What is Your LPO Strategy?
A few months ago, a major international bank announced that it would cut its law firm roster by 10 percent. This may not seem significant at first glance, but it is the continuation of an ongoing trend towards Legal Process Outsourcing (LPO). The bank has a reported market cap of nearly $35 billion and deals with a wide variety of banking activities throughout the world, including mortgages, pensions, wholesale banking, insurance, and wealth management, to name a few. The announcement that it will be cutting back its legal budget shows that it’s not just small companies that are focusing on savings. Even Global 100 corporations are cutting back on legal costs.
The bank reportedly has notified all of its current firms that they will have the opportunity to pitch for the remaining legal business. The goal is to reduce the number of core firms it works with and lower the outgoing legal expenses. The bank’s list of firms includes firms at the top of the Am Law 100 and Magic Circle firms.
Those firms that can swiftly and effectively cut costs for the bank will remain with this major client. Those firms that cannot do so might be shown the door. Many of these firms will tighten their belts and cut into margins in an attempt to keep the bank on their client list. The smart firms, however, will find they can dramatically cut costs by effectuating their LPO strategy, which they hopefully already have in place. Outsourcing repeatable tasks that don’t require legal opinions, such as billing, e-discovery, document tracking and filing, medical and legal research, secretarial services, and negotiation support, will drastically cut these firms’ costs. The smart firms will know this and will already have an LPO strategy in place. They will efficiently be able to cut their costs and, in turn, pass those cost savings on to the bank, saving themselves a very large client in the process. Firms without an LPO strategy? It’s likely they’re about to lose a substantial portion of their business.
So what is your LPO strategy? It would first be beneficial to more fully understand the LPO business model. After that, it’s time to develop an LPO strategy of your own. It’s time everyone realizes that the days of endless legal billing are over. The benefit of using outside non-firm firms to assist in legal undertakings could be the difference between retaining a large client and watching it leave you by the wayside. Don’t give your clients the opportunity to cut you because you don’t have an LPO strategy in place. Put an LPO strategy in place today.