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Is legal services outsourcing a serious threat to your business?

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Mackenzie McCarty | 10 Mar 2014, 08:00 a.m. Agree 0
A new book published in the UK suggests legal services outsourcing poses an imminent threat to law firms and in-house counsel across the globe. But is it a direct threat to the New Zealand market?
  • Rob Knowsley | 12 Mar 2014, 10:16 a.m. Agree 0
    Interested in Martin Wiseman's reported comment that NZ is largely immune. It's not much different to Australia, and Australia is certainly affected, both in terms of the competition and the benefits offered.

    There may appear for example to be less pressure in terms of many areas of wages being lower in NZ, and the gap therefore between internal wages costs and out-sourcing costs being smaller, but in my experience fees are often considerably lower in NZ.

    The benefits of out-sourcing are potentially huge, and they range well beyond direct costs savings per hour or per item.

    As one small example, if a firm presently juggles availability of support staff in normal times, at seasonal peak load times, and at times of staff illness or critical urgency, unacceptable pressures can fall on those available, and turnaround and quality can be impacted.

    However if a good slice of the normal work has been going to a reliable provider it is extraordinarily easy for them to absorb sudden additional load.Their people resources are immense and they can speak and write good English.

    Work is usually turned around faster and with quality at least equal to your own staff...and considerably cheaper.

    Importantly you don't do the juggling of schedules.

    If a contractor offshore has one of its people with a sick pet dog and can't do overtime (or normal time), it's not your problem and certainly will not affect your turnaround speed.

    Watch these is not at all uncommon in Australia for Corporates requesting tenders for work to include a raft of "must answer" questions about how tendering firms use LPO.

    Too often I hear NZ firms complaining about competition and "silly" pricing by competitors. There's always a firm that is desperate enough to do a job for less than you, but at present it usually means they have even less profit margin than normal.

    With considered use of the wide range of LPO solutions you have options to significantly reduce your costs, and not all of that must be passed on to your clients.

    In a real Win-Win you can improve value for money to them and still retain some of the improved profit margin for the benefit of your own business, and all stakeholders in it.
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