoE) are an extension of these alternative legal efforts, and a viable way to access teams of experts that provide leadership, best practices and insight that lead to increased efficiency, scalability, cost savings and service levels. While most law firms and law departments have ample operational functions that are well positioned for CoE adoption, some areas will be quicker wins than others.

Here are a few areas where CoE can make a fast and measurable impact on law firm and law department business models:

• Contracts. Contracts are a vital part of most organization, commanding a considerable amount of in-house counsel resources in many corporations. In 2016, 65 percent of law departments spent at least 15 percent of their time on contract coordination and negotiation, up from 43 percent in 2015.² With a CoE in place, law departments can centralize each step of the contract management lifecycle, from request intake and triage to drafting, review and execution. Having a dedicated partner overseeing the contract workflow ensures accelerated cycle times, a more consistent process and greater compliance for the entire organization.
• Procurement. A tremendous amount of complexity comes with handling third-party supplier contracts and, for most firms, procurement is perceived more as a cost center than profit center. As our 2016 Law Firm Procurement Survey found, half of procurement leaders only report on less than three KPIs to their executive teams. A CoE helps law firms drive more value from procurement, including better contract ROI, increased market intelligence and decreased supplier risk.
• Research + information services. Law firms need targeted information to win new business and nurture existing client relationships. However, only one-third of law library leaders feel their current library structure can fulfill their firms’ future demands. Exacerbating the issue, traditional library budgets are under growing scrutiny, limiting their flexibility to modernize and improve. A CoE approach to research ensures that information services are tightly integrated into other operations (including marketing, business development or practice area support), and resource use is optimized firmwide.

Shifting time-consuming administrative responsibilities to CoE frees up organizations to work faster and smarter to carve out a competitive advantage. And by reducing the number of service providers, organizations are achieving optimal buying power and reducing third-party risk. With operational roadblocks cleared, forward-thinking organizations can focus their talent on creating additional opportunities to engage, develop and retain clients.

For a deeper review of law firm and law department CoE opportunities, download our latest white paper.

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¹ Association of Corporate Counsel, “ACC Chief Legal Officers 2017 Survey"

² Thomson Reuters, “2016 Legal Department In-Sourcing and Efficiency Report: The Keys to a More Effective Legal Department”