What can you learn from Manila's largest shared services operation?
Interview with Joeri Timp, Baker & McKenzie's Executive Director in Manila
BH: Joeri, could you describe your operations in the Philippines, what kind of services are you providing to your customers, and who are your customers?
JT: My service centre is a captive service centre, so we only service our own organisation worldwide. Baker & McKenzie is a law firm, in fact it’s the largest law firm in the world. We were the first one in the legal industry to set up a shared service centre offshore, and we are still the largest today, with 500 people here in our service centre in Manila.
At this stage of our journey, we service every area that a law firm needs to cover –ranging from the typical IT and network support services to finance. We draft bills for our lawyers and we help our offices around the world with their accounting. We also have a very large pool of secretarial support, which provides typical secretarial copy typing, voice transcription, translations, PowerPoint presentation creation, Excel reformatting to PDF, and all kinds of document support.
As we are a large law firm, and "business development" and "marketing" are very important to our firm, we have around 65 people now working in that area. We also have a group of paralegals and support lawyers, who help our lawyers around the world to develop certain services and products, or help them in the management of their knowledge base, so that means libraries or recycling older documents that our lawyers have written in the past so they can be used in the future.
BH: I talk to many people who run shared services, and generally it’s typical back office material, finance & accounting, HR, IT. When you talk about this paralegal group, Joeri, it nearly sounds as if you’re providing some of the front-end pieces of business.
JT: Yes, the shared services definitely started as a back office function ten years ago, but we are moving more to the front desk type of activities, although slowly. We still operate behind our lawyers around the world, but it’s true that especially in the knowledge management area, and in certain client facing activities that are more administrative than legal in nature, we already are involved in direct client facing work. For example, we have a large group working on trademarks and intellectual property issues.
BH: What does this group do, for example?
JT: Say we have a client with brands all over the world. All these trademarks need to be registered, and properly renewed and managed in every country, so we have a large team doing exactly that – keeping that database up to date, making sure that nothing is forgotten, making sure that lawyers around the world and intellectual properly trademark officers around the world get instructions to renew or to change these registrations.
Sometimes, it’s a bit difficult to explain our services, especially if people don’t really understand the various services a large law firm provides. We have 11,000 people around the world. Some of our smaller groups focus on exotic things that are very knowledge driven, and that you typically would not find in a service centre. Overall, as a firm, we always try to investigate the possibility of setting up services in Manila. In fact, we are only constrained by two things: One is the talent and capabilities or skills available in Manila. And I should say that talent is not really the problem, but experience and skills are in short supply.
The other thing that constrains us is the face-to-face contact with our clients, which cannot really happen from Manila, but which does happen in London, New York, Hong Kong and so forth.
BH: How are you limited by face-to-face? Because, if Manila acts as an invisible support to your front offices, I don’t see how that limits you?
JT: Let me explain: We are a true law firm, with partners and associates around the world, who have their typical career paths. As these things go with lawyers, there’s always a combination of technical and legal knowledge, which is going to be at the top of the market, combined with the personal relationship with the client. The partners at our firm establish these relationships over time, and manage these relationships, and are the primary interface with the clients.
These relationships are typically managed between a partner and the legal department of these international companies, wherever they are headquartered. That is the relationship that is key, and there are great efforts to keep that relationship, to build that relationship on a personal level. It’s not something the partners would hand over easily. So our service centre is definitely not capable or ready to establish and to maintain those relationships directly with our clients.
Also, we’re not lawyers. Or rather: most of us are not lawyers, and definitely not at the level of the Baker & McKenzie partners.
BH: Would the clients of Baker & McKenzie necessarily know that the work is being sourced from Manila?
JT: If we would be performing legal work that is directly billable, ie, not back office work, we would always disclose this to the clients. But whether our network is being monitored out of Chicago, or out of Manila, it should not be the client’s concern.
BH: But some of the work you do is billable, correct?
BH: Let me change tack for a moment. Can you tell us why you choose the Philippines to set up your centre? And with the Asian market growing, to what extent is the shared services centre supporting this growth?
JT: We opened this centre 11 years ago, so we were definitely an early mover in the legal industry. It really started as an experiment in the Asia region. Our choice for location was constrained by the fact that we decided to open this facility in a location where we already had a presence. We have offices pretty much everywhere, but not really everywhere; for instance, we do not have offices in India, because in India there are special rules that forbid foreign law firms from opening offices there. We still do not have an entity in India. India was, in fact never considered. When we looked at the local jurisdictions, where English language was available, Manila and Malaysia immediately came up – Manila being the more suitable for us, because the labour pool is five time bigger that that in KL. Our initial shared service centre, with just 10 employees, was hosted at our existing law office.
Today, our service centre is three times larger than our Manila law office! For us, Asia is a good place. Some of our competitors have a different situation, however. For instance, Allen & Overy decided to open a service centre in Ireland recently. For them it makes sense, because they are very London-based. London is very important for them.
For us on the other hand … even though we started in Chicago, North America actually only represents 25% of our revenue today. Most of it comes out of Europe, followed by Asia, so we are truly a global firm, and it really doesn’t matter where the service centre is. Having said that, however, we do run into some problems with time zones sometimes. We now have a very small group of people in Buenos Aires, where the time zone makes more sense, and the Spanish language capabilities make more sense. It is a very small team of only six people, and they are an integrated part of our Manila facility, but they are in Buenos Aires.
We probably will be creating more of this kind of satellite groups, because of time zones. Night work shifts are painful to run out of Manila, especially if you work with knowledge workers, and not so much just call centre agents. Knowledge workers won’t want to do night shifts for the rest of their lives, so we probably will be looking into spreading ourselves around the globe a bit more, but only for small groups.
BH: Are these groups akin to what we would call Centres of Expertise?
JT: They would definitely become Centres of Expertise, but not necessarily in client facing work. That being said, a large function of what we perform could be considered back office, in that it’s related to finance, in particular our billing function. For lawyers, billing is an important element of life, not so much because of the money that it brings in, but also because of the narratives and the explanations that figure on bills. A lawyer’s bill is actually considered client-facing work, and it’s also knowledge driven. So these are the types of groups that we are now considering setting up in the Western hemisphere.
BH: One last question. We hear a lot about legal process outsourcing. What are your thoughts about it?
JT: Well, legal process outsourcing is definitely important to my mind, and we are constantly thinking about it. Strategically, we are still seeing where that is going.
Though there has been a lot of talk about it, LPO is not the big, big, industry its providers claim it is.
BH: Could you define LPO for us?
JT: For me, it means that you would have trained lawyers performing activities that require legal training to do properly, which immediately means that anything that doesn’t require a trained lawyer should not be labelled LPO. That’s how we talk about it.
For instance, the trademark registration that we are handling now, these are not trained lawyers. Of course, they are working under the supervision of trained lawyers, but the 50 people who are actually doing the work in Manila on a day-to-day basis are not lawyers, or they do not need to be lawyers, because the work is already organised and so that there is no need for legal training.
When I talk about legal process outsourcing, I like to think that you need lawyers to do that, but in reality, legal processes are something of an oxymoron. People don’t even think of "legal" as a process. Some legal activities could be broken down into legal processes, until you don’t need lawyers anymore, and that’s the interesting evolution, of course.
BH: Would the main clients of an LPO provider be in-house counsel?
JT: I think indeed that it’s going to be the counsel that are going to lead the charge towards LPO, and it’s not going to be the law firms.
I think most of the LPO work will be coming from in-house counsel pumping the work directly to LPO providers, or forcing the law firms to work with LPO providers. It may be a good model, in the sense that law firms can maintain their specialty without getting tangled up with large groups of process driven support groups, because that’s a totally different business than providing legal advice.
BH: Thank you. It’s been enlightening to hear what you’re doing – how you provide not just back office but also some end-client-facing services.
I think a lot of what you’re doing is at the forefront of thinking in this field and that people across industries will be interested in reading about it.
JT: Thank you very much.
If you want to hear more about shared services in the Philippines – attend SSON’s Shared Services & BPO in the Philippines Conference on November 15-16.