In this era of doing ‘more with less’, one of the key challenges many in-house teams are facing is managing the constant flow of ‘business as usual’ (BAU) that comes across their desks. Over the last few years, two key solutions have emerged to tackle this continuous challenge. The first is the secondee/labour hire model pursued by businesses such as Axiom in the US, and Lawyers on Demand in the UK and Australia. The second is the managed service model which has been pursued by providers such as UnitedLex in the US, and popularised by LegalVision here in Australia.

It can be difficult to make a choice between the two models, each of which have their advantages and drawbacks. This short article is designed to provide in-house teams with clarity on these two options.

Secondee/Labour Hire Secondment Model

It will come as no surprise to most in-house teams that the secondment model was first popularised by traditional law firms. The main aim of the model was of course to deepen client relationships. Unfortunately, sending secondees to clients for extended periods of time has never been particularly profitable for law firms, so demand has almost always outstripped supply. This is the gap that providers like Axiom and Lawyers on Demand spotted and leveraged 15 or so years ago. 

The secondee/labour hire business model is pretty simple. The business hires lawyers, either on a day rate or as permanent employees, and effectively rents them out to in-house teams at a 40%-50% margin. The model is quite profitable as the labour hire business does not need to invest much in the way of operating expenses (i.e. technology).

From a client perspective, the key benefits of the labour hire model are as follows:

On-Site Presence

A key benefit of the secondee/labour hire model is that you will have a qualified lawyer in your office during work hours. There is a slight overhead cost to this, of course, but it can be beneficial to have a secondee available to attend internal meetings, and work face-to-face with key stakeholders.  

Get Moving Quickly

If you are working with one of the larger labour hire businesses in the market it is likely that they will be able to get someone into your office at short notice. Because the secondee/labour hire model does not involve bringing process efficiency/tech to bear in the production of legal work, your resource can generally jump straight into the “doing” of the legal work. In certain circumstances this can work well.

Back-Ups Available

As we all know, it is not easy to find a lawyer who will gel with your business. If a labour hire business sends you a lawyer who does not work out, they will generally swap that lawyer out for a new lawyer for no additional cost. It is worth making sure this is the case before you sign up!

Managed Service Model

There are many different models of legal managed services. At LegalVision, we divide our enterprise managed services offering into two distinct baskets – product-specific managed services, and desk extensions. 

Our product-specific managed services assist clients with recurring legal work, such as marketing collateral review, managing retail leasing portfolios, and employment compliance. Our desk extension service involves us bundling a variety of work types into one streamlined solution, for a fixed monthly fee. For example, assisting with general contract reviews, advising on commercial contracts, and so forth.

The managed service business model involves a more significant investment in technology, systems and processes than the labour hire model, because we leverage technology to automate many of the processes required in recurring legal work. Of course, the goal is that this investment will lead to process efficiencies, which in turn lead to continuously improving pricing and ever decreasing turnaround times.

It is our desk extension service which is compared most often to the solutions offered by the secondee/labour hire businesses. 

The key benefits of a managed service/desk extension offering include:

Turnaround Times

A managed service gives you access to the provider’s whole team. So if a large volume of work needs to be completed quickly, resources are available to make this happen. This is a significant benefit when compared to bringing in one “on demand resource”.

Knowledge Capture

One of the key premises of a managed service is that the provider will attempt to capture institutional knowledge that can then be used to continually improve services. This allows the managed service provider to produce work consistently during times of change in the client’s team. This is a clear advantage to the secondment/labour hire secondment business model, where any knowledge developed with the secondee leaves with them.

Wide-Ranging Specialist Expertise

A quality managed service provider will have a large team of specialist lawyers and legal process designers (LegalVision has a team of 120+) on hand to support clients. As mentioned above, a key challenge for in-house teams is the wide variety of BAU legal work that needs to be dealt with. A managed service provider can assist across general commercial, corporate, construction, employment, IP etc… It is pretty tough to find a secondee lawyer who has such broad cross-sector expertise. 

Process Improvement

Managed service providers are specialists in process improvement. Volume-based areas of law, such as marketing collateral review and retail leasing, are particularly suited to such improvement. While there is less scope for process enhancement when servicing BAU legal work (due to its less consistent nature), a quality managed service provider will still seek to break down tasks into component parts, and use system, structure and where possible technology to more efficiently service clients. 

Selecting Between a Secondee and a Managed Service Provider

There are obviously a number of factors that an in-house decision-maker needs to take into account when choosing between the two different models. Having said that, as a general rule a secondee works really well if you need immediate coverage for a relatively short period of time (three months or less), and are looking for a resource that absolutely needs to be present in the office on a day-to-day basis.

The managed service/desk extension model works best if you are looking for a solution over a longer period of time, you need coverage for a broad variety of legal areas, and would ideally like your provider to commit to ongoing process improvements. A managed service provider is ultimately aiming to become a permanent part of your resourcing mix, whilst a secondee/ labour hire provider generally is not. 

The great news for in-house teams is that both models are going from strength-to-strength, both in Australia and overseas. Having a range of choices is empowering in-house teams to push forward with their transformation journeys, which is a great win for the industry as a whole, and in-house teams in particular!

Labour hire  Managed service 
Solves for excess workload Y Y
Appropriate skill level  Y
On-site presence  Y
Specialist expertise across multiple areas of law N Y
Only what you need (resource matches volume) Y Y
Creates lasting capital value in the business  N
Scales with the business  N Y

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