The outsourcing puzzle – how to get the right fit for your firm

In the first part of a series on outsourcing for smaller law firms, Nicholes Family Lawyers managing partner Sally Nicholes discusses some of the key lessons from her firm’s embrace of outsourcing services.

The firm

Nicholes Family Lawyers is a specialist provider of family law services based in Melbourne’s CBD and has Australian and international clients. Managing partner Sally Nicholes, a former partner at Middletons Lawyers, has practised exclusively in family law since 1995 and has developed a strong practice with substantive experience in all aspects of family law, acting for a range of corporate, institutional and private clients. She is Chair of the charity group, Lasallian Foundation; a director of the World Congress on Family Law and Children’s Rights; and a director of Children’s Rights International.

Why it outsources

In setting up her boutique firm a decade ago, Nicholes says she was determined to access the kinds of high-calibre resources that are available at larger firms – without letting the business’s costs blow out. “I wanted to use all the good things about a big firm,” she says.

What services it outsources

The firm uses external accounting, marketing and HR consultants to assist its lawyers and employees. The consultants advise senior management and work with team leaders within the firm who are responsible for managing lawyers. They also act as mentors for the firm’s employees while at the same time giving them the skills to become as independent as possible and handle most issues in their respective business areas. Nicholes says if an issue escalates, or if there is a serious incident – such as a bullying accusation – the relevant specialist consultant is engaged. “But they also help us put structures in place so we can be self-sufficient to a certain degree as well.”

The outsourced HR function has been valuable, according to Nicholes, “because as lawyers we don’t get the training at law school about how to manage people”. With marketing, Nicholes says the outsourcing arm has helped get the firm up to speed in areas such as social media. A younger, tech-savvy consultant has advised senior lawyers, in particular, on how best to use platforms such as Twitter and LinkedIn, while increasingly making sure they have the skills to be autonomous when using such tools. “It has just been a fabulous investment,” Nicholes says.

Engaging an accounting outsourcer has also given Nicholes Family Lawyers’ in-house financial controller an important aide when determining key financial policies and decisions. “It’s very good for my financial controller to have that sounding board,” Nicholes says. “She is excellent, but having someone who is a step removed is crucial.”

Nicholes Family Lawyers assists a number of charitable and community groups through pro bono services, adding to the complexity of the business. “We need to be toughly managed because of the pro bono work we do,” says Nicholes, who admits that the intensive pro bono focus of the firm means it spends more on accounting than most of its counterparts.

The accounting outsourcer sits with the executive team and analyses the firm’s business performance once a month with the financial controller. “It’s very handy to have the objective perspective of someone who is in professional services, but who has a wide range of clients,” Nicholes says.

Issues to consider with outsourcing

Outsourcing may not be for everyone, according to Nicholes. She advises:

• doing a rigorous cost-benefit analysis before hiring external consultants. Weigh up their experience versus their fees and consider the value that they can bring to the firm through leadership training and better business performance.
• clearly outlining the tasks that any consultants should be doing, and what they shouldn’t be doing. While consultants should play a key role in overseeing the firm’s operations and success, they ultimately report to the managing partner and must acknowledge this fact. “It’s a combined effort,” Nichole says. “But make it clear who they answer to.”
• communicating clearly with all employees to explain why outsourcing help is required and the benefits it can bring to the business.

The benefits

Nicholes says outsourcing has helped her firm in a number of important ways, including the following.

1. Lawyers in bigger firms run the risk of becoming complacent about important aspects of business operations within the firm. After all, they typically have highly trained accounting, marketing, technology and HR professionals to make the key decisions for the firm. “People think, ‘Oh well, debt recovery is not my issue and marketing and HR are not my issues,” Nicholes says. “That’s not right because (in smaller firms) we live and breathe the management of people. We’re having to make commercial decisions about debtors and charging people. So we have to be skilled-up in those areas. It’s good in some way that we can’t be complacent and that we can outsource when we need to, but we are also trained in those areas ourselves. We’re well-rounded lawyers.”

2. An experienced consultant can draw on their experience from dealing with a range of firms, whereas a more junior in-house employee who costs less may lack a track record in critical business areas. As such, they may not be able to add value to the firm in the way that an external consultant can.

 Choosing outsourcers

Nicholes relies on a tried-and-tested method when selecting outsourcers. “Word of mouth is really important,” she says.

Run the ruler over prospective outsourcing suppliers. Do they champion the same values as you? Are they professional? Does their treatment of staff match your culture? “You want to make sure that whoever you outsource to will add value but also have a similar culture and value system, otherwise it could be destructive,” Nicholes warns. Her firm likes to treat consultants as “friends of the firm” and invite them to important functions the firm hosts. At the same time, the consultants may be called on to make tough decisions about the future of employees, so there needs to be some separation between them and staff.

Nicholes explains: “There’s a fine line. You want to be on good terms, you want people to respect them, you want them to be approachable, but you also need to have that little bit of distance so they can help you with executive-type decisions.”