Outsourcing your Back Office

Every time I speak to a lawyer, including my husband, about the possibility of outsourcing the Legal back office, the first reaction I get is that they can’t live without their assistants.  Who would do the filing?  Who would call the client to arrange appointments?

We’re not talking about replacing the Legal Assistant.  We’re talking about complimenting him/ her.  Pushing the different tasks down the office totem pole is the best way to maximize returns.  Depending on the size of the practice, there’s different ways to do so:

·  Sole Practitioner looking to get the job done?
Having seen my brother-in-law and several of my husband’s friends set up their solo legal practices in various area of law, one thing is for certain.  They start up just like any other start up out there.  They are short of cash and cannot afford an assistant, but will admit that the first thing would do once they could afford one is to hire one.  Which means that they do require someone to do what an assistant would otherwise do.  Type up their dictation, update edits in their documents, file their papers, set up appointments with clients, etc.  require all and having set up a business myself.  Do not have the need for a full-time legal secretary, but still have correspondence that needs to be typed?
Outsource the simple and time consuming task of dictation to the experts @ eDecree. ·  Small to Mid-Sized Firm looking to improve efficiency?
Assuming 1 assistant per lawyer, output is limited by the bandwidth of your assistant

• Limiting the number of files you can handle
• Resulting in multiple day waits for your letters to be transcribed causing delays

Why hire an additional assistant? Reduce costs by dividing the type of tasks that need to be done. The assistant performs tasks which require onsite support, while outsourcing repetitive tasks such as transcription to the experts @ eDecreeBy outsourcing your dictation, you free up considerable time for your legal assistant to take care of higher priority tasks such as scheduling and file management.According to 2007 Salary Guide from Robert Half Legal, the average salary of:·  Junior Legal Secretary: $36,000/yr + benefits ·  Midlevel Legal Secretary: $41,000/yr + benefits which results in a conservative average cost of $51000 on the low end.Why would you utilize an employee costing you ~ $25/ hour to do a task that can be done at ~ $8/ hour? Free up your assistant to perform tasks that are higher up the value chain and result in higher efficiency. As well, outsourcing your dictation can result in significant cost savings for your firm. For instance, using eDecree for your dictation is much cheaper than hiring a temp if your assistant is sick or on vacation. Also, if you have a surplus of dictation, then using eDecree is similarly much cheaper than hiring additional staff. 

In the last post, I introduced the fact that you will need to analyze your business to see what to outsource.  The reason is that business is all about margins, and core competencies.  If your core business is providing insurance services and processing claims that come in as a result, why would you have a large team in the office typing up the correspondence that goes with providing those services?  Your team should consist of people that are able to sell those services (sales), and people who are able to respond to claims coming in from current clients (customer service).  In some cases, insurance companies even go the next step and outsource the claims handling as well, such that they are essentially the sales arm for an underwriting organization.

The insurance company in this case has recognized that their core competency is doing sales.  So their biggest cost is their revenue producing sales staff.  Notice that I used the term “revenue producing”.  That’s your goal as a business owner, to make a profit beyond what you are paying your staff.  If your only fixed cost is your revenue producing staff, then you can effectively increase margins. 

How do you analyze your current resources to see what can be outsourced?  Follow the steps below to chart out your team’s activities.  It might seem like a tedious process but it’ll help you determine how your resources are being spent to perform your core business, and hopefully also to assist in cost cutting measures as a result.  I would recommend doing this in a spreadsheet program of some sort.  It’ll help make the math easier.

1. List all the individuals/ teams currently in your staff, and what you pay them.  Assign an hourly rate to each one of them.
2. Speak to them briefly and list what each of them do.  Assign a percentage to each task they do if they do multiple tasks. 
3. If they work over-time, list that as well, including any compensation that goes with the overtime.
4. Look at the task list and compare it against the person’s qualifications and abilities.  Is the person able to do higher value work compared to what they are currently doing? I have listed a couple of examples below:
   • Is your Legal Assistant and/ or Law Clerk typing up your dictations for you when she could assist you in running files instead?
   • Is your Claims Adjustor spending time typing up letters or hand writing letters instead of dictating them?
5. Highlight all of the tasks that are not directly revenue producing.  I have listed a couple of examples below:
   • When a Legal Assistant or Law Clerk is putting together a Motion document or Brief for a proceeding, it is directly translating to billable hours that the firm is able to collect on.  The time spent doing transcription of a Lawyer’s dictation isn’t directly recoverable as billable hours.  It is usually a part and parcel of the final hourly bill rate.
   • When a Claims Adjustor is typing up a letter, and as a result is only able to run one claim file instead of five or six claims during that same time period, it results in more claims adjustors required overall as a company to process the claim files.  And the process of typing up a letter instead of dictating it definitely isn’t a part of the core competency of that individual.
6. If none of the tasks under a certain individual/ team are revenue producting, highlight the entire individual/ team in that case.

In the next post, I will talk about how to use the above information to compare the cost and rationale of keeping certain things inhouse versus outsourcing them, and to increase the value add of your current staff to increase your profit margins.