This is the second post in a five-part series dealing with Legal Waste and outsourcing strategies to overcome it. Many corporations and law firms have begun incorporating the cost- effective strategy of Legal Process Outsourcing (LPO) in order to break the cycle of legal waste at their companies. This post examines why unbundling legal services works to eliminate toxic Legal Waste for corporations and law firms.
Unbundling legal services is necessary because legal fees have hit the summit at a time when companies are being forced to take a closer look at the bottom line. Traditional law firms are guilty of gluttony because their legal rates have gone up 75% during a “great” recession when most companies are cutting operating costs and employees. These law firms compete with each other for high hourly rates, skyscraper office space, and revenue expectations that have become more a function of firms comparing themselves to each other for bragging rights rather than reflective of value of work done for their clients. This unjustified boasting swirls into a tornado of big law firm revenue expectations that must be fed by every client, whether or not the work truly justifies it.
Because of this Legal Waste, a shift is occurring in the way companies think about legal service. Several commentators have referred to legal services as a "bundle of twigs" that can be separated and broken down or decomposed into individualized tasks.
The doesn't read the
The doesn't play the
The doesn't throw the
and the doesn't design the
So why are corporations paying big firms to do it all at exorbitant prices? Specialists can always do the job more efficiently and better than generalists trying to cover all bases.
Companies are now in the driver's seat and can dictate how their legal services are delivered. Companies want legal costs to be predictable, and they want such costs to be decreased while at the same time maintaining quality or even increasing the quality of the legal work because the various tasks are now being performed by specialists at each step of the way. The time to unbundle legal services is now in order to remain competitive for the future.
Next up: How to unbundle.