Asset managers and investment banks often struggle with the decision to outsource a business or legal process. When they finally decide it’s the right move, the struggle shifts into figuring out the best choice of vendor. The ramification of picking the wrong vendor is a short-lived relationship and the time and expense of hunting for a new service provider. No one wants to get it wrong.
Fortunately, there are ways to address investment firms’ other top concerns with legal process outsourcing. To begin with, firms should consider the differences between old-school LPO and the new generation of legal process automation. It may be that your firm needs legal technology and not simply an offshore workforce.
Create a process for the vendor search
The best way to search for a legal process automation vendor is to use defined selection criteria based on your firm’s specific pain points and goals. This search method requires a great deal of thought and planning before speaking with potential vendors.
Consider the vendor’s cybersecurity
With a steady stream of news regarding security breaches and cyberattacks, you must consider data security, privacy, and confidentiality whether you choose to outsource or not.
When it comes to picking a vendor, look for one with robust cybersecurity practices, from the location of data centers to encryption protocols and breach responses. A legal tech company with high-quality cybersecurity helps your firm mitigate risk.
Review references to build trust
The only way to build a strategic partnership with a vendor is through trust. Yet, given your firm’s fiduciary duties and the importance of quality and accuracy, you might struggle to have faith in third parties.
Fortunately, it’s become more common for law firms and financial services firms to work with ALSPs and legal tech companies. Your firm isn’t the first to venture into this territory. To build trust, pay close attention to vendors’ customer success stories and other references.
Verify the vendors’ fees
You’ll undoubtedly consider the cost of working with a vendor when deciding whether to outsource or keep routine legal work in-house. For perspective, it’s helpful to calculate the cost of retaining high-volume, low-value work in-house before measuring whether a vendor’s fees are reasonable. Additionally, you should look for a vendor with fee transparency to ensure they can satisfy any investor concerns that may arise.
Consider the benefits to your information governance
It can seem as if using a third party might complicate your firm’s information governance rules and processes. However, many legal tech providers offer cloud-based technology and more advanced controls, which can bolster your firm’s information governance programs. Be thorough in reviewing the features and benefits of a particular legal tech solution.
Choose a vendor with white-glove service
Transforming the firm’s operations with third parties and technology requires time, careful change management procedures, and money. The right vendor will understand your concerns and provide excellent account management service during and after the transition. Always ask vendors about who will be your contact during and after implementation, and whether that contact is consistent or a department with rotating personnel.
Reevaluate your risk management practices
Working with a vendor requires you to adjust your risk mitigation practices. However, this need is balanced by freeing up internal resources. As time-consuming, manual work shifts offsite, your compliance professionals and other associates have time to focus on improving your firm’s risk management and business resiliency strategies.
Acknowledge the risk of not evolving
You’re passionate and protective of your reputation and might believe there’s a risk to your brand if you have an unsuccessful relationship with a vendor. However, the more significant long-term risk is not digitally transforming operations and taking advantage of cost-effective technology at all. Without help from the outside, your reputation could suffer in the future.