Large Law Firms Will Rethink the Operating Model Post Crisis

Controlling Cost in and after the Crisis with Outsourced Document Processing

As large US and UK law firms adapt to a lockdown that will last weeks or longer, they must start to think about what comes next. Of course, urgent client work comes first. But many firms already have cut costs (including lay-offs) with revenue down, or in anticipation of it being down. 

Now is the time for smart law firm management to consider structural cost savings. This post explains how document processing outsourcing is a fast and easy way to control cost and gain operational flexibility. And both cost control and flexibility will be critical as law firms contend with and then emerge from the crisis.

We are the Beginning of the Middle., In the early days of the crisis and lockdown, firms rightfully focused on helping lawyers and staff set up to work from home. By now most lawyers have learned the needed skills and adapted. With the ability to operate remotely in hand, management must now consider the next set of crisis-related issues: controlling overhead costs on a sustainable basis.

Many Firms Have Taken Painful Cost Cutting Steps. Already, the crisis is creating visible and painful signs of severe cost concerns. As of the time I wrote this, over three dozen medium and large law firms in the US and UK have cut costs to conserve cash because of the crisis. These cuts are emergency measures that address neither structural costs nor longer term support requirements. And the cost problem will likely grow worse. Client pressure for value – discounts, lower costs, and fixed fees –  will only grow with so many companies facing deep financial challenges. Law firms will feel that pressure.

Smart Management Will Act to Control Costs Sustainably. Now is the time for management to reduce overhead and gain operating flexibility. Some options, for example, building a low cost service center, take too long and entail too much commitment and risk during economic upheaval. But the key to mid- and long-term survival and prosperity are more considered structural shifts.

Fast and Lower Cost Options Include Outsourcing. Outsourcing has long been and remains a viable option to reduce cost. And it can happen quickly. Many law firms have long outsourced mailrooms and copy centers. Many also outsource aspects of information technology, from network support to application development. On the marketing side, some firms outsource competitive intelligence and most retain consultants or agencies to redesign their public facing website. Firms facing cost pressures should consider outsourcing business support services. In fact, quite a few already outsource support, including document processing. That is a sustainable cost cutting approach.

Outsourcing Also Offers Greater Flexibility. Outsourcing to a lower cost location not only reduces law firm cost, it also gives management great flexibility, especially in a time of uncertainty. Outsourcing providers are built to flex teams up and down as demand changes. That type of flexing is much harder for law firms because of both how US and UK labor markets operate and firm cultural considerations. A good provider can start work in days or weeks. Especially with the uncertainty not just of the immediate crisis but its aftermath, management should seek solutions that can scale up or down without further pain.

The Secretarial Job Will Likely be Scrutinized. I have long worried about the future of legal secretaries. (For example, see my 2003 article The Future of Legal Secretaries — Working Groups?) The advent of PCs and the wide adoption by lawyers in the mid-1990s caused massive changes for secretaries and document processing. Those trends continue today. A BigHand and ALA survey released in early 2020, Managing legal support staffing in a world of increasingly constrained supply and evolving demand, found that “proactive firms are aiming to achieve a 10:1 attorney to support staff ratio; yet 17% are still operating on a 1:1 or 2:1 basis.” The current ratio of lawyers to secretaries is 3:1 and in a roundtable, many firms said they expect it to move to 5:1. The study also found that many experienced secretaries will retire in the next five years. In our view, the crisis will accelerate this trend significantly.

Even With Fewer Secretaries, Lawyers Need Document Processing. As the study indicates, traditional secretarial staffing is already in question. Cutting secretaries, however, without other steps, may result in lawyers spending too much non-billable time on editing and formatting documents. The answer is not keeping secretaries, It is adding document processing capability with outsourcing. The advantages of outsourcing include fast ramp-up, lower cost, and flexibility to change team size without the headache of hiring – or laying off. 

Cenza is a Proven Choice for Document Processing. Cenza offers proven law firm document processing. We have been in business over 20 years and have over 10 years of legal word processing and document processing experience, including working with MS Word and a wide range of add-in tools. We support an Am Law 50 firm and other customers and have passed the most stringent security audits.

Ron Friedmann

Ron Friedmann

Ron has assisted law firms and legal departments to increase profits by improving practice and business management with knowledge management, process improvement, technology, and outsourcing. Ron writes the widely-followed Strategic Legal Technology blog, an ABA Journal Hall of Fame blog.