My colleagues and I were excited to see Incisive Legal Intelligence (formerly ALM Research) release a legal outsourcing study. We thought The Law Deparment Legal Outsourcing Study, 2008 would quantify the rapid growth of legal process outsourcing (LPO).
In fact, it focuses exclusively on law departments outsourcing legal work to law firms. Incisive found that general counsels (GC) outsourced 40% of legal spend in 2008, down from 46% in 2007. The study does not quantify other law department outsourcing such as e-discovery.
With GCs outsourcing so much, we wonder why some seem nervous about legal process outsourcing, that is using a company like Integreon for managed review service, e-discovery, contract review and management, or legal research.
Many lawyers conflate “outsource” with “offshore”. While we think offshore is a fine option, we and other LPOs offer onshore service as well. Perhaps GC misgivings are more about the type of resource than the location. Other than inertia, it’s hard to understand GC reluctance to expand the already broad scope of law department outsourcing by deploying more LPO services.
Law departments can reduce costs by explicitly acting as general contractors to solve company legal problems. Like any GC (general contractor that is, not general counsel), a law department should consider what resources it employs full time and what it sub-contracts. With this mindset, law departments would select a broader range of resources that better meet corporate objectives.
Law department management consultant Rees Morrison notes in Three reasons why legal departments are better positioned to negotiate arrangements with suppliers (15 April 2009) that (1) GC have more bargaining power than law firms, (2) GC are more motivated than firms to save money, and (3) GC can provide better direction to sub-contractors than can firms. Morrison’s blog post further supports the idea of GC = “general contractor” as well as “general counsel.”
In our own business, we do see GCs act as general contractors. Fortune 50 and FTSE 100 law departments use our managed litigation document review and contract review services. They know they must deliver the best solutions at the lowest cost so they assemble the right teams and resources, including our services. A general contractor approach to meeting corporate legal needs is one of the easiest and least painful way to get more bang for the buck.
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