Mexican wave is the model outsourcing arrangement

Last week’s story about Freshfields Bruckhaus Deringer looking to build a national referral framework with regional firms highlights how legal market trends come in and out of fashion.

A decade ago the Mexican wave initiative, which involves outsourcing lower-value transactional work to UK regional firms, was put into practice by Hogan Lovells legacy firm Lovells with regional firms Cripps Harries Hall and Knights Solicitors.

While the attention of many in the legal world may have been diverted during these 10 years to offshore legal process outsourcing (LPO), this onshore ­outsourcing arrangement has remained a success for the firms involved, and most importantly for the client, Prupim.

The discussion around the virtues of outsourcing as a way to offer a cost and quality benefit to clients is clearly back in vogue. This provides a good opportunity for those experienced in outsourcing to examine what kind of arrangement really works for the benefit of all clients and firms involved, as well as why.

Offshore vs onshore forms a central part of any discussion on outsourcing. In recent times we have seen certain legal players outsource commoditised legal work to LPO vendors based abroad. ­However, recent research suggests that domestic outsourcing looks set to eclipse offshoring as firms become reticent about sending work abroad. Despite cost ­savings, quality assurance when delivering legal services is paramount, and this is best guaranteed by working with ­outsourcing partners who understand the context of the client’s sector and who share a common approach and culture.

Onshoring can include a large national firm outsourcing work to their lower-cost centre, or a firm outsourcing work to an external LPO vendor. Mexican wave is a tried-and-tested third way. The work that is outsourced is usually of a lower value, but not necessarily so, and this does not ­prevent it from being complex or important to the client. Lovells retains control of quality and service delivery and the client does not have to deal with separate law firms in contrast to a legal panel. There is a synergy and cultural fit between the participating organisations and a creative tension between the two or more separate firms; this leads to innovation and ultimately a service of continuous improvement.

The development of technology enables this arrangement to be seamless: all knowhow and precedents are shared; all documentation and reporting is held ­centrally and standardised; and all processes and systems are embedded across all parties. However, it is the trust, transparency and collaboration among
the firms involved that have proven to be the key ingredients for success.

The benefits do not stop with the client. In the case of Cripps, it goes to the heart of the firm’s strategy of attracting talented City lawyers to its Kent base by offering a ’work-style change’ without diminishing the quality of work. The morale of the ­people and their pride in the client list were key factors behind the firm’s recent listing in The Times’ Top 100 Companies to Work For 2010 poll.

Outsourcing work to other onshore law firms may sound like an anathema, but the Mexican wave model has shown the real benefit for all the participants. For the lead firm it provides the opportunity to retain and develop a happy client with an extended legal team able to handle work at the right level and at the right cost. For the regional firm it helps to attract high-­profile clients with interesting and varied work. And for the client it bestows the advantages of access to a larger legal team and the associated cost saving without the management headache that may be attached to a legal panel. Ultimately, it is
a win:win:win for all involved.