Legal Outsourcing in Times of Economic Difficulty

by | Jun 13, 2022 | Insights


Interest rates are rising globally, stock exchanges are reporting large losses, and the global economy appears to be heading for a downturn. For the legal industry, this might result in attorney layoffs and reduced profits.
For attorneys seeking work, and legal departments wishing to achieve more with less resources – ALSPs are the solution.
ALSPs (alternative legal service providers) can absorb top-tier talent seeking employment in a tight labor market. ALSPs can also provide legal departments that top-tier talent at a fraction of the cost.

First, we must acknowledge that legal departments can, and will, lay associates off. This has been demonstrated by previous economic recessions and is a proven method to reduce operating costs. Specifically, legal departments that focus on transactions/deal work may be particularly vulnerable to layoffs.
During challenging economic conditions there are less transactions completed as industries focus on surviving the recession instead of expanding. Rising interest rates make financing more costly.
Everything from mergers and acquisitions, real estate, capital markets, and everything in between will experience reduced activity as companies seek to reduce expenses and avoid bankruptcy. Although we may see defensive measures such as freezing hiring, cancelling bonuses, and reducing salaries before layoffs, we must acknowledge that layoffs are likely.

Second, how will legal departments service their existing clients with a reduced staff? The best solution is to partner with an established ALSP who can provide additional labor power based on client demand. Alternatively, the legal department could simply make their attorneys work eighty (80) hour weeks. But we all know this only leads to increased employee benefits expenses in the form of vacation and sick time use due to the strain of doing the workload.
This approach may also result in attorney resignations due to the challenging work conditions. Attorney resignations during times of economic difficulties can make business operations significantly harder. ALSPs can help legal departments avoid these challenging decisions by providing elite talent at a fraction of the cost of hiring someone directly, and on a flexible arrangement.

Third, an ALSP could entirely replace a legal department if the business outlook requires it. For example, an early-stage tech startup company may not need an internal legal department, but they still face legal problems that require advice and action.
An ALSP can become an external legal department by providing the company with experienced former general counsels who can provide guidance, draft contracts, risk mitigation strategies, and all other aspects that a traditional in-house counsel would provide.

But at a fraction of the cost – maintaining the early-stage company’s flexible and efficient business operations. Partnering with an established ALSP is a high-quality option for businesses seeking timely advice without the expensive costs of an in-house counsel.

Fourth, what do the laid off attorneys do for work? ALSPs can hire attorneys looking for work with flexible employment options. Assuming a financial recession occurs, there will probably be many legal departments seeking flexible solutions. ALSP attorneys might have the option to work as much, or as little, as they prefer given the abundance of work that ALSPs will receive from overworked legal departments.
ALSPs provide laid off attorneys the opportunity to keep their skills sharp, flexible employment, and the ability to service top-tier clients – qualities that often translate into an enjoyable work-life balance. An experience that many attorneys strive to achieve, no matter who their employer is.

In conclusion, ALSPs can provide legal outsourcing solutions to the legal industry during the forthcoming economic downturn. Whether offering elite talent to legal departments, experienced guidance and solutions to smaller businesses, or providing attorneys fulfilling work with a flexible work-life balance, ALSPs can do it all.
ALSPs are a lasting solution to the numerous challenges the legal industry faces – and the faster companies incorporate them into their businesses, the better their long-term prospects will become. To begin experiencing the benefits discussed above, contact LawFlex to receive the help of elite lawyers, at a fraction of the traditional costs.