Why Major Companies Are Outsourcing Legal Solutions

More legal departments are looking to outside talents to bolster their ranks and grow their business. Wolters Kluwer’s new survey of 100 legal executives shows that 93% of legal or compliance departments have outsourced work in the last three years.

And these are more than just smaller companies: The respondents came from entities making more than $500 million in revenue, with the increase most prevalent among institutions with $1 billion-$4 billion in annual revenue.

Why are even institution-sized firms pulling in external experts? And what duties are those hires performing?

Why Now? 

As the survey responses show, outsourcing legal solutions solves multiple problems for legal departments.

One: It eases workflow, allowing companies to redistribute workload to dedicated experts, thereby freeing their in-house counsel to manage and tackle larger, more complex aspects of their project.

Two: On-demand in-house counsel keep the budget down without sacrificing quality. As Wolters Kluwer found, GCs anticipate a 25% increase in workflow, but 88% anticipate needing to trim their budgets. On-demand solutions let them do both.

Third, hiring on-demand counsel for bespoke solutions allows companies to grow their business without burning out their staff. Plus, it lets legal departments test new methods that keep them agile in an increasingly competitive environment.

Paragon CEO Trista Engel explored this topic from the ALSP-lawyer perspective in a recent blog post. She says: “There’s been a growing interest in — and acceptance of — doing legal work in a different way. That comes from attorneys who are saying they want a path outside the traditional legal career path.”

What Is the No. 1 Function? 

According to the Wolters Kluwer survey, the second and third highest duties companies are outsourcing are corporate compliance (40%) and legal research (43%). This speaks to a desire and need to keep pace with evolving legislation and regulation.

The number one reason legal departments outsource, however: technology strategies. Of those Wolters Kluwer surveyed, 59% say they rely on outside legal tech providers.

This makes sense: Technology changes every day. From eDiscovery to AI-powered research, the changes can be overwhelming for even the most up-to-date lawyer.

(Read our piece on how improving legal tech can elevate your bottom line.)

How Can ALSPs Help?  

Let’s explore the top three factors that go into an in-house counsel’s decision to find third-party talent: experience, 45%, followed by budget, 31%, and finally, accessibility, 29%.

While ALSPs address the “budget” factor by offering a significant discount to standard Biglaw billing rates, the advantages of the model run far deeper.

On the topic of accessibility, for example, interim counsel are more than just outside advisers. They become embedded members of your team dedicated to your success.

This results in higher engagement, more time efficient operation, and lower costs. It also leads to an optimized workflow for permanent staff, meaning a GC can continue to grow their department without worrying about burnout.

Regarding experience, interim counsel providers are highly selective about the lawyers they hire. And for the lawyers who work with ALSPs, the model allows them to grow their careers while having more time for family, hobbies, and other interests.

Because lawyers enjoy this lifestyle, ALSPs attract the best and brightest in many fields.

Today, it’s clear that GCs are increasingly open to operating their departments in new ways.

Flexible counsel are playing an ever-increasing role, serving as an ideal complement to both permanent employees and outside counsel.

The model allows for the team integration and work-life balance of permanent hires, plus the flexibility and niche expertise of a large law firm.

As surveys like this reveal, interim counsel are a key tool for GCs looking to maximize productivity and morale while minimizing their costs.

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