Service Sourcing: The Deconstruction of Legal Technology Service Delivery

Steven M. Novak, Chief Information Officer, Bingham Greenebaum Doll LLP

Many firms over the last decade have expended significant amounts of time, money and resources to build global technology and operations centers around the world to support the globalization of legal service delivery. I liken the legal technology build to the Industrial Revolution of the late 18th and 19th centuries. Firms of all sizes have implemented leading edge technology and capabilities with expert staff and support from consulting agencies. All of the investment and spend was supported by the ever increasing hourly rates for legal service and increasing demand and growth of legal services.

Those times have dramatically shifted to a legal profession we now find in a position of over capacity as well as continued hourly rates pressure and a drive for efficient delivery of legal services. Also, in-house lawyers have taken on more responsibility and legal work as a mechanism to control outside counsel costs. Just as the industrial age eventually came to an end because of the changing demands of the economy, the legal industrialization and building of monolithic legal technology operations for law firms is following the same trajectory for many of the same reasons. The nature and needs of the clients have changed as well as the market dynamics as more legal services are being provided by nontraditional sources such as accounting firms, consulting firms and subscription services via the internet.

The Service Sourcing approach requires a mindset change from “we can build it” to “what is the most cost effective methodology to source a service, such as email and support

Now is the time for legal IT to embrace the shift and chart a new path, Service Sourcing. Does the attorney really care that the equipment and software that are required to deliver email services be located in the firm’s data center or the individual providing support is sitting down the hall? What is most important for the attorney is that the email service is available at all times of the day or night and the communication with the client is swift and reliable. This is just one example of a service that is readily available, cost effective and secure via a third-party service supplier.

The Service Sourcing approach requires a mindset change from “we can build it” to “what is the most cost effective methodology to source a service, such as email and support. This concept can be extended to other key capabilities such as document management, remote access, financial management, document drafting, business development, collaboration and messaging, to name a few. The conversation needs to change from a focus on technology to a focus on services. The question that should be asked and answered: what are the key service capabilities required to enable the lawyers to deliver value aligned legal services to the client?

What is required to evolve information technology as well as the other functions within a law firm into a service delivery organization? There will need to be an evolution of in house skill sets from a technical expertise with hands on skills to resources that are practiced in the business arena with service selection and service management skills.

The benefits of pursuing a Sourcing Strategy are many, but the key benefits will drive innovation, speed solution and capability delivery as well as reduce fixed costs. This approach will align overall costs with business activity and be accretive to operating margin. With the current monolithic approach, technology planning is always a “best guess” on the direction for the business because of the long lead times to procure and build systems with the associated hardware, software, security and people. With Service Sourcing you are able to flex the service in any direction, up, down or even sideways to meet the ever changing business needs of the law firm.

Service Sourcing allows for rapid solution or capability delivery because the service leverages outside expertise that are experts in their respective field and are focused on a particular area day in and day out. Also, the service provider captures the institutional knowledge across their customer base. Those learnings are brought to bear and can be leveraged by the law firm. No longer is the firm burdened with “recreating the wheel” for each and every project or new capability. From a startup perspective many Sourced Services only require standards based security and an internet connection in order to get started.

While Service Sourcing is the way forward, it is not panacea. Before going down the path of Service Sourcing, one needs to understand the dynamics and risks with the approach. Data security and privacy are always top-of-mind and should continue to be a priority with Service Sourcing. The security challenges with a service are different than in-house systems and capabilities so a thoughtful approach and plan is warranted in order to provide the necessary protections. In most cases a service provider can bring to bear significantly enhanced security capabilities because of the scale of the service and depth of expertise.

The other aspect of Service Sourcing that is critical to manage is the cultural change for both the staff and legal practitioner. In the service driven model, gone are the days where projects and new capabilities take 18 months to deliver. The speed of change can be swift which requires a dynamic cultural shift to embrace change and continuous learning. Training will become paramount as the capabilities evolve at an ever quickening pace as new features and capabilities are added.

At the end of the day law firms will need to innovate in order to compete and stay relevant in the legal services market. Service Sourcing will drive operational and practice innovation in the legal services market and provide the strategic platform for future success.