Research update: Contract attorneys and outsourcing, Part 2 of 2
In Part 1 of this series we focused on successful uses of contract attorneys and outsourcing, but not all experiments in this area have ended happily.
Some participants reported that their experiments in the area had been failures:
Although we haven’t given up on them, we’ve not been successful in using lower cost associates, contract associates, or alternative track associates that give us a lower cost. There was a time when we thought that existing associates might like it if we took the demands of being on the partnership track off them, gave them a lower salary, and charged a lower rate for their work. The reason it hasn’t succeeded probably has a lot to do with people thinking they’re in the realm of second-class citizenship. Now we have more of a focus on hiring people who have the expectation of not being on the partnership track. But I think we labored under the misimpression for a couple of years that it was something that may be attractive to our existing associates.
We had a two-year experiment with the use of contract lawyers in India to lower costs. It failed.
As a result of our client interviews, we heard a lot of clients complain about our competitors who use contract lawyers. Probably the most common complaint is that they are not well managed or well supervised and that the quality of the work is extremely poor. So while the price may be low, so is the value.
Some still on the fence
We haven’t committed to it big-time yet. I think we’re open to contract attorneys. We know what the ethical standards are. For example, say we want to use somebody from India. We’ve studied what our ethical obligations are, and we know we’re going to meet those ethical obligations. Are we at the point yet where we’re ready to do a lot? No, not yet. But we are seriously considering coming up with a new category of attorney who is not on partnership track, who would be considered a contract attorney. We’re talking about hiring some younger kids and maybe bringing them in for three years as sort of an apprenticeship program, paying them less, billing them out at less, and letting the winners rise to the top.
We have some lower cost offices where it might make sense to do some of our commodity price work more efficiently and build a little warehouse of attorneys who can kind of churn through the high volume stuff, but we haven’t done anything like that yet.
Clearly, the idea of lowering costs through contract attorneys and outsourcing is here to stay. Although contract attorneys and outsourcing account for just a small percentage of annual law firm work, they can have important implications for a firm’s flexibility and bottom line. Like other tactics described in this chapter, this can lead to greater efficiency, client satisfaction, and profitability.
However, everything has costs and risks, and outsourcing work raises a number of new management challenges. On August 3, 2011, the Wall Street Journal published an article entitled “Objection! Lawsuit Slams Temp Lawyers.” It reported on a case in which:
J-M Manufacturing alleges that McDermott Will & Emery failed to adequately supervise contract attorneys who inadvertently produced privileged documents to the government… While this may be the first eDiscovery malpractice lawsuit specifically dealing with the lack of supervision of contract lawyers, it surely won’t be the last.
As of this writing, that case has not been resolved, but it has focused attention on the need to manage contract attorneys and outsourcers to assure high quality. (For more on the topic, see our 2 blog posts on Managing Outsourcing and eDiscovery.)