Orrick Considers Tech Support for Other Law Firms

Orrick Considers Tech Support for Other Law Firms.

I have written previously about Orrick’s centralized “Global Operations Center” (“GOC”) in Wheeling, WV. The Aug/Sep 2004 issue of Law Firm, Inc. has a good follow-up article (“Location, Location, Location”) about the GOC. 

has cut annual operating expenses by $5.6 million by consolidating tech
support, operations, finance, and benefits in a central facility in
West Virginia. Moreover, the article reports that Orrick is considering
offering support to other law firms through its GOC. Chairman and CEO
Ralph Baxter says “If we can organize it in a way that provides other
law firms the assurance of confidentiality and reliability that they
would need, we think we’ve got something there that would be a huge
benefit to firms around the country.” COO Douglas Benson qualifies this
by saying that the firm would work with joint venture partners to offer
such a service.

Certainly there is a market for outsourced
services to law firms. For example, the same issue of the magazine
reports in “Let Someone Else Do IT” that 130-lawyer firm Herrik
Feinstein has outsourced its technology support to Union Square
Technology Group. Providing GOC services to other firms would
presumably offer Orrick several benefits: incremental revenue, lower
unit costs for technology (because of higher volumes), and external
forces that instill a disciplined approach to running its operations.
But there are potential disadvantages as well: distraction from the
core business of law and putting the needs of paying customers ahead of
the firm’s own needs.

I applaud Orrick for continuing to
think innovatively but on balance, believe that the distraction-factor
of re-selling internal services outweighs the potential benefits. I
think the firm would obtain greater benefit by devoting time and energy
it might spend on selling GOC service to a potentially more lucrative
purpose – creative applications of technology and processes to further
differentiate and elevate the firm’s competitive position. It’s hard to
beat the profit margin of law practice and I think that any speculative
or unusual investment a firm makes should be focused on supporting and
growing core client service with its traditional margin rather than on
an ancillary business that would have no impact on clients and likely
carry a lower margin than fee-paying legal work.  [Strategic Legal Technology]

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