Business process outsourcing
The perfect storm
10 December 2012 | By Lucy Burton
New regulations, technology, competitors and customer expectations are forcing law firms to adapt to change, say the industry’s leading lights
In association with Thomson Reuters
The Lawyer and Thomson Reuters arranged a roundtable discussion chaired by William Robins, a corporate partner and chief operating officer at Keystone Law, to discuss business process management (BPM), business process outsourcing (BPO) and the use of technology within law.
“To some, this is just management speak and a foreign language which has no place among the art of law,” highlighted Robins in his introduction. “At the heart of our discussion is the role of technology and strategic thinking in law firms to re-engineer how things are done and, in particular, how we can make operations quick and trackable, predictable and efficient.”
Could you set the scene, taking us back to the perhaps halcyon days when BPM was not on the agenda and explain what it is and where it came from?
Gary Jackson, operations director, Irwin Mitchell: If you look back the key point was when tasks started to be measured and analysed in detail, and that probably came to a key milestone in the mid-80s when Motorola began to develop what then became Six Sigma. That grappled around within Motorola for some years, but it wasn’t until Jack Welch came along in the mid-90s and started to build his entire strategy at General Electric around Six Sigma that it [BPM] really reached prominence.
Business process management then began to gather momentum, which came at the same time that automotive companies, particularly Toyota, started to adopt ‘lean’ processes and ‘lean’ management. You then had the advent of the internet coming out around the mid-90s, which drove companies - particularly in service industries - to start thinking about the way that individual tasks and processes hand together, not just in the sense of looking at a cost analysis but also how the client was affected by those processes - what were they experiencing, what was the client journey? And so around the turn of the century, and certainly over latter years, I guess BPM has taken a step forward. Today there are a lot of industries, particularly in financial services, that have somebody in charge of business process improvement and management.
Just before we dive headlong into actually looking at what this means for law firms in today’s world, I want to pull back and look at what we mean when we say ‘today’s world’?
Adam Shutkever, chief operating officer, Riverview Law:
Certainly in the UK market we are looking at a period of unprecedented change, partly driven by new regulation but most significantly by the requirement of customers. I see the current developments in the legal sector taking it closer to behaving as other businesses have always behaved: treating customers properly and delivering a service that they’re looking for.
Traditionally, law firms haven’t been terribly good at doing that. If you just go to the core and look at how law firms compare themselves with others - by profit per equity partner - ask yourself what message that gives to customers of those firms? I don’t think there’s any magic in the introduction of alternative business structures (ABS) into this process, [but] I think it’s acted as a catalyst for change.
How has the legal market accepted and adopted parts of business process management tools available on the market?
Samantha Steer, FloSuite legal product manager, Thomson Reuters: If you look at the Legal Technology Insider top 200 as a starting point, only 42 of the top 200 firms actually have what you’d call a real BPM solution in place. I think it’s early days still. Firms are starting to take more notice of what customers actually want, and if you look at in-house counsel they’re increasingly asking for changes to be made. Firms will be driven by customers, particularly when there are new entrants coming to the market.
For firms that haven’t started this process [BPM], what sort of questions should they be asking themselves so they can prepare to go on this journey?
Crawford Hawley-Groat, director of IT, Maclay Murray & Spens: I think the starting point really should be ‘would I pay for this?’. When you look at the bill that lands in front of you for work that is carried out, stand back and think: ‘Am I getting value for this? Would I pay my own money for the service that I’m receiving?’. You’re then able to look at the different elements that go into the end result. Through that strategic analysis you look at areas of the business that maybe aren’t as efficient as they should be, maybe areas where you can learn lessons from other industries. BPM isn’t just turning a current process from paper to electronic, you have to say not just ‘how’ do we do it, but ‘why’.
Can you give an example of how a firm might analyse a particular process?
Jackson: In a typical law firm you have partners, or fee-earners, who dictate file notes. Historically those will be dictated via a secretary. The fee-earner will speak to the client, finish the call, then call upon the services of a secretary or a PA to take a note to reflect on what was said in that particular call. That then takes time and effort for two-people. You can see where I’m going with this - if you ask the partner to type up a few words when they have a conversation, it’s done and dusted. You’ve immediately taken a process, condensed it, saved time and money and arguably created an opportunity for more work from both those individuals.
Shutkever: I started life as a lawyer but only very recently returned to the sector, and the rest of the world wouldn’t dream of doing things in that way. It’s a real indictment of the legal profession that these issues are still being debated - should we have a call with the client and then go back in and call the secretary to dictate a note, presumably on paper, then maybe put it in the post afterwards. It’s absolutely extraordinary.
Jackson: Something has to change and change really quickly.
Abbey Ewan, director of business transformation, Simmons & Simmons: But don’t you think we’ve been having this conversation for the past five, six, seven years? Every conference I’ve been to in the past seven years has had this on the agenda, yet very little has changed in terms of the cultural mindset.
Hawley-Groat: When you look at the individuals that you’re working with, many of them have been in the same organisation all their lives. They are professional arguers, it’s how they are taught at university to work, and then if they go and work in the same firm [for much of their careers] what do they learn from other industries? What do you learn about working practices and working faster? There’s a lot that can be learnt from the outside world, but you need a driver for change. The individuals at the top have to understand that there needs to be change.
Ewan: But you would have thought with the pincer movement of ABS, legal process outsourcing (LPO) , disruptive technology and the economic environment, there’d be an explosion of change which, in my experience, hasn’t really happened. Three or four years ago, I was known to say I never like to waste a good recession and I managed to push a number of initiatives that I wouldn’t have been able to [prior to the recession]. But we’re four years into that now and revenues are going down consistently, profits are going down consistently, obviously not for everyone but for a number, and still we don’t seem to grasp the imperative for fundamental change.
Barry Bostoff, senior sales consultant, Thomson Reuters: I think, as Crawford said, there’s a -reluctance to change. The legal industry, if you compare it with other industries, has always been a slow adopter of IT. It takes a lot of persuasion for law firms to embrace technology.
Shutkever: That’s because it hasn’t been optional, it’s been develop, adapt, or die. Whereas the legal profession - through a combination of the curious ownership structure at traditional law firms and the underpinning of regulation - hasn’t had to do it. But the profession is approaching the perfect storm because we’re looking at regulatory change, new entrants to the market and customers that are demanding better.
So who is - and perhaps, who should be - driving this? Whose problem is it?
Hawley-Groat: It’s everybody’s problem. It’s your management team’s problem, depending on how your firm is structured, but it’s every partner’s problem, it’s every lawyer’s problem, because as Adam said we’re in the perfect storm and it is going to be a case of change or die.
One of the big drivers that I think is gathering momentum is seeing other firms change the way they’re working. So partners who are dealing with a particular sector are trying to win work from a firm that has already started going down a more automated or structured route, which then leads the partners involved to say they can’t win the work anymore, they can’t be profitable enough, because the guys over there are doing it differently.
Ewan: I kind of agree with Crawford but in my experience lawyers spend very little time looking at the world around them and paying much more attention to what their clients say to them. It’s also absolutely fundamental that it is driven from the top down but the reality is that a lot of managing partners have a lot of things to worry about and business process management might only be a microcosm.
What sorts of things should we, and are we, measuring?
Jackson: In the past year or so we’ve looked critically at the number of times we’ve ‘touched a case’ and why - [and asked ourselves]what can we automate? So a client calls us, they want an update on the case, so why can’t they self-serve? We have a website. It’s understanding that first step that leads us to the second step.
So [using this as an example] it’s win-win because you restrict costs and increase customer satisfaction. But it’s not just about client satisfaction, it’s about what effort they had to put in to get there - I might be satisfied by the outcome, but crikey the effort I had to put in to get to that result. If a client wants an update at 10pm because the kids are in bed, they can do it online.
Hawley-Groat: It’s also recognising a generational change. Many of us are used to having a paper diary, and the way that we react with the world around us is one that our parents would recognise. But when we look at how our kids interact, it’s a completely different world. A customer experience that we think is satisfactory, someone 10 to 15 years younger is going to think ‘what on earth are you doing?’.
Jackson: That’s true, my 13-year-old daughter would never think of using email, it’s all about instant messaging - I need a response there and then. When her generation wants legal services, how do we satisfy that demand?
If you were able to walk into your managing partner’s office and he or she was in a trance-like state with a blank cheque book, what would you ask for?
Ewan: I’d like to allow every fee-earner in the firm to contribute a proportion of their time to self-reflection.
In an environment where the behaviours that you have are driven by the way you remunerate people, there is little motivation for self-reflection - and that’s whether you are an equity partner taking drawings or an associate on a billable hours bonus.
It’s only been recently that law firms have allowed a certain amount of people’s time to be recorded and given over to such things as business development or contribution to know-how. Yet this is the sort of element that makes everybody better lawyers, improves the firm and improves service to clients.
If we were to return to this discussion theme in 20 years’ time, where should we be?
Shutkever: I think there will be few, if any, law firms structured as traditional partnerships and I don’t think anybody will get away with billing by the hour.
Ewan: I agree, there will be fewer law firms generally and those that exist will probably have a geographically dispersed workforce - though human beings are essentially social animals and so I can’t envisage a world where everyone sits at home doing their work with a headset on.
The provider’s view
This roundtable event gives excellent insight into what the future holds for today’s law firms. To echo William Robins, partner and COO at Keystone Law, “It’s rare that a panel is so united in their views - business process management is coming, it’s the way forward, and it’s essential for any law firm that wants to survive and flourish”.
According to CapGemini’s 2012 Global Business Process Management (BPM) Report, 44 per cent of UK survey respondents anticipate that interest in BPM within their organisation will increase in 2013, with one in three anticipating their organisation to launch a major BPM initiative.
In our experience, law firms that want to drive efficiency, manage risk and strengthen their ability to compete are increasingly using a combination of case and process management. Together, they can deliver efficiency gains and cost savings alongside risk and resource management benefits. Of course, individually they can also be of enormous benefit, but it’s when they’re used together that maximum gain is achieved.
What we’ve heard in this roundtable dispels the myth that case management is a solution suitable only for certain areas, such as probate and personal injury. By examining the current workflow and ascertaining which aspects of it could be rendered more efficient using software, we can achieve efficiencies and safeguard against risk in any department. Even something as simple as providing the lawyer with one console from which to view and action all of his/her client matters, eliminating time spent moving between multiple systems, can free up large amounts of time. The art of practising law is only one part of the lawyer’s day. The rest can easily get consumed with manual tasks that potentially could be scaled back and automated.
A key process that benefits hugely from being brought into a workflow is client matter inception. Matters can be opened in a locked-down environment, ensuring all compliance criteria are met at every step of the process, minimising risk to the firm. The Bribery Act 2010 has implications for anti-money laundering and corruption, and firms need to be able to prove that they’re meeting compliance requirements.
In our opinion, today’s successful law firms are already realising the importance of striving to deliver a great customer experience, however it’s the firms that keep a close eye on streamlining their internal processes that will continue to flourish in the future.