As practices find their place in the new age, a rising and noticeable trend has been the increased outsourcing of services for legal practices. In general, the benefits of outsourcing have been widely raved about in other industries. However, when it comes to operating a legal practice, more lawyers are wondering how they can best incorporate the cost and time cutting measure into their legal operations, and whether it is the right move. By 2025, the global legal outsourcing market's expected growth will be $35. 9 billion. From future-proofing your legal career with technology to reducing the burden of specialized workloads on experienced lawyers, here's how to get outsourcing right as a lawyer - and why you should.
As a legal professional, your firm's inefficiencies are highlighted using your billable and non-billable hours. According to the 2018 Clio Legal Trends Report, lawyers only boast a 30 percent utilization rate. So, for a 60 hours work week, only 20 hours are billed by lawyers. Legal practices have also been shown to have an 81 percent invoice rate and an 85 percent collection rate for their fees. This means only 21 percent of a lawyer's time that is spent working contributes to revenue.
Routine and non-specialized legal tasks can be outsourced to other firms or individuals, which allows lawyers to focus on client needs and increasing billable hours. For your practice, it helps to increase your capacity, and enables your lawyers to focus on what they do well, improving client experience. Finally, outsourcing can help firms access expertise and specialization skills, without the full-time price tag. This is particularly relevant currently, as law entities have built on subcontracting during C-19, with many firms choosing to recruit freelance lawyer support or outsource marketing, accounting, and human resource functions for their private practices. For instance, a legal practice outsourcing to paralegals can enjoy having them serve as legal administrative assistants and filing standard motions, or drafting legal documentation during the pandemic. Lawyers can then focus on depositions and building a good case for client representation in court.
Depending on your practice goals and internal inefficiencies, some options for outsourcing may be unnecessary - and costly. Remember the aim is to improve and simplify the business processes within your legal practice; not complicate them further. To do this, start with answering a few key questions about the legal process outsourcing (LPO) option. Does your firm have enough volume of work to outsource regularly (monthly or quarterly) to a firm? If not, you may be better off working with a contractor or freelancer for one-off projects or peak seasons.
Do you require an in-house presence? Remote working allows you to access worldwide talent. However, many legal processes come with a confidentiality caveat. Outsourcing raises several questions about client security. Finally, are the tasks you are looking to outsource highly specialized? What services do you spend the most unbillable time on as a practice? One good example of outsourcing can be case research and document management services. According to a past IDC study, time wasted on document creation and management costs legal firms approximately $9,071 per lawyer annually.
Common law jurisdiction stipulates that all communications between legal counsel and clients are protected and confidential. When outsourcing, this can present a dilemma for your legal practice - and potential grounds for a lawsuit. For instance, if your firm specializes in tax or immigration cases and opts to outsource, this exposes sensitive information to external parties. If you plan on outsourcing parts of the legal process, you must disclose and obtain the consent of the client before proceeding. Also, when choosing external legal professionals, ensure they are familiar with the privacy laws, both in the state and nationally.
Maintaining the quality of work as if it were produced in-house is always a concern. Without the implementation of proper quality control mechanisms, legal practices risk the production of substandard work and the loss of valuable clients. Ensure your firm does a thorough background check on potential outsourcing firms or contractors, including their past work. During the process, ensure that smooth two-way communication protocols and checkpoints are established so that quality can be regularly assessed and assistance provided if needed. Finally, ensure that any outsourcing firm or legal representatives have a point person for information and regular communication on caseloads.
Outsourcing presents a wide range of improvement opportunities for legal practices - if done well and done right. Law firms must be mindful of the potential ethical and privacy complications outsourcing can present, and be proactive in implementing the right safeguards before reaching out to contractors. If they do get it right, the potential is extraordinary.