Today, clients are spoilt for choice for legal solutions. It is a buyers’ market and they’re shopping around to ensure that they find the best possible quality solution at the right price. Until recently, clients with a legal issue or matter could either send it to a traditional law firm or handle it in-house.
Different players are emerging - offering a wide range of legal solutions (e.g. contract lawyers, legal consultants, document review services, LegalTech platforms, managed legal services, and hybrids of any of these). In-house departments have grown, are becoming more sophisticated and have higher expectations and demands from their external legal solutions providers. The rise of managed legal services or the contracting out of a part or whole of a legal function to an independent legal service provider is very much a part of this growing trend. This trend will only continue to rise in popularity among General Counsels (GCs) and will drive significant changes in how the legal services industry structures and provides solutions to clients.
Globalisation, rapid advancements in technology, and economic pressures (internal and external) are driving GCs to expect more from their external advisors. This has created opportunities for new entrants - such as NewLaw providers, the Big 4 and others - to enter the fray and act as a disruptive force in an environment that has traditionally been dominated by law firms (big, medium and small).
In recent times, managed legal services has emerged as a popular service model for GCs being asked to do ‘more with less’. Managed services have been widely used in technology companies and projects; it is now impacting the legal sector. You can see why – it enables clients to quickly and more cost-effectively tap into rich technical expertise or additional capacity by focusing on deploying the right resources to the right project at the right price.
What’s driving this change?
GCs, at least those that are more receptive to change, innovation and of a better way of doing things, are frustrated with the traditional law firm model. Increasingly, they are turning to alternative providers as a way of extracting maximum value and impact from ever-shrinking legal budgets. And they will reward those that can provide better solutions by engaging them on various projects, including strategic ones.
GCs have a lot on their desks in terms of the types of legal matters and complex issues they’re asked to advise on by their own internal clients. These don’t fit into neat categories of commercial, employment, tax, IT, IP, etc. They’re also increasingly involved in overall strategy considerations of the business, often working closely with the Board. GCs are under enormous internal pressure from their own CEOs and CFOs to find more time and cost-effective ways to process legal tasks, manage risk and demonstrate they can add value to the business. That’s where managed legal services come into the picture.
Even if some GCs might prefer to stay with their traditional notions of quality – top law firm brands – they’re also willing to experiment with alternatives. This is particularly common in areas where GCs and in-house teams simply don’t have the bandwidth or expertise, where they have a higher risk appetite (e.g. document review and drafting of standardised contracts, repeatable high-volume work, etc.) or in areas where the law firms either don’t have the relevant experience or expertise. Or they have simply elected to not advise in that area because it doesn’t give them the cache or volume, they need to make the offering commercially viable.
A managed legal services provider, using its real-world, practical experience can fill this gap, quickly add value to the business of the client and provide services which are complementary to those provided by the law firms, at a more competitive price point.
Different models of managed legal services
So, you might be wondering ‘what are the key differences between managed services and typical outsourcing’? Some of the key differences are outlined below. In the current market, there are a variety of different service models for providing managed legal services to different classes of clients, depending on their unique needs.
These can generally be classified into the following key categories:
Regional / geographic coverage - provide support for clients who don’t have a substantive legal presence, team or capabilities in a particular geographic region;
Expertise - provide technical expertise or experience in certain specialised areas of the law (e.g. employment, technology/IT contracting, IP, payments/remittances and other financial services regulatory, financial crimes compliance, risk management, etc);
Volume work - high-volume, lower risk legal, regulatory or contractual projects (e.g. response to request for proposal (RFP) processes, review of high-volume transaction due diligence documents, etc); and
Repetitive work – where repetitive contracts and standardised playbooks, can provide support to allow legal team to focus on more high-value strategic legal matters.
How do these service models work in practice?
The key to these solutions is collaboration, as well as the effective use of project management, technology integration and the adoption of lean management systems and processes, to drive greater efficiency and accountability in the execution of projects. In the first category noted above, the managed legal services provider acts as an extension to the client’s in-house capabilities in a geographic region by supplementing their home-based team by making available consultants on the ground in the region. These consultants not only provide the hands-on, same-time zone support needed by the local business and operations teams, but also provide local jurisdiction expertise, know-how and counsel that the HQ teams either do not have, or don’t have the capacity to service effectively. This can be in the form of providing support on RFP review and documentation, contracts review, drafting and negotiation, to specialist advice on employment law or IP matters. It’s this ability to tap into the regional capacity, coupled with knowledge of the local market and regulatory environment, that can help a client gain quicker access to new markets.
In the second category, the managed legal services provider works closely with established clients, as well as new entrants in different sectors to assist them to come up to speed on the legal and regulatory frameworks that may potentially impact the business and operations of the client, or that may be exposed to new risks that they have not previously faced. n example of this is where a managed legal services provider helps clients to build and execute on their compliance and risk management strategy by helping them to develop robust frameworks that address business needs and enhance decision making and compliance.
In the third category, through the adoption of technology, disciplined and streamlined processes, and by using standardised practices, templates, market playbooks and toolkits, managed legal services can help clients to handle to large volume, lower risk projects and activities without compromising on quality and accuracy. This enables additional capacity to be added at relatively low cost and risk.
Why you should consider managed legal services?
The outsourcing of legal services is not new. But, managed legal services as it’s developed over the last few years is a new solution, structured very differently from previous “outsourcing” services.
As a service model, it’s more considered and effective – and gives clients more bang for their buck – because it’s driven centrally from the clients’ own business objectives and needs. A managed legal services provider invests time and effort into understanding those objectives and needs and assembles a cross-functional team that works collaboratively (sometimes, cross-regionally) to co-design and deliver tech-enabled solutions. These solutions integrate technical expertise in specified areas of the law, regulatory affairs and government relations, project management, and change and stakeholder management. Together, they help businesses to solve some of their most challenging and pressing problems. And, in turn, giving them valuable access to new customer segments and markets.
About the Author:
Danh is currently General Manager for EMEA at the Asia-centric NewLaw legal consultancy, KorumLegal. He is focused on providing innovative legal solutions to businesses entering into and branching out of Asia. He is also an experienced senior commercial and corporate lawyer with over 20 years of global commercial practice experience across payments, financial services and IT/technology sectors. He has worked in global listed companies and in private practice on a wide range of matters including general corporate and commercial, financial services, regulatory and strategic risk and compliance. He also has extensive general management, leadership and business development experience.