Need For 2nd Level Legal Offshoring

Everybody thought the growth of legal outsourcing would multiply but it didn’t grow as it was expected. In the first level of legal outsourcing, eyes were set on cost cutting.

Despite excellent projections it couldn’t come out of its infancy stage. The proximity of clients and vendors could not increase. Many LPO’s were born like bubbles and vanished identically. All the way it was a good signal to show there was a gap between two ends. The said gap could be bridged if some better means were discovered.

The first level of legal Outsourcing consisted of Captive centers and off shoring of the services to LPO’s.

The Captive Centers started closing down not because of the same were un-economical but primarily due to other problems connected with the working. The stress taken by a company in running the Captive Unit had started becoming a nuisance to them. The very purpose of setting up Captive Unit came under attack whereby its future was sluggish. Though a good number of captive centers have been efficiently working yet most of them could not prove to be economical. Factors like investment, employee attrition rate, changes in Government Policies and day to day running problems discouraged companies to open their Captive Unit.

The mushrooming of LPO’s had put the clients into a saga of disbelief. It had become very tough to settle down with third party vendors. It was inevitable that confidentiality would be bridged and exit policy was tough.

There was a need to find better ways for offshoring legal and paralegal services. The important key points of offshoring decisions include: – The reputation of the company, the non compromising attitude towards confidentiality, keeping control on the working and having cost savings. Law firms of UK / US were divided on off shoring and subsequently about the nature of services to be offshore. The mist had become so heavy whereby the answers could not be found for off shoring while keeping in mind the key points. There came the need of 2nd level outsourcing. The solution to these problems lies in attaining the benefits of Captive Unit at the price of Third Party vendors and this is required to be dealt with “aptly”.

7 Sure Fire Ways For Your Legal Marketing to Fail – The Essential Lawyers Marketing Guide

1. Failing To Define What You Want Your Marketing To Achieve For You

This is the number one pitfall of nearly all campaigns. You are guaranteed to fail if you don’t decide up front what you want your campaign to achieve for you. Without formulating your critical success factors for the marketing initiative you will never be able to measure success or failure, and if you cannot do that how will you know if your limited legal marketing budget has been well spent?

Practical tip: This is guaranteed to happen if you say yes to a speculative call from a newspaper which has some “last minute advertising space” but you must agree to advertise “today” or the firm of solicitors next door to you will be offered the slot. Let them have it and you can have the last laugh!

2. Trying To Please Everyone

Marketing obtains the best possible results when you have clearly defined your target audience and you speak to them in a language that they clearly understand. In business law, you might find that you work best with certain sectors of business, or in private law that families are your best audience. When you know this all of your marketing materials can be amended to reflect this knowledge and provide you with a much better return on your investment.

Practical tip: Review your current client lists for different legal sectors and see if there are any trends appearing.

3. Communicate Too Little Or Too Much

With solicitors it is always normally the first one which causes the problem. If you have a client database you must do what every hugely successful business does; that is to communicate with it and sell it more of your services. Look at Amazon or Tesco, they email their clients at least once a week, normally twice. I know that one of the concerns that lawyers have is that this will scare off their customers. This is simply not true. If customers do not want to read your emails or mailed marketing message, they will choose not to. It does not stop them using your service again but it will put your name front of mind when they need legal assistance.

Admittedly solicitors would find it hard to communicate with their clients once or twice a week, but once a month should be very easy.

Practical tip: It is 10 times easier to sell more services to existing clients than it is to recruit new ones. Start talking to your client database now before Tesco Law or Halifax Law does.

4. Not Making Use Of Your Free Marketing Space

When a client attends your premises they are a captive audience. What are you doing to communicate with them now?

Your clients should have a choice of marketing materials to read (see below), some educational information sheets about your various areas of law, and advertising messages in your office windows and on internal walls. Is this happening?

Practical Tip: Remove any materials that do not relate to your practice. Whilst it is good to support charities, do this from the extra profits your practice makes from selling more of your services to existing clients as opposed to displaying charity literature in reception (as a lot of solicitors do).

5. Not Having Brochures To Support Your Marketing Communications

Many solicitors seem to believe that brochures are now an expense that they can do without. This is a fatal mistake. Do Banks produce brochures for every service they offer? Do insurance companies produce brochures for their car and household insurance policies? Will they produce them for legal services when they enter the markets en masse? Yes of course they will.

If you are competing against an insurance company in the future and a client visits the insurance company’s amazing website and requests their brochure, when they then pop into their local solicitor to see how they can help them will they feel something is missing when no “sales materials” are provided to help them to make their “informed decision” of which legal service provider to use?

Practical Tip: If you do not have any brochures, obtain at least one practice brochure now and then add one more type of brochure per month until you have at least two types of brochure for every legal service that you offer.

6. Not Having A Website, Or Having One That Is Badly Out Of Date

Many solicitors still do not understand the power of the website. Please let me help you: If you are not receiving at least 20 new enquiries from your website every month you are doing it wrong! It is that straightforward, there are solicitors winning more business than they can handle online. If you are not doing so your website is not working.

Practical Tip: Ask a website professional to audit your website and explain why it is not working.

7. No Time To Market – Too Busy Helping Clients

This is the one area that is a huge problem for solicitors with their legal marketing. In most cases if there is a marketing deadline to be met and a legal matter deadline, the marketing will always fall by the wayside. The trouble with this is that marketing needs momentum to really flourish and provide you with outstanding results. You must commit to spend time growing your business as you do when working on the business you have already generated. Failure to do so could be fatal in a more competitive arena.

Practical Tip: Set aside at least one hour per week to ensure that your marketing builds momentum.

Captive Insurance Companies Need Independent Directors

Owners of captive insurance companies, as they continue to grow in asset value, need to look at expanding their Board of Directors to include the experienced Independent Director, regardless of domicile. The longer the captive insurance company remains in business, the greater the chance the captive will get into serious issues that will require a good deal of insurance industry expertise.

As an insurance practitioner for 40 years, let’s go over some of the issues that will come up for the “mature” captive taken from actual experiences.

Reinsurance Recoveries

The initial feasibility study contemplated only one reinsurer and now, due to market conditions, the captive insurance company finds itself with five reinsurers, with different limits of excess of loss protections. One of the reinsurers does not want to pay the excess claim and the captive has to select a reinsurance litigation law firm. This is not exactly within the job description of an insurance risk manager. Where does the captive’s risk manager turn for good advice? Does the captive litigate or arbitrate? What is the arbitration process all about, and can captives secure reinsurance recoveries through the arbitration process? Most captive owners have had no experience with this type of event. Failure to collect the reinsurance recovery may result in an insolvent captive insurance company.

Renegotiate the Fronting Fee

How many renewals have you gone through without getting the “front” insurance company to reduce its fronting fee? Who is responsible to devote the financial resources and time to explore new options for a “front” insurance company? Many captive owners never shop their fronting fee on the simple basis that they have no resources available to meet with potentially new “fronts”. It will be necessary for the “fronts” to solicit the captives, as they do at all the captive insurance company conferences held both domestically and offshore, especially in a soft underwriting cycle.

Captive owners need to understand the components of a “fronting fee,” and more importantly, what parts of the “fronting” fee are negotiable. The “front” company has all the components qualified from state premium taxes to residual market fees, to insurance company overhead.

Restructuring the Reinsurance Program

It is the responsibility of the captive owner to continuously monitor the reinsurance program and search for economic options. The pricing of reinsurance is not controlled by any regulatory body and therefore it is market driven. Many captive owners have never been exposed to the reinsurance negotiating process, nor are they in a position to benchmark reinsurance prices. Risk managers have very little national contact, other than their local chapter meetings. The cost of reinsurance is a big factor as respects the profitability of a captive, and must be negotiated by experienced executives. Independent Directors can help with that process.

Independent Directors

In contrast to the captive insurance company, the publicly held insurance company has used Independent Directors, mostly from the accounting and legal professions. Private equity firms that invest in insurers are looking for Board Directors to represent their interests, especially where they have a significant stock position.


More captive insurance companies are going to reach out to Independent Directors, with parental consent.