Best Practices in Law Firm “Business of Law” Merger Integration
LegalShift’s consulting services are largely focused on operational improvement. However, based on our team’s broad experience, law firms and law departments approach us to help them review and save contractual costs. Spend categories for these services have evolved to include:
Law Firm Operations
Law Firm Technology
|Legal research contracts spend reduction and library efficiency||Telecommunications cost reduction|
|Middle and back office managed services spend reduction||Technology (IT) spend reduction|
|Gas and electric fees reduction||Print/copier equipment and managed services cost reduction|
The following case study is intended to highlight a recent law firm success.
AUDIT OBJECTIVE: LegalShift was hired by the new COO of a large law firm to perform a Back-Mid Office Services and Technology Software and Services Audit, scoped to include a variety of administrative services and technology contracts that were hand selected by the Firm.
Background: In the areas defined by the client, the firm was spending approximately $4.5M annually, in contracted back and mid-office services, software, hardware and technology services including telecommunications services (wireless, wireline and conferencing).
AUDIT DISCOVERIES: When reviewing the invoices, contracts, service level agreements, headcounts, utilization, etc., LegalShift discovered the following:
- Billing errors by providers
- Expired contracts
- Client was paying above-market rates
- Delivered services were, in many cases, substandard
- Auto-renewal clauses without limits on annual fee increases
- Contract minimums above actual consumption
- Heavier staff coverage than required to meet Service Legal Agreements
- Zero-usage mobile devices (being billed at full monthly fees)
- Inefficient processes relating to invoice validation and processing (e.g., paper bills, unconsolidated bills and manual bill review, G/L cost allocation, inputting of invoice data, tracking of contract expiration dates, processing and payment of bills)
RESULTS: LegalShift delivered a one-year cost savings of over 30%, totaling almost $1.4M. Four- year savings total approximately $5.2M. First year savings breakout, alone, can be found below:
- $700,000 (43% savings) in copy, mailroom, print related services, software and hardware
- $120,000 savings on expensive financial software licenses and subscription fees
- $170,000 (13% savings) of optimization savings and credits due to telecommunications billing errors
- $95,000 (15% savings) of optimization and contract savings
- $100,000 savings switching conferencing service providers
In addition, LegalShift continues to expand its review scope with further savings to be identified.
NOTE: Importantly, the results had no negative impact on the Firm’s lawyers, while service levels and solution capabilities improved across the board.
For more clarification, please contact us at www.legalshift.com.
Developing and maintaining a high-performance information technology function within a law firm is a bit like the game whack-a-mole: Just when you think you have hammered a component of your operations into place, another area pops up demanding your attention. The path to achieving operations excellence is not for the faint of heart.
Base IT operations practices vary by law firm, but every law firm IT function should include a focus on applications, infrastructure and computing, client support, technology risk management, IT business management, IT project/program management, and other elective administrative areas. What does each practice cover, and how is the changing legal landscape affecting their focus?
- Applications: The applications area includes IT practices that span requirements identification, selection, design, testing, implementation, management, maintenance and expert support of the software applications leveraged by the firm’s lawyers, administrative team and often clients. This can also include application packaging and development and database management. The adoption of cloud-based and SaaS software applications and the flexibility they provide will continue to reduce desktop and packaging practice requirements. Cloud-based applications will cause the desktop environment to become less customized, which will reduce the focus on some applications testing and packaging practices. Based on this sea change, applications practices are morphing to include a strong focus on vendor management practices. Understanding applications and the analysis of requirements will continue to be strategic practice sets for law firm IT functions. In addition, a subset of the firm’s software applications and associated responsibilities normally found in the applications and program/project management areas may now exist within knowledge management in firms that have a separate knowledge management function.
- Infrastructure and Computing: This area encompasses requirements identification, selection, design, testing, implementation,management, maintenance and expert support of the desktop environment, networks and storage, access control, and overall hardware and software infrastructure leveraged by the firm’s lawyers and administrative team. Also included are practices related to data center management, IT backup and recovery, and overall systems monitoring. As cloud adoption drives the evolution of today’s operations practices, the legal market will reduce internal reliance on and investment in traditional infrastructure practices. That migration work could occur over the next three to seven years with a continuing internal focus on high-level system engineering and systems integration practices being owned within the IT function. Vendor management practices are quickly evolving as importance grows.
- Client Support: Client support includes the IT help desk, desktop support and user technology training. The past decade of outsourcing help desk, desktop support and client support has yielded mixed results. Some firms have outsourced everything, some use outsourcers only for after-hours support and others use third-party providers for weekday support. One newer trend is for some members of the outsourced team to physically resident on a client’s site as a hybrid outsourcing model, though the financial commitment makes this option less attractive. Training practices are evolving. Technology training is most often owned by IT, but some firms share responsibilities between IT and human resources. Most firms do not provide incentives for lawyers to attend training, so firms are adopting a combination of deskside, classroom, “genius bar” and self-service training (virtual or recorded).
- Technology Risk Management: Technology risk management relates to compliance, cybersecurity, business continuity and disaster recovery, and overall business risk management. Law firms have experienced a disruptive focus on risk management practices over the past eight years. Firms have been forced to develop strong practices in many places where none formerly existed, and more firms are recognizing the strong link between technology risk management and the firm’s overall risk management function. Firms are building a matrix structure where operational practices are jointly owned by both IT and risk management (or the office of the general counsel).
- IT Business Management: Business management covers shared business services within the IT function, including but not limited to procurement, fulfillment, financial reporting and vendor management. These operations practices have been owned by the IT leader, but many are recognizing that structured policies, processes and tools are required.
- IT Project/Program Management Office: The project/program management office is involved in the solution delivery life cycle. This includes business analysis practices required to align the firm’s user community needs with IT. Corporate America has long recognized the value of having good program/project practices to ensure project success and to manage resources, costs and time lines. Law firms have toyed with these models, with few recognizing their full potential. Strong pressure from both clients and internal shareholders is creating a renewed focus on these operations practices. Law firms are experimenting with similar practices (i.e., legal project management) to support the delivery of substantive legal engagements, which should further spur the use of internal practice sets. In some instances, IT’s program/project management practices (and organization) have been co-opted by the firm’s administrative management, as there is an increasing understanding that these practices have applicability outside of IT.
- Other Elective Administrative Functions: Depending on the scope defined by the firm, the IT function could also own and manage knowledge management, library or legal research, litigation and practice support, records and filing, and new business intake and conflicts. Firms that do not have a formally defined knowledge management function have recognized the value of having business analysts and analysis practices to ensure the firm’s legal and administrative practices (e.g., practice group chairs, line lawyers and administrative areas) are aligned with the IT function and vice versa. These analysts bring solutions to the practices and ensure that the IT function is responsive and aligned to business needs. Firms with knowledge management functions typically subsume the business analyst practices under that function. A high-performance IT function in a law firm will address all of these operational areas, identifying how operations needs and practices must adapt to the everchanging legal landscape. The firms that have made the most progress on this journey have focused first on assessing their current state and then on prioritizing the IT operations practices they believe will provide the most value for their firm’s business.
Dan Safran is President/CEO at LegalShift, LLC. His is former EVP at Project Leadership Associates heading its Legal Vertical as well as its Managing Consulting practices. Prior to this, Dan was President of Project Leadership Consulting and has held a variety of President/EVP/COO and Global CIO roles over his 32 years of work experience in both the legal and corporate business sectors. Dan spent the first nine years of his consulting career at Arthur Andersen/Andersen Consulting (now, Accenture). Dan can be reached directly at (312) 560-8932 or at email@example.com.
This article was first published in ILTA’s Spring 2017 issue of Peer to Peer and is reprinted here with permission. For more information about ILTA, visit www.iltanet.org.