Why Use an Outsourced Legal Department? (I)
By Jonathan Wachs, Offit Kurman
For organizations around the world, outsourcing various functions and departments has become an ordinary part of doing business. Legal services are no exception. In fact, according to Deloitte’s 2014 Global Outsourcing and Insourcing Survey, nearly two-thirds (65%–67%) of organizations everywhere outsource legal opinions and counsel, and even more respondents (15%–23%) said they planned to do so.
As new forms of legal service delivery emerge to meet the demand, law firms are evolving. Altman and Weil found that only 14% of firms consider outsourcing a temporary trend, while the majority regards it a permanent change. Meanwhile, a 2014 Allen & Overy survey found that 53% or organizations surveyed struggle to coordinate different types of legal service providers, and that 39% “would prefer to use a one-stop shop for legal services.”
Outsourcing is the process of assigning tasks, responsibilities, or processes to an independent service provider. Accounting, manufacturing, programming, sales, and customer support are some of the most commonly outsourced jobs, though virtually any in-house service can be fulfilled by contractors.
Why should an organization consider using an outsourced legal department? This series takes a look at some of the most compelling reasons to engage a third-party lawyer or team of lawyers to meet your legal needs.
Reason #1 to Consider an Outsourced Legal Department: Customized Arrangement
A business’ legal needs are diverse, and vary throughout its lifecycle. The knowledge you may call on during your company’s founding stages is drastically different from the skills required during a sale of or exit from that company. There is a reason attorneys typically concentrate their practices on one or two areas of law: each area involves countless regulations, governing authorities, and best practices. Beyond their initial education, practitioners have to stay informed of current and impending legislation, as well as cultural changes affecting their disciplines. Moreover, the law’s categories and subcategories are legion. Employment, real estate development, intellectual property, insurance, and government contracting are just a few examples of the fields to which a lawyer can devote his or her entire career.
Imagine tasking one or two attorneys with all of the above. It seems like a decision that would lead to a rash of mistakes and inefficiencies, and yet, it is the reality for many general counsel. If in-house lawyers need to spend time learning the laws, expectations, and paperwork associated every issue their organizations face, bottlenecks occur and risks increase.
As much as one lawyer with too many responsibilities can pose a liability, so can a lawyer with too few. It can be expensive to retain general counsel when legal services are unnecessary: for instance, during a period of slow sales or stagnant growth. This uncertainty hampers your competitive ability to move quickly between routine business and pivotal moments that warrant multiple lawyers.
When they cannot predict the level or duration of legal assistance necessary, organizations sometimes choose to hire several law firms, addressing issues piecemeal—as they arise. This option has drawbacks. For one, the fees associated with working with more than one team are often expensive and unpredictable, not just upfront, but over time. It is a costly and counterproductive process to ensure multiple lawyers at different firms are familiar with your business, methods, documentation, and industry. Second, the attorneys may not communicate with each other well, and may actually be incentivized not to cooperate with rival firms. Finally, it can be challenging internally to keep track of which legal team manages each project, breeding disorder and confusion. Why spend more money on the deliver of legal services to only increase their likelihood of error?
The key is integrating a full service regional law firm to meet the specific needs of your business, budget, and schedule. A single outsourced legal department that integrates multiple practice areas empowers organizations to receive legal services effectively, and on their own terms. Clients can decide when and how to engage with attorneys, determining the right length of service, and breadth and depth of knowledge required.
Integration means versatility. A customized legal department can allow your business to better streamline the use of external and internal legal resources, as well as non-legal resources within your organization. It provides you with a bench of capable attorneys who can move at the speed of your business at a moment’s notice, and withdraw when no longer needed. At the same time, an all-in-one department makes it easy for executives to have regular discussions with legal professionals to understand how the legal strategy relates to each aspect of the business’ operations. By having periodic scheduled check-in sessions with your outsourced general counsel, you can identify and monitor legal issues relating to your business before they become significant problems.
Members of an outsourced, integrated legal department are united by the same objectives, and have complete information about and access to the same client at all times. They can manage the overall delivery of legal services pursuant to an overall scope of work, timetable, budget, and set of reporting forms. They can also be on hand to accommodate pressing concerns as they arise, whether that means answering an email or phone call, or visiting the organization at one its locations. Clients frequently find the perspective helpful in matters large and small. A real estate attorney, for example, may notice a zoning error a retail store owner would not have been aware of otherwise. A labor and employment attorney could be invaluable during an HR dispute. A team of attorneys experienced in M&A (mergers and acquisitions) transactions and IP can identify assets a client has under- or overvalued, or assist a client in securing a better deal at the negotiation table.
To meet the needs of today’s dynamic organizations, Offit Kurman has developed New Paradigm Counsel®: a service offering through which Offit Kurman develops and delivers outsourced, customized legal departments. Your business may be particularly well suited for New Paradigm Counsel if it:
- Needs substantial legal assistance to help the company through a rapid growth phase involving new products, services, contracts, terms or conditions of service, employees, regulatory hurdles, or legal disputes.
- Has grown to a size where it needs substantial and continuous legal assistance, but no legal department has been established.
- Currently assigns projects to several different law firms, but would benefit from creating a coordinated legal team for all matters.
- Desires to supplement its current in-house legal department with additional or different legal resources.
- Wants to fill a significant void created by the departure of a prior law firm or counsel.
- Needs substantial on-site legal support for an extended period of time to understand or implement business changes required by new laws or regulations.
For less than the cost of traditional law firm engagement, New Paradigm Counsel provides clients with access to Offit Kurman’s comprehensive suite of legal services. Click here to learn more.
Jonathan WachsOffit Kurman, Baltimore, United States
T: +1 301 575 0302
Jonathan Wachs provides strategic counseling and operational advice to clients in the areas of intellectual property, commercial transactions and outsourced legal departments. As head of the firm’s Intellectual Property Group, Mr. Wachs works closely with clients to develop, register, analyze, enforce, and transfer intellectual property assets in a customized, cost-efficient, and highly effective manner. Additionally, he conducts intellectual property audits through which clients learn the nature and value of their intellectual property assets and the steps needed to protect such assets from misappropriation or dilution. As a business lawyer, he has successfully negotiated and completed several multimillion dollar business transactions and has served as general counsel to several small and midsize businesses and organizations in various industries and professions. He also manages a blog about intellectual property issues, Friday Factoids. Mr. Wachs co-manages New Paradigm Counsel, a service through which Offit Kurman delivers customized, comprehensive and cost-effective outsourced legal departments. Through New Paradigm Counsel, Jon served as outsourced general counsel for a government contractor, a large printing business, a payment processing company and an identity theft restoration business.
Published: October 2015 l Photo: jovannig - Fotolia.com