Lee Ann Moore, Chief Marketing Officer
Patrice Gilles, Managing Director, Legal Processes

‘Can you outsource legal spend?’ How many lawyers do you know that would respond with an affirmative answer? We have asked many, and we have met few open to this discussion. Surely more exist… What if a similar question were posed: ‘What can you do to optimize legal spend?’ Would this grab their attention? It should. Law firms are facing downward pressure on rates, threat of alternative price structures, the loss of revenue due to the economy in sectors such as financial services, overarching pressure to cut costs and the need to be a better partner to their clients. In short, it appears that the days of charging $300 per hour to have Ivy League graduates review documents will soon be over! Attorneys find they need to spend more time closer to the business and strategic legal issues leaving them little time to manage these challenges.

Evaluating legal spend options can help solve these critical issues. We are in active conversations with several Fortune 500 clients about optimizing their external legal expenditures. In these dialogues, legal spend is in the range of $12 Million to $20 Million, or higher. While these companies have historically been opposed to the idea of using an LPO offering for legal work, their interest level changes when they hear about the potential savings. Today it is common for companies to reduce this important spend category by as much as 50-60% without sacrificing service or quality of work. Pushed by their clients, law firms that are willing to adopt alternative service delivery models will have a clear advantage.

One of the key enablers for outsourcing legal work was issued in August 2008 by the American Bar Association (ABA). In August 2008, the ABA issued ABA 08-0451 where U.S. lawyers are ethically permitted to outsource legal work, including to lawyers or non-lawyers (both domestically and internationally) if they adhere to ethics rules requiring:

• Competence
• Supervision
• Protection of confidential information
• Reasonable fees
• Not assisting unauthorized practice of law
• If the provider is in a foreign country:
  • Determine whether the legal education system in that country is similar to that of the U.S., and whether professional regulatory systems incorporate equivalent core ethics principles and effective disciplinary enforcement systems.
  • Determine whether the foreign legal system protects client confidentiality and provides effective remedies to the lawyer’s client in case disputes arise.
  • Determine necessity to obtain informed client consent before engaging outside assistance.

It is important to determine if using an alternative delivery model for your legal services will help you to optimize your legal spend. The word ‘outsourcing’ may never be used in your evaluation as it is less a question of offshoring legal jobs than a question of increasing capacity of the current staff to focus on critical issues while optimizing budget dollars/pounds/Euros for mundane tasks. The significant savings reported by others should serve as a point of inquiry for anyone managing this critical function for their business.

For more on this topic from EquaTerra, read the paper, “Legally Speaking: What You Need to Know About Legal Process Outsourcing and How to Get Started.”

Also, check out these related blogs:
•    Nine Predictions for the Future of Legal Process Outsourcing
•    Emerging Outsourcing Areas: Legal Process Outsourcing

Filed under: Legal Process Outsourcing, Market Trends and News by EquaTerra