How Legal Outsourcing is Changing the Legal Sector

by | May 5, 2022 | Insights

Legal outsourcing is changing the legal sector because the concept of outsourcing has far surpassed its restrictive definition. The concept of outsourcing certain job functions is not new to the business world, but it is fairly new to the legal industry.

In part due to restrictive regulations surrounding the practice of law and the conservative nature of the profession. However, legal outsourcing may be slightly different from traditional outsourcing because it now refers to external staffing, legal tech, and ALSP companies. Let’s take a look at the impact legal outsourcing is having on the legal industry.

Both the legal sector and the business world generally have embraced a business model that structures profit earned from non-proprietary assets. For example, Airbnb does not own the majority of short-term residential rental apartments and homes it markets for rent. UBER does not own and operate a large fleet of taxi vehicles.
These types of business models can reduce liability, overheads and fixed costs while improving efficiency due to the option of growing the business as a direct result of demand.

The legal sector will continue to evolve to be a similarly value-based industry. The traditional law firms and in-house legal departments “own” their assets when they are employees. They are committed to fixed costs, regardless of demand.

The model of integrating a legal outsourcing company, such as Lawflex, into the company or law firm means the legal team are able to receive effective counseling or temporary assistance without the commitment and rigidity that more traditional law requires. In this fashion, the law firm, for example, is able to profit from an “asset” that they do not own, or rather, do not employ.

Another benefit of legal outsourcing firms is the advantage they give to smaller law firms. In a sense, the new staffing companies have levelled the playing field between the boutique firms and the larger outfits.
A boutique is now able to access talent in niche areas such as anti-trust, tax, and employment law and they do not need to commit to a full time hire in order to provide their clients with a full suite service.

In addition, they can recruit top lawyers for specific projects, whereas hiring a full-time lawyer would be impossible due to competitive full time salaries being offered and prestige considerations for the lawyers. So, while a top lawyer may do a project as a freelancer for a smaller shop, they would most likely not seek full time employment at such a firm.

In addition, the flexibility to rapidly increase or decrease staffing levels could be a key factor that allows law firms or businesses to survive economic hardships. Although the COVID-19 pandemic has spurred record profits for some law firms, it has also forced some law firms to collapse.

Businesses alike are no stranger to pandemic-related difficulties, and other challenges. Legal outsourcing companies provide the exact type of flexibility that is required to operate within an evolving business climate. As is true across all industries, the legal sector can have busy and slow periods throughout the year, and it is a major benefit to have the flexibility to shift one’s labor force accordingly.

Yet another benefit of outsourcing legal, for the service provider this time, is finding the elusive work-life balance. As many freelancers will confirm, the issue is not necessarily working less hours, but rather, the ability to control one time.
Although this does not have a direct advantage on the consumer of services, the fact that the freelancer is selling his or her own service often means that service is owned by the lawyer developing his or her own business and image.

In short, legal outsourcing is changing the legal industry just like outsourcing has done with other industries. The benefits cannot be ignored any longer. A traditionally conservative industry is reimagining what it means to operate efficiently.
Both law firms and companies that require legal support are increasingly turning towards legal outsourcing companies to resolve their legal problems. The number of legal industry employers using legal outsourcing companies is growing by the day, with no signs of slowing down. This is a lasting change in the fundamental structure of the legal industry, not a passing trend.

The legal industry faces increasingly favorable regulatory changes that permit greater legal outsourcing involvement, and legal outsourcing provides a sustainable avenue to grow one’s law firm or company without the restrictions of employing a traditional law firm. If your law firm or business is ready to receive flexible solutions to your legal problems, contact Lawflex today.