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18 February 2013
The outmoded conception of lawyers as drafting technicians finds one of its greatest challenges in the outsourcing arena. It is here that lawyers most clearly are being asked to demonstrate what added value (over and above assumed technical competencies) they can bring to the table.
Historically, the division of responsibility in the outsourcing process divided quite neatly: the finance director sells the deal internally and is in charge of the pricing bottom line; the consultant formulates the service levels, the pricing model and the project and implementation plan; the lawyer does the drafting and negotiation of the outsourcing services agreement and the outsourcing transfer agreement.
But let's face it, the consultant has all the fun in this model. He or she runs the frontline commercial negotiations and project manages the outsourcing from conception to signature. The lawyer is left looking like a rather poor second relation. Good outsourcing lawyers should behave like lawyers and consultants. That is where we demonstrate added value.
We should work more closely with consultants and we should not be afraid to step into some areas that lawyers often shy away from. All too often we would prefer the client, or the consultant, or indeed anyone except us, to come up with: benchmarking procedures; continuous performance improvement programmes; exit management plans; service level agreements; service credit regimes; incentivised gain sharing schemes; business continuity plans; and management and reporting structures.
Historically, we have avoided taking responsibility for producing such things because our inherent caution as lawyers tells us that the client is in a better position to know its own internal business requirements than us. We do not like to second guess its needs. We do not like to assume responsibility for getting it right or wrong. Of course, the concerns can be addressed by expectation management - explaining and recording where lawyers' responsibilities for content begin and end - and undertaking and recording client verification and sign-off.
Our caution often does not serve the business needs of our clients. Sometimes the very thing they are paying us for is to suggest models and solutions based on our experience of how the outsourcing industry works. They want us to be more commercial. They want us to act more like consultants.
The challenge, therefore, in demonstrating added value in the outsourcing arena for lawyers is to expand the scope of what we can do, what deliverables we can produce and what wider commercial advice we can give. Successful outsourcing lawyers will be those who: can provide excellent project management skills to run an outsourcing; understand why the business is outsourcing; are unafraid of advising on wider commercial imperatives; can produce the not purely 'legal' documents listed above; understand the pricing and are willing to get their hands dirty by drilling down into the pricing model.
At a time when governments across Europe are increasingly favouring large-scale public/private partnerships (with variants of outsourcing models within those schemes), and current economic pressures are causing businesses to achieve cost-savings through outsourcing, it is likely that work for outsourcing lawyers will increase. We need to be ready to face the new demands that will be placed on us.
Michael Sinclair, partner, Klegal