Survey shows law firms’ outsourcing apathy

NORTH West 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.

Research by Manchester-based legal referral network, Connect2Law, polled 169 smaller firms in the region, and found that few were taking advantage to save costs by outsourcing back-office functions.

Connect2Law is a subsidiary of law firm Pannone and helps smaller firms, with 10 partners or les, offer their clients a full service.
 
It conducted the research ahead of the Legal Services Act, which comes fully into force this month, and opens up the legal market by allowing non-law firms to provide legal services for the first time, and external investment into legal businesses.

Major retail and financial services brands, including Tesco, WH Smith and The Co-op, are set to launch into the market. Many smaller firms will find themselves competing against the might of these businesses for legal work.

The survey found that only 11% of law firms view the Act as an opportunity.

It revealed that more than three quarters, 77.3%, 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, just over half , 51.8%, has outsourced any back office functions.  Of those that had, the majority has only tentatively entered the market and outsourced minor functions such as payroll and typing.

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 %), IT (33.2%) and HR (26.3%).