An in-house lawyer's guide to outsourcing legal work
We investigate the growing number of outsourcing options available to in-house legal counsel
Is your in-house legal team wasting precious time on repetitive work?
Or worse, are you wasting precious budget sending straightforward tasks to your law firm partners?
We look into the many outsourcing legal service options on the market.
Budgets are being squeezed
In-house legal departments are under increased pressure to get more work done for less. Only a quarter (25%) of in-house teams said they planned to increase their budget, a UUֱ survey found.
And time is being wasted
More than half of in-house lawyers list spending too much time reviewing documents as a key pain point. A similar number said they spend too much time on repetitive tasks that are low priority.
Now is the time to get strategic
Legal counsel urgently need to reconsider how they're managing workloads. What work should you keep internally? What should you pass to a law firm? Where should you outsource the rest?
We discuss...
Now, more than ever, is the time for in-house legal teams to cement their place as strategic, commercially-savvy and digitally-driven assets within their organisations. However, many are being held back by mountains upon mountains of routine, lower-priority work.
Instead of attempting to manage this hefty workload internally, or sending anything and everything over to their law firm partners, a growing number of legal counsel are looking to outsource workloads through unconventional means – giving them more time to focus on the strategic, board-level tasks.
In this report, we take a look at some of the many outsourcing options available to the in-house legal market, including:
The growing prominence of Alternative Legal Service Providers (ALSPs)
Years ago, a series of . In 2007, the Legal Service Act allowed non-lawyers to own and manage law firms, causing a flurry of fear that retail chains and supermarkets would then start offering legal services at half the price of law firms.
A decade and a half on and these alternative business models are now carving a unique place in the world of legal services. They haven't yet made much of a dent in the profits of the top law firms, but that's not to say they're not winning work. Just watch our interviews with the legal counsel at BT and Marco Polo Network to see what other in-house teams are doing.
The tech-centric mixed delivery models offered by ALSPs allows in-house teams to get more work done and cut costs, says Dana Denis-Smith, CEO and Founder of Obelisk Support, an ALSP.
“The volume of work that is floating around at the moment is huge. I think traditional law firms couldn't cope with it, especially with their structure and infrastructure.”
Denis-Smith believes in-house teams operate on a sort of unofficial bartering relationship with their law firms. "In-house lawyers need to break away from this idea of dependency – they really have options now,” she says.
Nigel Rea, Service Development Director at legal services provider LoD (Lawyers On Demand), says one of the perks about working with an ALSP is their attitude - they have to move twice as fast, be twice as creative and bring fresh thinking.
“If you engage newer providers, you’ll most likely find people move twice as fast, and you're more likely to get some interesting outcomes because we are coming to things with fresh eyes.”
Firefighting is one of the biggest challenges legal teams are up against right now, says Rea.
“The main challenge for in-house leaders is how on earth do I balance my team and my capacity between all the fires that I need to keep putting out and all of the strategic stuff that no one has time to do.”
ALSPs are perfectly equipped to help in-house legal teams do more, he says. “That's what we're constructed to do – take that pain off the legal department’s desks.”
Outsourcing high-volume work means general counsel could be better equipped to manage more complex work in-house that, in the past, they might have sent to their law firms because they didn’t have the capacity to do it themselves.
“If you talk to most general counsel, they will say if they had the capacity and the expertise, they would keep all the really strategic complex work for themselves because that is institutional knowledge. But often they just don’t have the capacity or the expertise because so much of their time is just dealing with the day to day and the demand for doing more with less,” says Anup Kollanethu, UK Head of Legal Managed Services at EY. “You put those factors in play and you can see why the ALSP market has grown so much.”
All of these factors are helping to change in-house attitudes towards alternative providers. Many organisations have now set up separate ALSP panels in addition to their long-standing law firm panels, as well as widening the scope of work being instructed.
Jamie Fraser, CEO & Founder of NineNineSix, chats with Emma Dickin, Head of Practice Area Group In-House Strategy at UUֱ about how in-house teams use ALSPs and why
BT's Transformation Director, Legal & Co Sec discusses outsourcing to ALSPs
Marco Polo Network's Head of Legal shares his thoughts on the alternative market
Why would in-house lawyers use an ALSP and what should you consider before outsourcing?
Rise of the legal consultants
A growing number of lawyers are leaving traditional firms to become self-employed legal consultants at revenue-sharing firms like Keystone Law and gunnercooke.
At these firms, lawyers take home approximately 70% or more of their billings (the rest goes to the firm for tech, insurance, admin and branding services). In return, they have to bring in their own business.
All this raises a very interesting question - if a lawyer you worked closely with were to go out on their own under this model, would you follow them?
Andrew Cooke, General Counsel at esports company Fnatic, says he has yet to use a platform firm to access legal services, but wouldn’t hesitate to use one if an external lawyer he had a good relationship with jumped ship.
“If somebody moves from a small firm or a firm we like working with to a big US law firm and all of a sudden their rates triple then we’re not going to continue to use them, but if they went off to work under a platform model, then yes we would go with them.”
One of the most compelling benefits of working with a legal consultant is the level of access and service you can receive.
“You get direct and immediate access to an expert in their field—you haven’t got to go through tiers of juniors to get to them,” said Mark Swann, a Director at UK Business IT, an IT services company and client of revenue-sharing law firm Excello Law.
“The price is also more competitive because these people are generally working remotely, so they can afford to do things at a reasonable rate. And because of the way these firms are structured, because we are a source of income for the lawyer, they care much more about me and my business, so you get a much more caring service.”
The Big Four accountancy firms
The workloads of in-house legal teams are growing - and the bad news is, they're only going to get bigger.
This leaves legal teams with three obvious options; hire more people, invest in legal technology to automate work, or outsource it to the right legal services provider.
The two latter options are where the Big Four accounting firms have carved out a competitive niche, benefitting from the growing prominence of ALSPs (see above) and changing the way that legal services are delivered.
“Most in-house teams have traditionally been used to working in a certain way; you either do the work yourself or you ask your panel firms to support you. Whereas, if you are in any other business function, you’re used to doing it a bit differently; you’re used to outsourcing scale stuff,” says Anup Kollanethu, UK Head of Legal Managed Services at EY.
“More in-house teams are now starting to see how their peers within the business are operating and there is almost an acceptance they have to adapt and use a different approach.”
The Big Four firms have blended tech and process to better manage high-volume, low-priority work at a much lower cost, says David Wilkins, Lester Kissel Professor of Law at Harvard Law School.
“The Big Four can offer a far higher integration of technology, project management and process management; they employ a huge number of people across a huge range of specialties and they are way more global than even the most global law firm. This is why, for many kinds of issues that companies face, it’s a very attractive offering,” says Wilkins.
Juan Crosby, Partner and NewLaw Leader at PwC, explains how the Big Four have benefitted from the rise of ALSPs: “Initially, ALSPs were more focused on higher-volume, lower-complexity activities a company might outsource... but now the types of services that are offered have moved much higher up the complexity curve.”
The adoption of technology is a key driver behind this change, according to Crosby.
“If you look at the biggest transformation that is happening in law and you look at the way in-house legal functions are revising their operating model, a key component of the change is around leveraging scalable technology,” he says.
With PwC already helping their clients implement technology across a range of business functions, the firm is able to integrate these previously separate systems and give organisations greater insights into their legal data, says Crosby.
Pushing the very boundaries of legal technology gives the Big Four a significant competitive advantage over traditional law firms.
“The Big Four put a lot of investment around researching how they can take existing technologies that don’t even relate to the practice of law, but can provide a client solution,” says Bea Seravello, Co‐head of Baretz+Brunelle’s NewLaw Practice. “Law firms are not there right now, they are still struggling with just embracing technology to use in practice.”
This technology‐enabled component is key to the Big Four’s legal services offering, says Fiona Maxwell, financial services senior correspondent at investigative regulatory news publication MLex.
“Organisations are no longer forced to go down the traditional law firm route, especially if the Big Four are offering tech‐enabled solutions that are better value for money and can be done in half the time. If an organisation is working with one of the Big Four for their audit, tax or consultancy work — why not add on legal services as well?”
The Big Four and law - a deeper look into managed legal services
Craig Chaplin, Partner at DWF and Commercial Director of its Mindcrest Division shares his thoughts on the Big Four and Alternative Business Structure law firms
Legal technology
In many cases, outsourcing legal work is a necessity for in-house legal teams - and the range of new providers on the market makes these options even more tempting than before, as we've explored in this report.
However, there might be cases where outsourcing legal work merely places a band-aid on continuously recurring problems.
A growing number of in-house teams are investing in the right legal technology to automate legal work, rather than pay someone to take it off their hands. Popular products range from workflow management tools that are designed to increase efficiency, through to legal document drafting automation software that saves time and increases collaboration.
But one of the most effective time-saving tips for in-house legal departments is to give legal counsel access to the right legal research and guidance.
In-house teams typically get a huge range of incredibly specific legal questions thrown at them each day - and they're expected to provide legally accurate and commercially astute answers almost on the spot. But no-one can be expected to be an expert in corporate law, and commercial law, and competition law, and technology law... can they?
If your legal team don't have access to a paid legal guidance platform, chances are they're Googling the answers.
A recent UUֱ survey of 300+ lawyers found three quarters (74%) use Google for research and guidance information. But this isn't necessarily out of choice. Two-thirds (63%) agreed that it is riskier to use open sources than paid sources, and the same number (63%) agreed it takes longer to complete a research task using free sources versus paid sources.
This is an easy fix. Instead of forcing your legal team to Google answers, or sending basic questions to your law firms (who unfortunately may also be Googling the answer), you can save time by equipping your team with access to legal research and guidance platform.
In fact, much of the guidance written on the market-leading legal guidance platforms is written by leading lawyers at top-tier firms - meaning you're getting the same advice that you'd get if you went to a law firm, anyway.