Why outsource legal processes

Even though the outsourcing underway in in-house law departments and law firms represents a very limited application of a management tool long used by other corporate functions such as IT, Finance, Human Resources, and Procurement, the discussion about whether and how to outsource legal processes has spilled into the mainstream media in the past year or so, with articles in The New York Times, The Wall Street Journal, and The Economist, to name a few. While both mainstream and legal industry media seem to treat legal outsourcing as a singular phenomenon and take sides in some supposedly momentous debate about whether law departments and law firms should or should not engage in it, the reality is that outsourcing is a broad term encompassing a range of different business structures that law departments and law firms (like any other business) may choose to implement depending on their business objectives. Indeed, most law departments already outsource work — to law firms. The real question is whether there is a better or smarter way to match the right work to the right resources. That exploration starts with a critical question: For what purpose (or with which priorities) would you consider unbundling matters or services and reassigning some of the work? There are certainly benefits to be obtained by outsourcing some tasks or services, and there are risks to doing so. Many hours have been spent negotiating contracts to try to reap those benefits and manage those risks, but experience shows that outsourcing the wrong things for the wrong reasons is a far greater a source of dissatisfaction than picking the wrong provider or negotiating the wrong terms.1 Outsourcing is a management tool that can be used to achieve different management objectives. And while outsourcing can save you money, cost reduction is certainly not the only reason to outsource. If you look at only cost reduction, you miss a significant part of the equation, but if you reach for other benefits without thinking through some of the inherent trade-offs, you may miss out on a significant part of the savings you expected.