Outsourcing: Odious or Out-of-the-Box?

A-2 Sunday, July 17, 200510:00 A.M. – 11:30 A.M.

AALL 98th Annual Meeting & Conference, San Antonio

Lee R. Nemchek, Morrison & Foerster LLPH. Larry Eiring, Thomson - EliteGanesh Natarajan, Mindcrest, Inc.

Catchy Phrases from the Past!

• “Death Knell for the Profession or an IdeaWhose Time Has Come?” – June 1995

• “Boon or Bane?” – July 1995

• “Crisis or Opportunity?” – May 2004

• “Panacea or Pain?” – October 2004

• “Odious or Out-of-the-Box?” – July 2005

More Plays on Words

• “Shelving the Library Staff” – July 1995

• “The Angst of Outsourcing” – April 1997

• “Avoiding the Ax” – October 1997

• “Out, damned source!” – January 2002

• “Outsourcing Outcry” – March 2004

Law Firm Outsourcing

• Reproduction and facsimile• Mail and internal messengering• External messengering and court services• Reception, housekeeping, food

service• Purchasing (supplies, equipment,

inventory management)• IT, including help desk, printer

support and telecommunications• Accounting (receivables, payables,

collections, billing)

• Litigation support and document management

• Graphics, desktop publishing, printing

• Marketing and public relations• Travel services• Security services• Human resources, including

payroll and benefits administration• Library and records management• Legal research• Secretarial and word processing

services

AND LAWYERING!

Decoding the Vocabulary

• Outsourcing: using any third party vendor to provide services previously provided by regular employees; vendor may absorb the firm's current staff and assets or may use its own staff and assets (or some combination of both); work may be performed on site or at a remote location (either domestic or overseas); sometimes referred to as strategic resourcing

Decoding the Vocabulary (cont’d.)

• Business Process Outsourcing (BPO): a fancy term for outsourcing any function engaged in by an organization that isn't its primary core business activity; for law firms, this means any function that is not the actual practice of law

• Select Sourcing: using multiple outsourcing vendors to provide certain services

Decoding the Vocabulary (cont’d.)

• Offshoring: outsourcing to a foreign country outside of North America; sometimes confusingly used as a synonym for SSC

• Onshoring: domestic outsourcing; limiting the scope of operations for SSCs or captive centers to North American locations, usually in smaller, underserved cities with untapped labor pools; sometimes referred to as rural sourcing; sometimes confusingly referred to as insourcing or inshoring

Decoding the Vocabulary (cont’d.)

• Near-shoring: outsourcing to Canada or Mexico; offshore vendors in countries such as India may subcontract critical work back to near-shore vendors to better serve US clients.

• Insourcing: taking back in-house functions that were previously outsourced; sometimes referred to as backsourcing; sometimes used to describe foreign-headquartered multinationals operating subsidiaries in the US

Decoding the Vocabulary (cont’d.)

• Home-sourcing: allowing workers to work at home as an alternative to setting up shared service centers; home-sourcers may be employees of the organization being served or may be employees of an outsourcer that is providing services to the organization; not to be confused with telecommuting

Decoding the Vocabulary (cont’d.)

• Transformational [out]sourcing:Re-engineering an existing process or function to improve performance and decrease cost; leverages third-party expertise for a limited period of time; long-term goal is for the organization to achieve self-sufficiency before the outsourcing contract ends; sometimes referred to as up-skilling

Decoding the Vocabulary (cont’d.)

• Facilities Management: onsite, outsourced management and staffing of non-core, back office functions; frequently marketed to law firms as a "bundle;" sometimes confusingly referred to as insourcing; not to be confused with the in-house law firm department that handles activities such as space management, physical plant maintenance, internal and external moves, etc.

Decoding the Vocabulary (cont’d.)

• Shared service centers (SSCs): can be onshore or offshore; may be integrated into the organization, organized as a separate entity owned by the organization, or entirely outsourced; sometimes confusingly referred to as insourcing; domestic SSCs sometimes filter work to offshore providers

• Captive outsourcing: outsourcing within a single company; one type of SSC

Decoding the Vocabulary (cont’d.)

• Co-sourcing: describes the practice of partnering with third-party providers to outsource selected tasks, functions or projects within a service department; usually pertains to an organization’s commitment to engage in a long-term partnership with a vendor; sometimes referred to as selective outsourcing or out-tasking

Decoding the Vocabulary (cont’d.)

• Best sourcing: sourcing from countries or regions that provide the best value; i.e., shopping around for the best deal. Can involve breaking a process down into smaller component parts in order to outsource each of the parts to whichever country offers the best value given the respective country’s skill sets, pricing, and the need for geographical diversification and risk mitigation; sometimes referred to as best shoring.

And the List Goes on . . . !

• Call centers• Operations centers• Support centers• Virtual contact centers• Contracting/Subcontracting Out• Legal process outsourcing (LPO)• Out-migration• Teaming• Vending out

Department Outsourcing Models

• Functional Areas - Library• Cataloging• Filing (loose-leafs, pocket parts, etc.)• Messengering; document delivery• Acquisitions (book and serial jobbers)• Reference (overflow)• Training

Department Outsourcing Models

• Functional Areas – Records Mgmt• Offsite storage• Confidential document destruction• Micrographics• Messengering• Imaging, including coding and scanning• Litigation support, including document

organization and reproduction

Department Outsourcing Models

• Projects – Library & RM• Data entry and clean up for system

conversions• Physical processing for system

conversions (relabeling, bar-coding)• Inventories and shelf reading• Pull-and-shift (weeding)• Moves

Department Outsourcing Models

• Staff

• Individuals

• Nonexempt staff only

• Management only

• Management and staff

Department Outsourcing Models

• Shared Service Centers• Back office functions are

moved to a remote location; staff may remain employees of the firm or they may be outsourced; may be domestic or offshore

• Can be spun off into a firm-owned ancillary business, and services can be marketed to other law firms [the Orrick model]

Contact the Presenter

Lee R. Nemchek MLS, CRM

Information Resources Manager

Morrison & Foerster LLP

555 W. Fifth Street, Suite 3500

Los Angeles, CA 90013

(213) 892-5359 phone

(323) 210-1237 fax

lnemchek@mofo.com