During recent years, the nature of Professional Services procurement has really evolved. Professional Services buyers are under increasing pressure to improve the quality of the service provided, while also having to come up with innovative ways to reduce costs to the business. Nowhere can this be seen more clearly than in Legal Services, where we are seeing increasingly creative operating models being explored all the time.
Legal Process Outsourcing (LPO) has been a common practice for many years amongst organisations seeking to delegate routine and volume work tasks to third-party businesses who can do it more economically. Lower costs are normally achieved because the work is carried out in parts of the country or world where labour is significantly cheaper, and by businesses that carry out similar work for numerous clients, benefitting from the economies of scale in doing so. In this model, a business will retain their in-house legal team who are freed up to spend more time focussing on the larger and more complex issues facing their business. Despite the clear commercial benefits of employing this approach, the transactional nature of this arrangement can result in client nervousness and issues around quality and control.
A growing trend in the Legal Services market has been towards the outsourcing of much larger areas of legal work to traditional law firms; not using a panel of legal providers for support, as many organisations have been doing for decades, but instead through the formal outsourcing of in-house teams into external law firms to provide the service on their behalf. In recent years, there have even been examples of entire legal departments being outsourced to a selected law firm as part of a strategic, long-term arrangement. High profile examples of this can been seen at Thames Water, who have recently entered into a 7-year partnership with Eversheds Sutherland following a previous arrangement with Berwin Leighton Paisner, and at Communisis PLC who partnered with the same firm for a similar deal in 2016.
Owing to the increasing demand and interest in this model, we have seen the emergence of specialist businesses whose raison d’etre is exactly this; to simplify and improve the delivery of managed legal services, while improving consistency and reducing costs. A notable example of this is Yuzu Law, which was established by a former in-house General Counsel to challenge the status quo and modernise the general approach to legal service delivery. This is a need which is recognised and shared by many in the legal sector, and which makes it unsurprising that Yuzu Law has recently gained significant investment from the leading international law firm Pinsent Masons to develop the proposition even further.
So, what are the benefits?
- Cost reduction and cost certainty over time
- Improved quality and consistency
- Retention of the in-house lawyers that your business knows and trusts
- A modern, innovative approach to service delivery
So, how can we help?
At 4C Associates, we regularly carry out reviews and assessments of the effectiveness of third-party spend for our clients and understand how we can optimise value for money through the development and implementation of creative and transformative delivery models. Considering the speed of change currently taking place across the Legal Services market, the opportunity to benefit from embracing this change is significant. If you would like to know more about how we can support you with this, we would be delighted to hear from you!