Friday, February 25, 2011

Outsourcing, Outrage or Opportunity? What is Core?

Yesterday I co-presented the Keynote "debate" at the Ark  Conference on Best Practices &amp Managenent Strategies for Law Firm Libraries and Information Centers. The program was moderated by  Marsha Pront,  Librarian and Senior Consultant from   Integrated Management Services. My debate partner Ron Friedmann who blogs at Prisim Legal and is a VP at outsourcing provider  Integreon, pointed out that  there has been an upward trend in professional services firms choosing to outsource "non-core" functions. Prior to the conference, I conducted a survey of attendees and asked them to consider which functions or services provided by their library/knowledge center were "core" to the law firm.

The definition: For purposes of the survey we defined a core business activity as one that supports the strategic value of either the product delivered to the firm's clients or is core to the growth and development of the business.

The chart below can be used as an informal benchmark for assessing how the various functions in your organization might be viewed by firm management.

Respondents overwhelmingly viewed research and research related activities as more core to the business of law than most back office activities.This makes complete sense, since research is core to the practice of law. Research Management was rated as core by 100% of the respondents.  There are clear exceptions in both research and technical servicers. The only "technical services" function which received a high "core" rating was the acquisitions function. Document retrieval which is a research function, was viewed as "non-core" by about half the respondernts. But many libraries are ahead of the curve here. Many of the functions which were rated as non-core have been completely or partially out-sourced for years.  These functions include, loose-leaf filing, shelving, cataloging, document retrieval and subscription management. The important takeaway here is that  in the current economic environment, Library and Knowledge Services leaders would be well served to be prepared for a discussion on outsourcing by considering the range of core and non-core services they provide.

Tuesday, February 22, 2011

Centralized Licensing as a Risk Management Strategy

In talking to large and midsize law firm colleagues, I am somewhat amazed at the level of decentralization that is supported and sometimes mandated by the larger firm organization.

There are obvious benefits in having local staff available for “high touch” projects and to provide special expertise in supporting practice and jurisdictional research. But the cost control and risk management implications of remaining totally decentralized cannot be ignored.

As law firm mergers increase in frequency and size, and as law firms expand their footprints across the country and around the world, librarians may be the only professionals in the organization focused on the magnitude of the copyright and licensing risks facing a firm if they do not review, combine, resize and renegotiate their licenses to fit the workflow and access needs of the lawyers they support.

Librarians are acutely aware of the $20 million dollar judgment against Legg Mason which arose from a misguided attempt by an administrative department (not the library) to save money by purchasing a single license to a newsletter and then posting it on the organization’s intranet for wider consumption. Lowry's Reports, Inc. v. Legg Mason, Inc., 271 F. Supp 2d 737; retrial denied Lowry's Reports, Inc. v. Legg Mason, Inc. 302 F Supp 2d 455.

As the Internet has expanded and the risks of piracy and misappropriation have grown, publishers have crafted licenses with increasingly restrictive language. By squeezing out all risk to the publisher these un-negotiated licenses almost squeeze out all value to the subscriber.

If a firm has three offices and three separate, geographically restricted licenses, this does not equal a firmwide license. A lawyer in California may not have the right to share digital content with a lawyer in NY who is under a separate license for the same content.

Centralized licensing does trigger the benefits of “economies of scale” for the pricing for most digital resources. A firmwide license can be negotiated to provide one click access via IP recognition at a lower cost. Conversely, the “law of increased overhead” also applies to the de-centralized approach. Not only do you pay more for less access to content, you pay for the additional management and staff time that must be invested in negotiating multiple licenses, managing passwords for individual users, and addressing needs of lawyers who are denied access to resources.

There are also strategies for negotiating limited firmwide licenses. After assessing the needs of a user group, the benefits of a full firmwide license (IP recognition) can be achieved by negotiating for a “simultaneous user license.” This eliminates the risk of password sharing and the overhead of password management, by simply limiting the number of people who can access a resource simultaneously. This works well for specialized resources that have a low volume of use but which are needed in multiple offices.

Products like Onelog, Research Manager and Lookup Precision can also provide a powerful management tool for, restricting unauthorized access while also managing individual passwords and measuring the volume of use of both small and firmwide licenses. Reports from these services can provide important leverage license renewal negotiations.

Thursday, February 17, 2011

"Vendor Sourcing" : Thinking the unthinkable as a strategic alternative to outsourcing

The new economics of the legal industry dictate that Law Library Directors and CKOs must seek strategic alignment with their firms by considering bold new thoughts on how and what we manage. We need to step back and identify the causes and sources of inefficiency within our organizations. Some processes and assumptions are so entrenched that it is sometimes difficult to discern the contours of the problem - let alone the solution.

Let's face it; we have for too long made our administrative processes subservient to the idiosyncrasies of individual publishers. This disparate collection of operational inefficiencies makes our organizations vulnerable to outsourcing. The LPO pitchmen are at the CEO’s door. We need to take the lead in considering all options for maximizing the efficiency of our organizations, including outsourcing. But before we outsource we need to ask more fundamental questions. Rather than paying a third party to take over “the obsolete and the inefficient,” shouldn’t we first consider the option of “vendor sourcing?”

I define “vendor sourcing” as a process by which we shift the cost of vendor generated inefficiencies or the inefficient processes themselves, back to the publishers.

Large vendors routinely articulate the benefits of “partnering” with our firms. I have outlined below several significant “partnership “opportunities which have been largely overlooked. The prospect of “vendor sourcing” might expedite the industry's transition to a more efficient business model for the acquisition and distribution of information resources.

Publishers verbally profess their support for the value of law librarians while simultaneously enmeshing our organizations in a host of unsustainable business methods. I find special irony in noting that one major publisher has acquired an LPO business and is selling process improvement to lawyers while its print publishing operation is guilty generating some of the back office inefficiencies afflicting law firm libraries.

While publishers have made enormous strides in making vast stores of digital content available, we still remain tethered to print publications due to a combination of generational and research style preferences, as well as technical and cost considerations. The administrative overhead generated by acquisitions and management on print resources (space, filing, claiming, invoice coding and processing) cries out for reinvention or elimination.

Let's take a look at a few of the opportunities for “vendor sourcing”:

Loose-leaf filing. Have you looked at what you are paying for the filing of loose-leaf updates and wondered by human beings are still engaged in this activity? What could possibly explain the survival of this costly and mind numbing 19th century process in the 21st Century? Would publishers still be supporting this model if we shifted the cost of the loose-leaf filers back to them? Maybe we should consider calculating the cost of maintaining each title and deduct that amount from the invoice price to be paid. E-books have existed for decades as an experiment and novelty in legal publishing - but only a handful of core legal titles are available for the growing army of Ipad toting lawyers. We are clearly reaching a watershed moment of opportunity for both publishers and law librarians to develop new models for pricing and distribution.

Billing and shipping errors. Several years ago I did a workflow study of my technical processing department. The data showed that one week of staff time was spent each month on resolving billing and ordering issues. What does this statistic suggest about the scale of inefficiency tolerated by publishers in their own organizations? A cost which is no doubt passed on to us as price increases! For years I have wondered by we don’t charge vendors for the cost of the staff time spent resolving, billing, shipping and claiming errors.

Bill processing and coding. Even when there is no error in the bill, the routine process of managing and coding invoices is an enormous undertaking. Law firm practice groups are now organized into financial business units and costs are no longer lumped into a single library budget. Managing and assessing practice group expenditures requires the repeated coding of thousands of invoices with numerous general ledger permutations for each office and practice group. More than a decade ago when a major publisher launched a customer “dashboard” for managing acquisitions and subscriptions, (which I applauded) I suggested that they allow customers to enter our general ledger and practice group codes for each publication in the dashboard so the invoices would arrive “pre-coded.” This would eliminate the repetitive re-coding every time an invoice was received. I am still waiting.

I was initially skeptical of the “flat fee print” LMA contracts which publishers offered to make pricing more predictable. I now believe that their greatest value may lie in elimination of paperwork and staff time spent processing hundreds of invoices. I have now successfully negotiated for two major vendors to provide a pre-coded spreadsheet from which we can upload all billing and general ledger details for our annual subscriptions. I have yet to see this embraced as an industry standard.

Forced bundling of print and digital content. I regard this as one of the most outrageous practices by publishers because it completely disregards the right of the law firm to manage its own resources and work flow. It is also decidedly not “green.” Years ago when a major publisher refused to let the firm cancel a loose-leaf serial publication that was no longer needed, my staff arranged to have the weekly updates shipped to the vendor’s sales rep (who sympathized with our position although his employer did not). Why should my staff have to continually handle and dispose of unnecessary updates? But the more troubling implication was that the vendor was so “fat and happy” they preferred to continue printing and shipping things that were destined for the landfill “at birth.”

The American Association of Law Libraries will be hosting a colloquium with the major legal publishers. Let us hope the discussion goes beyond nibbling around the edges of the old problems and someone actually "moves the cheese" into the 21st Century.