Legal outsourcing is slowly – but surely – taking over more and more from the legal sector, and there is no doubt that it’s here to stay.
Legal outsourcing is the process whereby a law firm or an in-house legal department hires a third party to complete its necessary tasks.
In a 2022 survey of over 100 executives in charge of corporate legal outsourcing decisions at U.S. companies with more than $500 million in revenue, a super large portion – 93% of corporate legal departments – updated that they have outsourced legal work over the past three years. This number is expected to continue to increase in the years to come.
Law firms and in-house legal departments all over the world are still dealing with the effects of Covid-19. One of the ways they have handled the ruptures caused to their businesses is by outsourcing tasks that those working within the firm would otherwise do.
What can law firms and in-house legal departments outsource?
There is a wide variety of tasks that law firms and in-house legal departments can choose from to outsource to alternative legal service providers (ALSPs). The list includes, among others:
- Drafting legal documents
- Document review
- Due diligence
- Litigation and court appearances
- IP portfolio management
- Legal research
- Jurisdictional work
- Ongoing corporate assistance
- And much more
According to the same 2022 survey, present and future outsourcing plans are focused most on regulatory risk and management. These findings add up given how much emphasis is placed on ESG and cybersecurity issues.
What are the benefits of legal outsourcing?
Also referred to as LPO (Legal Process Outsourcing) – legal outsourcing provides many benefits for law firms and general counsels looking to reduce costs and keep company morale high.
- Outsourcing helps reduce many of the overhead costs. By bringing on outsourced legal counsel, firms and departments do not have to deal with the costs associated with hiring a new, full-time employee to complete the same role.
- Efficiency is also greatly increased by outsourcing legal work. An EY Law survey, created by EY Law in cooperation with Harvard Law School’s Center on the Legal Profession, states that law department leaders say their teams spend too much time on low-value, repetitive, or routine tasks.
- By outsourcing, team members do not have to complete this time-consuming and monotonous work. Instead, they can focus on work they find more interesting, which leads to shorter project completion times.
In the same EY Law survey, almost half of the general counsel surveyed stated that an increasing amount of low-value work was adversely affecting the morale of their teams.
Bringing on an ALSP enables law firms to maintain high spirits in the office, given that employees will be performing more of the tasks they want to be doing.
Overall firm performance also improves with the use of ALSPs because individuals tend to do better at what they enjoy. This results in less lawyer burnout, fewer sick days, less turnover, and more time spent on activities that are profitable for the firm.
ALSPs are also known for using many tech solutions. Using advanced technology through an ALSP allows firms to have faster turnaround time, enabling them to take on more projects.
How to pick an ALSP?
Picking an ALSP (Alternative Legal Service Provider) to outsource your work is not an easy task. While many firms get bogged down by looking at the least expensive service, this is not the only factor law firms should consider.
Although cost is certainly important, and most law firms and general counsels are switching to ALSPs to cut down on overhead costs, firms should also consider the experience that an ALSP has and how much emphasis it places on taking security measures.
Looking at the experience that an ALSP has is paramount to the success of the outsourced task at hand. If an ALSP does not have the necessary knowledge and exposure to the task or practice area a law firm is asking for work in, it will likely not be productive.
With Chambers ranking ALSPs in their own legal industry category (link), it’s clear that they are not going anywhere. It’s time to join the bandwagon if you haven’t already.