This week we ask Mike: should I outsource - or even offshore - my IT?


The answer to this question is limited to what may be considered two or three likely types of outsourcing in a law firm. It may be that you are outsourcing some of your IT already - it is just that you do not think of it that way.



Many law firms are outsourcing elements of IT management to their suppliers of software (and hardware). Most small to medium-sized law firms use such suppliers because they do not have the skills or the resources to write software or maintain hardware. Therefore, the suppliers are effectively providing the resource to manage and maintain your software and hardware. If this is you, you could say you are already outsourcing.



If you decide to outsource the management of all your IT systems you are effectively handing over management of your IT to a provider who may not have in-depth knowledge of your business. Outsourced suppliers may tell you that they do. The outsourced supplier may offer you services such as the maintenance of hardware and software, and they will propose that they can save the internal costs of employing staff to do the job for you. The advantage of the outsourced supplier is, of course, that they may have industry-wide knowledge and they may offer to use this to liaise with your software supplier. Thus the IT chain is extended, with the 'outsourcer' sitting in the middle.



You may be faced with the difficulty that you do not know how to run your IT, or you cannot engage suitably qualified staff. Many small to medium-sized law firms appoint internal staff to an IT role and expect them to cope or learn as they go, with varying degrees of success. The balance to be struck when outsourcing, in financial terms, is that while the outsourced supplier claims to be able to run your IT and save you the internal expenditure of employing staff, there is inevitably a time issue, with the added process of having to liaise with the external supplier. This opportunity cost (or trade-off, depending on how you look at it) is not to be underestimated.



It is relatively easy to compare the cost of employing staff and the other associated establishment costs against the annual cost of the external supplier. However, the outsourced company does not usually supply you with the software. It supplies you with the services to run the software and hardware, and possibly gives advice.



Next, and most important, is to question whether or not the outsourced supplier will still be in business in the years to come. IT is a key resource and an essential risk management issue for any law firm, so it is imperative that the suppliers of IT are checked out financially. It is therefore a matter of weighing up the advantages and disadvantages.





Outsourcing the business process to make savings



A good example of this is using digital dictation to enable you to create documents elsewhere, perhaps in another country because of lower employment costs.



There can also be great advantages to using time zones intelligently - where the recipient country is doing the work over your night-time. The same principle can apply to some other areas of legal work, such as bulk conveyancing, but I do detect a move away from this idea and you have to question why. Is it language, competence, continuing viability of the supplier abroad, operational risk, data protection or supervision?



It is also important to ensure that quality and client service is maintained. Check out how confidentiality is to be maintained and compliance with the Solicitors Code of Conduct. Are the issues above relevant, and are they too burdensome to maintain proper risk control?



Again, check out financial viability. Ask for a history or a background of the key staff who are going to work with you - it would be helpful to know that they have worked with the legal profession before. It would also be best to know which software suppliers have worked with the company and who their customers are. Try, if you can, to get references from existing customers.



Even if the decision to outsource is forced upon you because of staff shortages or other circumstances, it is important to ensure that whatever contract you sign for outsourcing services allows you to walk away from it without being tied up for an unsuitable period and that there is a service level agreement.



Finally, one last word on contracts with suppliers, particularly in relation to outsourcing: be certain that the contract is not one-sided in the supplier's favour. Be clear that the contract is actually giving you what you need, not what the supplier needs.



Mike Gorick is practice director at Marshall & Galpin solicitors



To Ask Mike a question, email: ask.mike@lawsociety.org.uk