Law Firms Need to Outsource to Fight New Entrants Head-On, but Many are Failing to Act, Survey Reveals
UK law firms believe that outsourcing business and legal functions will help them fight off competition from new entrants but many are failing to act, a survey reveals.
Apathy and arrogance among lawyers is being blamed for the lack of action by many to explore the massive cost-saving opportunities presented by outsourcing back office functions such as HR, marketing and IT.
The Legal Services Act, which comes fully into force next month, will open up the UK legal market by allowing non-law firms to provide legal services for the first time.
A number of household names, including Tesco, WH Smith and The Co-op, have already signalled their intent to launch into the market. Many smaller firms will find themselves competing against the might of these high street giants for legal work.
A survey by legal referral network, Connect2Law, found that only 11 per cent of law firms view the Act as an opportunity.
The survey revealed that more than three quarters - or 77.3 per cent - believe that outsourcing business processes will help them compete with the back office resources that the new entrants have at their disposal.
Yet despite this, only half - 51.8 per cent - has outsourced any back office functions. Of those that had, the majority has only tentatively dipped their toes in the market and outsourced minor functions such as payroll and typing.
Business Process Outsourcing (BPO) involves the outsourcing of back functions such as finance and accounting and front office customer-related functions such as contact centre services.
While lawyers have begun to see the benefits of Legal Process Outsourcing (LPO) - where larger firms farm out more routine legal work to third-parties, or smaller firms in legal networks outsource work where they haven't got the expertise - the legal profession as been slow to embrace BPO.
However Charles Layfield, Head of Connect2Law, said: "Outsourcing business functions will be the key to survival for many firms in the new legal landscape and the dynamic ones recognise the huge advantages it offers - mainly reducing their cost base enabling their business to grow.
"However, there is still reluctance by many lawyers who arrogantly assume they can do everything from IT to marketing.
"Lawyers need to recognise that while they might be good at the law they are not business people. There are people out there that can do it much better!
"Law firms have had it good for many years but times are changing. New entrants are on the horizon and to survive firms need to be more efficient - the solution is outsourcing."
The most popular areas for future outsourcing from law firms were marketing (43.2 per cent), IT (33.2%) and HR (26.3%).
The survey also revealed that 85 per cent of firms said that joining a legal support network would help them meet some of the challenges from the LSA.
