As challenges come in waves, resilience is vital for sustainable transformation.
Bearing in mind that challenges come in waves (as we’ve seen with this pandemic) and that they lead to new questions, progressive in-house law departments have started to reconsider their strategies, focusing on a more efficient and resilient approach that focuses on legal operations management. Legal managed services (LMS) respond to many of the needs and challenges arising in our VUCA environment and empower the legal department to transform legal services.
LMS is a service model that involves the outsourcing of processes, data and technology, together with highly specialized providers, in view of supporting clients with their businesses needs allowing operational efficiency gains and cost cutting. The advantages of using non-traditional law firm legal service providers has already long been recognized. Today’s difference is that, beyond typical legal deliverables, non-traditional law firm legal service providers have reframed to perform new, consolidated and specialized matters, ultimately optimizing their mixed portfolio of outside counsel.
Overall, managed service providers support corporations and law departments, preparing them to flex and adapt to a whole manner of events – some of which can be predicted, and some not. Those in-house law departments that are resilient and focused on managing transformation proactively are the ones that will be better prepared for whatever comes. In fact, progressive law departments are already using managed services and reaping the benefits. EY’s Reimagining the Legal Function Survey shows that law departments which use LMS more extensively are:
- More cost effective
- More confident about improving efficiency in the future
- More confident in their ability to respond to geopolitical and regulatory changes
- More confident they have built the right set of capabilities within their department
- Better able to attract and retain talent
Legal managed services also ensure access to modern technologies as well as consistent and multilingual expertise, improved continuity planning and efficient execution.
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A key motivating factor for organizations seeking alternative working models, the cost savings benefit is intrinsically connected with expense optimization. The impact of LMS stems not only from the immediate benefits they deliver, but also because they allow law departments to continue increasing efficiency and reducing unit costs in the future.
This recurring benefit is essential if businesses wish to sustain cost reduction. Businesses in Europe plan to reduce costs by 9% on average, while in North America ambitions are even higher at about 13% on average.
The larger the headcount, the greater the planned costs reductions. This can be achieved using LMS to optimize internal processes. At scale, the effects are even more impressive. LMS usually bring about data, technology and process improvement to every engagement. The allocation of the right resources, time and staff at the right project impacts efficiency almost instantly.
Alongside processes and data, technology is key to managed services. The close partnership between the service provider and the client allows a suited and consistent transferring of technology, which immediately impacts the work routines and brings openness to future technological automations.
Finally, legal managed services, as the name suggests, focus above all on planning the continuity and completion of legal corporate tasks, by creating and clearly communicating short and long-term legal roadmaps that indicate the steps to be taken to better prepare for future challenges.
Summary
It has been widely discussed – more than even since the coronavirus pandemic – how business can better handle the uncertainties and complexities of a world characterized by volatility, uncertainty, complexity and ambiguity (VUCA). Countless articles have been published promoting alternative (and better) ways of coping with new challenges in the new normal. Against this background, managed services for legal departments is emerging as a positive way to respond to the disruption in legal and financial services.
Many thanks to Ana Carolina Brönnimann for her valuable contribution to this article.
