Camerons may live to regret its boldness

"Looks like it's time to outsource the partners as well." Unfair perhaps, but the comment from one reader on Legal Week's story last week regarding CMS Cameron McKenna's financial results does illustrate the extent to which the City firm must tread carefully.

Having last month announced a deal with Integreon billed as the largest outsourcing yet seen in law, Camerons was already facing unsettled staff. There is also some evidence that the communication regarding the move made the inevitable internal tension more pronounced than necessary.

In short, Camerons initially went out of its way to project itself as the bold innovator with too little regard for how that message would play internally. And there are a number of other reasons to question whether Camerons was wise to position itself so strongly in the brave new world of outsourcing.

At the best of times a large outsourcing project comes with plenty of risk, even if handled well. But Camerons is not undertaking the venture at the best of times, coming after two years of tough financial performance. Camerons has now seen partner profits fall from £655,000 in 2008 to £453,000, while turnover has fallen in 2009-10 by a further 11%.

And, of course, Camerons has already put in place other measures to cut costs, including last year announcing a redundancy consultation and introducing a flex scheme that saw associates and support staff asked to take reduced hours and pay. The danger is that the Integreon move will be interpreted as a last throw of the dice rather than a commitment to innovation; there will be those who will argue that, while cost control and outsourcing are fine in themselves, the most crucial issue for any law firm is the ability to build business.

There are several other reasons why the Integreon deal looks questionable. For one, to signal your readiness to outsource your entire support function without sending out any legal work gives a worrying signal about how non-legal staff are viewed within the business. You can also debate if it is appropriate to outsource staff who the previous year were asked to cut their own pay as a gesture of long-term support for the firm.

All this before you get into the issue of whether the entire back office, including areas like human resources, finance, communications and business development, can be viably sent out of house. The firm says it will now review its operations to see which areas can realistically be outsourced. From what I can tell, this was always the plan rather than a U-turn forced by angry staff, but this message apparently got lost in the rush to talk up the venture's radicalism. After a shaky start, I'd say Camerons is going to have to work hard to get this thing back on track.