Exposing the Hidden Costs of In-House Legal Hiring

by | Jul 7, 2021 | Insights

The scope of flexibility within the legal industry has changed, opening new avenues for cost efficient solutions. The expectations within the industry itself have changed as well, fluidity and the mitigation of cost being of the few important attributes.

As the recent Axiom Whitepaper pointed out however, cost alone will never be the factor used to quantify a GC’s departmental contribution. Rather, true value consists of the optimization of “spend, risk, and people management”.

It’s rather important then to lean into the idea of flexible legal staffing, which provides legal departments the ability to procure experienced talent, which ultimately aids in adapting to a fast-changing landscape, while simultaneously reducing risk, and significantly improving legal outcomes.

 

 

According to a cost analysis conducted by Axiom, annual savings through ALSPs (Alternative Legal Service Providers) and Flexible Legal Staffing companies can total, on average, around $85,000 per year, as opposed to the cost of hiring a full-time in-house attorney.

It’s an undeniable pro, especially when factoring in the daunting aspect of hiring new employees for your team. Flexible legal staffing provides a “try-before-you-buy” cushion; an un-intimidating way of testing the waters with a new hire, and using the opportunity to “assess the types of softer skills that are only appreciable once a lawyer is in-seat.”

This is where the model of flexible legal staffing reveals itself to be one of the most pragmatic ways of providing legal services. And it works for any kind of desired legal hire; in the Axiom whitepaper, a cost calculator was used to compare the pricing of a New York based capital market lawyer, with over 11 years of PQE. The results of the comparison yielded a cost of $590,000 for a full-time in-house GC, whereas for its own flexible legal staff, it uncovered a price of $505,000.

 

 

The numbers speak for themselves, and they’re hard to ignore. Not to mention, the industry as a whole seems to be wholly embracing the localization of legal hiring, and the comfort found in in-sourcing highly qualified legal talent. A 2020 CLOC report showed that there’s quite a staggering increase in overall ALSP spending, the total legal spend increasing by almost 30% in this sector.

The truly wonderful thing about flexible legal staffing is that it doesn’t assume the one-size-fits-all approach, it’s genuinely a tailor-made legal-ops solution as well as a legal services solution. And it’s incredibly dynamic, allowing departments to merge full-time staff with flexible talent, creating a diverse environment that doesn’t require its full time staff to constantly shoulder the brunt of the legal work. It allows for staff to remain focused, and devoted to their more pressing projects.

Ultimately, when the cost comparable are complete, and the budgetary frameworks of both options (freelance vs. typical full-time legal talent) have been solidified, it’s hard not to be impressed by the slashing of prices that ALSPs are able to provide clients. And it’s especially important to acknowledge such an attribute in a time where everyone is searching for ways to be frugal, yet efficient.

As mentioned previously in this blog, ALSPs are incredibly dynamic – it’s not at all out of the ordinary to expect flexible legal staff to work in tandem with full-time staff, making for a well organized hybrid team of lawyers ready to take on whatever comes their way.