The shared service centre model: could it work for your business?
There’s been a lot of excitement about ChatGPT recently.
From Allen & Overy rolling out a similar tool to assist lawyers to Colombian judges using ChatGPT to assist their rulings, there’s no doubt that AI will hugely shape the future of law.
Yet as anyone familiar with Gartner’s Hype Cycle will tell you, this change will take time:
We are currently climbing the ‘peak of inflated expectation’. The ‘trough of disillusionment’ will follow and years will pass before we reach the ‘plateau of productivity’.
So what should solicitors and firms do if they want to make a difference now to how they deliver work?
One option that’s gaining traction is the use of legal shared service centres. Clifford Chance and White & Case were early pioneers nearly 20 years ago.
Today, shared service centres are becoming the norm for the largest firms.
Reed Smith set up a centre in Leeds in 2020 and the Government Legal Department continues to demonstrate that centres can work for in-house teams.
To understand why, it’s important to understand how shared service centres differ from traditional legal delivery models and what benefits they bring.
How do legal shared service centres operate?
The core role of shared service centres is to take high-volume, low-complexity work – such as document review and due diligence – away from expensive lawyers and transfer it to a lower cost team.
Yet shared service centres do not merely offer a cheaper service.
The best centres are also able to deliver an output that is faster and better – compared to when tasks are performed by more traditional operational methods – by ensuring structured, consistent and quality processes are in place.
Agreed-upon measures and benchmarks give legal professionals an indication of how their work is progressing and if an issue needs attention.
Examples of an indicator of an unstable status are an increase in error rates, length of time to complete a task or customer complaints.
These issues can be brought to a resolution team for discussion, decision and action planning.
A well-oiled shared service centre is an interdisciplinary team offering a mix of services.
A partner will decide to send work to the centre based on a service catalogue. This is effectively a menu, setting out all the work that can be performed at the centre.
Once the request is received, it will be triaged by a resource manager. They will look across the centre to identify resources with the skills, experience and capacity to work on the project.
Work is tracked on a work intake tool, allowing the centre to understand who is doing what and ensure that the lawyer is able to track progress.
Once the work is distributed, the team will follow standard operating procedures that have been carefully designed to ensure that work is done in a standardised and efficient manner.
Where possible, the work is automated and tasks are performed on the most effective tech platform with a team of specialists who are constantly scanning what new and improved technology is available on the market.
Benefits of the shared service model
Firms rarely report on benefits realised through the shared service model and the benefits will depend on how they’ve been positioned in the market.
It’s not uncommon for a firm to see write-offs drop by 50% within a year of setting up a shared service centre or for margin to increase by 10%.
The real value, however, is more deeply embedded.
Shared service centres are driven by key performance indicators (KPIs).
KPIs are quantifiable measures of performance over time for a specific objective, such as the number of documents reviewed per hour.
They provide targets for teams to aim for and milestones to gauge progress.
By setting smart KPIs and designing a process that allows works effectively with the firm’s IT infrastructure, shared service centres gain access to a deep and rich data source.
This is used for management purposes to measure and drive performance which is typically tracked on a managed scorecard.
An effective ‘balance scorecard’ system is built with the firm’s mission and vision in mind, with processes leveraged to achieve results that are aligned with customers, the strategic plan and the mission.
The data can also be used to analyse trends in matters, as well as across industries and work types, giving customers insight into how they compare to the rest of their industry.
Moreover, by taking on low-margin work, the firm’s solicitors are free to focus on more strategic work.
Not only is this higher value to the firm, but it’s also more rewarding for the lawyer.
Looking to the future
When Richard Susskind’s seminal book Tomorrow’s Lawyers: Your Future was published in 2013, Susskind argued there had been little significant change to the law since the time of Dickens.
The lightbulb may have replaced the candlestick, but the billable hour and the idea of the artisan lawyer with mastery over every step of the process remained.
Today, the landscape has shifted. This can be seen by the slew of roles law firms now recruit for such as ‘legal designer’ or ‘legal process manager’.
Many of these roles, which didn’t exist little over a decade ago, sit comfortably within the confines of a shared service centre.
As technology continues its relentless advance, the winners will be the broad firms who are sufficiently skilled at processes and data analysis to find and implement new ways of working with legaltech that leads to a competitive advantage.
Those firms are likely to have incubated those skills in their shared service centre.
Law firms and the functions offered in the shared service space*
*This table provides a non-exhaustive indication of the firms with shared service centres and scope of work undertaken by them.
So, could this benefit your firm? If you’re thinking of outsourcing certain functions to a shared service centre, start by:
- reviewing the services your firm is currently undertaking and assessing how many of these are appropriate to transfer to a shared service centre
- looking to other industries (such as finance) that are mature users of shared service centres and draw out parallels/lessons
- reading up about shared services
- talking to a professional with expertise in build, design, and operating shared service professionals
Find out more
If you're thinking of entering into an outsourcing arrangement, check our practice note to find out how to comply with your regulatory obligations.
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