Effects of Outsourcing

This article is a consideration of the recent rise of outsourcing in the legal information world – something which is likely to have an effect on many of us who work in the field. It has already occurred in other firms, and it may happen to you. If you are unaware of these developments or perhaps believe that this is something which only “happens to others”, now is the time to understand more about the subject and to assess your position.

Susan Alcock

In the present difficult economic climate, law firms are forced to consider ways to save money. One of these is to choose to outsource all or some of the “back room” services, such as secretarial work, IT, Facilities Management, HR, Accounts, etc. In addition, the library and information services of several law firms have been contracted out to outsourcing firms. This is a quick return method to reduce head counts and overheads and transfer benefits. Some of you may be surprised to realise how many of the traditional information services no longer exist in their original form. Recent outsourcing deals have absorbed the information services of at least nine large firms, mainly in London, the South West and Wales.

There have already been several published articles and a few presentations on law firm outsourcing in the UK. Authors and presenters have often taken the pro-outsourcing view, outlining the positive aspects of privatising support services. The whole concept of outsourcing can be sensitive, with people holding very strong views (one person – who has seen several colleagues lose their jobs – has said “I have no balanced view on this – the whole thing is an outrage”) but it is worth opening a dialogue on the matter and putting forth viewpoints which haven't always been expressed.

To this end, I advertised within the BIALL network, as well as on LIS-LINK and LinkedIn, for comments on people's outsourcing experiences or thoughts. I received forty-one replies. In addition, six of these provided me with further comments from several of their colleagues and friends. The responses came from librarians, database providers, trainers, an abstracter, booksellers and recruiters, plus two people who did not reveal their backgrounds. Thirty-seven of the people who contacted me wanted to add to the debate from the viewpoint of the information professional – outside the outsourcing firms – who is concerned for the profession. They expressed a desire that there be a more considered perspective on the subject. They all wished their names to remain anonymous. This level of concern regarding anonymity seems to reflect how worried people are about the issue. They showed unease about the effects of outsourcing on their professions and their jobs. This follows on from concerns raised in an earlier article on outsourcing which I wrote (anonymously) for CLSIG News Footnote ¹. The remaining four replies showed a general interest in the outcome of my enquiries but didn't express any further views.

Most of us know that libraries are no strangers to the concept of outsourcing – although it is usually a form of “selective outsourcing”. Larger libraries (usually academic and public) will often receive “shelf-ready” books. If a library lacks equipment or expertise, such as for binding or the digitising of collections, it will purchase this service, as it will if there is a one-off project that needs completing but where it has neither the time nor the staff to accomplish it. And of course, if a firm is small and does not have its own library service, it may subscribe to an external organisation to provide it with certain levels of information and expertise.

However, the trend we are seeing now is that entire, established services are being outsourced. This has led to a loss of jobs within the law library sector, as well as a probable loss of individual accounts for database suppliers, library management systems suppliers and booksellers.

While an outsourcing firm can be considered just another library provider, with qualified staff who need representing and protecting, it is also important to recognise and support the independence of the rest of the profession, including those people who have lost their jobs as a result of outsourcing activities. Some well-qualified staff who were recruited from law firms to develop services in the outsourcing sector are also now losing their jobs. Some of these people were in fact extremely persuasive in their passionate arguments to the profession that outsourcing was the way forward and that there would be a great career structure in place. Other colleagues who have lost their jobs in law firms are now looking for new employment in a difficult job market. The loss of these experienced professionals leaves a big gap in the profession. People are also concerned that jobs presently held in the UK (“onshore”) will be shifted (“nearshore”) to Northern Ireland, or even further afield in due course (“offshore”) to countries such as the Philippines, India and South Africa.

The arrival of outsourcing firms has also proven to be something of a challenge to the legal information profession. In the past, there have been strong ties of co-operation and comradeship in the profession, with borrowing and advice shared in common. Local co-operative groups such as CLIG (City of London Information Group) and BRILL (Bristol group) were formed and meetings and collaboration between the libraries involved proved extremely beneficial. There are now some question marks about how the groups can work effectively, with concern raised by several people about the spirit of total and/or open co-operation being eroded by the addition of more “closed shop” organisations. This loss of co-operation and interaction means that few of us understand the workings of outsourced information units, so we can only speculate. It is early in the development of outsourcing firms, so there is also little independent commentary on their working practices and as these are commercially sensitive, little information is revealed by the actual firms.

All this division, suspicion, rumour and concern is doing damage to our profession. Most of us would not want to see the erosion of our chosen speciality and we will want to work within a co-operative community with other firms, outsourced or not. So let's have a look at some of the issues which concern people with regard to outsourcing in our profession.

Financial

Outsourcing is usually only considered if it is going to have a cost-benefit to a law firm. Libraries are notoriously difficult in this regard, because they are usually non-profit centres. So any savings would have to be made with these considerations:

• • Books: A law firm will not necessarily have access to more information when opting out to an outsourcing agency – each client will continue to retain the books, major works and loose-leafs they paid/continue to pay for. An outsourcer will usually make an arrangement with a main bookseller for the best possible discount arrangement. Law firms would do well to bear in mind that any perceived extra discounts which might be offered against the purchase of publications may be balanced by administrative charges. So the “savings” offered by the outsourcer to the law firm may not always be what they seem to be. Booksellers and suppliers of Information Management Systems are also affected. When an outsourcing agency draws in several libraries, it will consolidate its procurement, potentially limiting its purchasing to one IMS and probably negotiating a best-possible deal with one main bookseller. One major bookseller has been treated with supreme indifference by a representative from an outsourcing agency, with a lack of honesty or communication about what will happen, and has had to eventually come to the conclusion that the agency's business has been placed elsewhere. “We were edged out without even being asked to submit a tender”.

• • Copyright Licences: At the moment, individual firms need their own licence to be able to copy articles or selected pages; it may be that they will still need to continue to purchase their own licences, as the outsourcing agency may be restricted with its own licence on how much can be copied and sent to its client firms. This could affect the circulation of contents pages or requests for periodical articles within a firm. If the firm needs to keep paying for its own licence, there will be no financial saving there. Another copyright issue was sent in by a British abstracting firm: “We were approached by an Indian company, which said it would only abstract anything in English and only those items which were available electronically. It would be a breach of copyright to scan hard copy so as to send the abstracting company electronic copies of material. The potential savings were not proven.” The issue of copyright is a complex one and the potential problems are perhaps not yet fully realised.

• • Databases: An outsourcing agency cannot offer additional access to databases to which the client does not subscribe – if they have only used Westlaw, they cannot suddenly have access to Lexis Library or PLC unless they subscribe to them. This factor may not be fully appreciated by law firms. In fact, if a supplier does not offer similar negotiated rates to the outsourcing agency, firms might end up paying more for access to the database than they did before.

• • Staffing: If a law firm outsources its information services, it may save on staff salaries, but it might also find that this could be at the cost of the quality of service. There will remain several issues, such as who will do the loose-leafing? How soon will queries be answered? who will chase up missing parts? Who will check the renewals? Who will do the constant changes of login details? Some of these issues have already proven problematic in firms that have been outsourced. In one firm, a top manager was tasked with checking subscription renewals (something she had no experience of doing); in another, loose-leafing was left to non-trained clerical staff and had been left to pile up until noticed by someone that it hadn't been done. There are countless areas where having no staff within the firm will lead to a lessened service. One person also gave this comment: “Librarians are not particularly well-paid. And surprisingly they do not always want a career plan taking them to project management roles, such as might be offered within an outsourcing company, even at a chance of greater salary. Law firms should consider this a bonus and learn to appreciate their staff more.”

• • Location: Library materials may still remain in a firm, even if no longer in a central library, so there is still a storage cost involved. Space will have to be made for them to be housed within practice areas or – as in some cases – they have remained where they were. Lawyers are often of the opinion that “everything is online anyway”, so they do not appreciate the fact that space will still need to be allocated for numerous hard-copy publications.

• • Future costs:“It is highly probable that the initial contract will be made to look enticing, but also inevitable that it will increase considerably once it comes up for renewal”. Law firms will probably face higher charges from outsourcing firms in the future, and it may not be easy for them to then re-establish their own in-house service.

• • Costs passed on: A firm's own clients, seeing any PR announcements of savings with outsourcing deals, may expect – and even demand – that some of these savings be passed on to them in the form of lower fees.

Other aspects to consider include:

Staff

• • Expertise: A law firm may have no control over the qualifications, training and experience of outsourced personnel. In-house staff can be employed to fit a firm's own criteria; they can be assessed locally and their CVs can be checked. In order to keep costs low and profits high, outsourcing firms may look to employ newly qualified staff on lower rates of pay, and some are employing staff from outside the UK, who will receive lower salaries and benefits. One outsourcing firm has actually admittedFootnote ² that it cannot find staff who are suitably qualified in Asia to do the research enquiries, but that they are training them for 4-6 weeks to get up to speed! This does not even begin to measure up to having dedicated and trained in-house librarians, with specialised degrees and years of practical experience. “I fear when overseas and untrained ‘researchers’ are used as there is no substitute for the experience and knowledge of the firm, its work and the legal content”.

• • Institutional Memory: This will be low with any outsourcing contractor – “staff will not know what has been done before, who the people are, what the corporate ethos or opinions are; there will be disconnection and they will be viewed as outsiders”. In contrast, people who have been with a firm for some time know the individuals within it, they are aware of the areas of expertise and interest, and are immediately in tune with current thinking and needs within the firm. There is a sense of continuity, which will be lost if this moves outside the firm.

• • Loyalty: Loyalty towards a firm may also be lost. “I often help people with tasks that I am sure I would never do were I just working for an agency. I like the staff at my firm, and when I see that they are having problems in doing something, I will sometimes do extra work even at home to help them. I also will use all my contacts, either in libraries or elsewhere local, in order to find a particular piece of information that may make all the difference. Money doesn't come into it – I am just pleased to help.” Another librarian wrote “I really like the people in my law firm and when I know that they are involved in a sensitive tendering process or that they have a high-profile case, I deliberately look for information that will be of help to them. I am not asked to do this, but I know that this is current within the firm, so I do whatever I can to help.”

• • Staff morale – People like to feel secure in their jobs. In a firm, they know the individuals personally and they like to feel that they matter. Times are hard at the moment, however, and staff morale can be low if they think their services are not appreciated. In fact, if they feel that an outsourcing bid may be successful, this can lead to a huge loss of morale.

• • Redundancies: Regardless of what is promised, if work is outsourced, then jobs go. Occasionally some staff may be recruited by the outsourcer, but it is more likely that in-house staff will be made redundant. Even if a job is offered, original law firm staff may not wish to work for the outsourcing agency or they may not be in a position to join, perhaps because it might involve relocation. One comment from someone who kept being asked if she would like to move to Northern Ireland is – “never, never, never! I might prefer being asked to re-locate to South Africa…..”. A recruiter has commented that “if the outsourcer is based in the regions, this opens up job possibilities for the non-Londoners”. But job security is not assured in outsourcing companies either – as has already been mentioned, even people who thought they would have a good future there have now found that they too are losing their jobs. Some staff may also be issued with limitations on what they can say once they lose their jobs.

Regulatory Challenges

• • Confidentiality and Conflict of Interest: These are matters of high concern not only to the law firm but to all its clients. Restrictions and safeguards will have to be introduced in contracts. The SRA has made it very clear that outsourcing contracts will be looked at very carefully and firms will need to ensure there are no confidentiality issues when outsourcing the high level research and client-related work. The firm must also be aware about the problems of confidential information within their Knowledge Management databases which may be outsourced – this is an area in which some libraries are deeply involved.

• • Disclosure: There must always remain some considerable concern about non-intentional or deliberate disclosure and/or corruption. Information is valuable.

• • Insurance: What if the service delivered is incorrect and gives rise to loss? Firms will have to carry professional indemnity cover or ensure that this is provided by outsourcing service suppliers.

Service Issues

• • Quality: While an outsourcing agency may try its best to provide law firms with the service they expect, there is usually a very quick turn-around of information, often within minutes, within a firm. “The intimate knowledge of staff and their requirements and interests, including the valuable face-to-face method of communication will be lost without in-house staff”. Loyalty and “institutional memory” are immeasurable and cannot be replicated once information services are passed outside of a firm. The link will become a business agreement between a few firm members and a dedicated account manager. “There needs to be a clear case for having an information service sub-contracted out to another – no point going to all the trouble and cost of reducing your staffing levels if you then have to pay for a service somewhere else and receive only a similar sort of service, but without the extras in-house staff provide”.

• • Customer Service:“The speed and quality of service are what you need and on a regular reliable basis, not a one-off occasion”. If working relationships are established, these themselves are worth a lot when time really is money. “If you deal with a different person each does that help or hinder? Is it part of the agreement? If you are able to ring when you want to and talk to the same person you dealt with previously, you are more likely to get information quickly than if someone has to open a file and read what has been done before”. Users of the library will have to deal with unknown people at an offsite agency and they may miss the continuity and personal knowledge of their own in-house staff. “Lawyers expect delivery at a speed that outsourcing agents may not always match. It is also easier for a lawyer to explain what he wants to a librarian”.

• • Variety of publications received: One pertinent comment was received from the USA: Law libraries are almost unique in the type of paper publications they receive – there are updates and supplements and sometimes wrong sets are delivered or they are damaged in transit, or pages go missing from loose-leaf binders and need to be re-ordered. The processing is cumbersome and takes up time (i.e. expense) and is probably more efficiently done in-house rather than at a remote location”.

• • Added Value: A law firm should also recognise that in-house library staff provide numerous “added value” services. Often they help to maintain intranet/extranet/internet sites; some may help with Knowledge Management, or are in charge of the setup and administration of other databases, such as Land Registry or internal Experts listings, etc. Yet others prepare weekly Alert newsletters which are greatly appreciated by their staff. And even more are asked to help with other matters within the firm, be it non-legal research, organising events, writing articles etc – all of which add value to both the firm and the individuals themselves.

• • Training: Library staff are usually involved in training new staff and trainees, often together with input from the various database suppliers. Organising and carrying out this training, often across several offices in different locations, is quite a logistical feat. One database trainer has said that “trying to organise sessions with an outsourcing firm was a nightmare.” One example was with a firm remote from the outsourcing agency. “It was difficult to get hold of the right person and then the exchange of dates had to go via a third party. The trainees in this instance had to wait over three months before they received training”.

Bearing in mind all that has been written above and with the potential prospect of an outsourcing approach to your firm, the question you ought to ask yourselves is: does your firm know what you do? Several people have commented that the people who work (and make decisions) in a law firm often have little idea of the variety and complexities of the work which the library does for the firm. “Many of our more senior staff think that everything is now online. It makes me wonder what they think we actually do!” Often this is because of the inability of information staff to get their voice heard. If you have a library scenario like this, it is imperative that you make your firm appreciate what you do. Ensure that reports are sent to senior partners on a regular basis, so they can see how decisions are made within the library to provide them with the best possible service. Prepare a paper outlining all tasks you do, even those not strictly in your job description, and lay out what will be missed should the firm consider outsourcing your service. Do this as a matter of priority and get it to the people who matter, such as the Finance Director, the HR Manager, the CEO and senior partners with an interest in the library. Let them know that the firm may be contacted by an outsourcing agency, and suggest that should they be approached, your opinion should be considered and that you should have a chance to have input into any decision that might be made. “The better informed they are, often by you, the easier it will be for them to assess what outsourcing providers can supply them and if the service they are offering really does match up to the one they might be considering to give up”.

Several commentators were worried that outsourcing is creating a “service centre” culture, where staff are physically remote from the firms for which they do work. “One of the joys of our profession is that one becomes immersed within the field where we are employed, be it in an academic or research organisation or part of an independent law firm”.

Until cost-cutting is no longer an issue, the prospect of outsourcing will continue to remain a concern and even a fear for many in-house librarians. It is important too, that law librarians are aware that their firms may be approached (without their knowledge) by outsourcing firms, and be prepared to justify their existence and necessity. Hopefully this article has raised some issues which will make professional law librarians act to “save our service”.