We started outsourcing in 2008. The workloads were getting heavier and we couldn’t just throw more people at the problem. When you’re bogged down in work, it’s hard to take a step back and identify what you need to do to be more productive.
We set up a captive ALSP in India to delegate some of the high-volume projects. It worked well for a couple of years but there’s a downside to training smart people well – other companies want to hire them! We ended up spending as much time managing the attrition rather than getting the job done. Eventually we decided to work with third parties who were starting to make this a core competency and could also provide multi-site offerings and technology.
You learn as you go, there is a certain amount of trial and error. You can’t just throw work at a service provider and hope for the best. A successful outsourcing project needs the right scope and the same understanding on the service model. You need to pull together the underlying collateral and provide guidance on why and how to do things.
It’s actually great training for legal teams. We had to look closely at our workloads and projects to precisely define the types of services we wanted and how they needed to be delivered. That meant developing playbooks and articulating the ‘BT way’ of working properly to our service providers.
Contracts is the first obvious answer but I think there’s a complexity scale to take into account, both from a legal team and an ALSP perspective. When we decided to outsource contract negotiation, we started with procurement contracts – fairly straightforward and low risk. Progressively, and based on successful experiences, we added customer contracts to the mix with greater complexity and risk profile.
I think many lawyers use offshore resources for very simple things and don’t always consider how else they can use third parties. I see service providers more as an extension of the legal department. To get the most out of it, you need a clear understanding of your workloads and a robust triage system in place to allocate work to the right skill set. When your workload peaks and you end up having more work than people available, it’s essential to figure out quickly what you can push that to a third party and what needs to remain in-house.
I think ALSPs themselves have matured – their service offerings have become better defined and there’s a number of new companies from big players to more boutique offerings. However, the market itself is still very fragmented, especially compared to other sectors. Outsourcing has been part of the HR or finance landscapes for much longer and adopts a more well-defined structure; legal outsourcing and managed services are still at the beginning of this journey.
There’s still a degree of uneasiness which I believe boils down to risk tolerance and service impact. When you outsource, you hand over day-to-day control of something, which is still a bit alien, and if it fails, you are responsible. So I can see how people might be nervous about it. The other factor is that corporate legal functions tend to live in the moment – work never ends nor loses its urgency so there’s little time for reflection.
However, I think these barriers can be overcome with careful management. It requires a degree of reflection and thought about questions such as how can we become more focused and efficient? Where did we start, where are we and where do we want to go? Every legal function needs a plan that shows what it aspires to be and how it can support the business in the best possible way. That means identifying and investing in data and metrics, reporting and process definition.
It might not sound very exciting to many in-house lawyers but if they are not happy with the service currently being provided, it can only change if they work it out – failing which, someone else might make that decision for them. That’s where change management comes into play; it’s incredibly important to understand how to communicate change, how your internal customers will feel about it and whether they buy into what you are trying to do.
At BT, we’re lucky to have a centralized legal ops team supporting all the various legal teams in BT. In theory, given the size of our legal team, each division could do their own thing so the legal ops team helps identify and drive consistency across the board.
The first step should be a review of the current operating model to identify if it helps the business succeed. That means looking at third party supplier management, tech adoption, how legal spend is being undertaken and what the legal departments service model is. It helps get an in-depth grasp on what people do, how they do it, what they spend, so you can better identify what they could do differently.
I see legal ops as the enablers for a corporate legal department to achieve its strategic goals. It requires a holistic approach to the legal department and a broad skillset. They can really help communicate the ‘why’ and how any change will be managed and implemented, which is crucial if any change programme is going to work.