Due to the rising regulations and litigations and its associated costs in corporate legal service, companies are looking for various methods to minimize legal spending and operate more effectively and efficiently. One of the most effective methods in this regard is legal process outsourcing. It refers to getting legal support service from an outsider law firm or legal support services company. It provides flexibility, enables to expand in house capabilities, and also brings cost savings.
Challenges Faced by Corporate Legal Service Departments
Before implementing legal process outsourcing, it is important to identify the challenges faced by corporate legal departments. There are a number of issues, and the major challenges are:
- Resource Allocation: Corporate legal service departments are looking for ways to provide more legal services with minimal resources and evaluating an effective mix of attorneys to staff.
- Project Management: Corporate legal departments are struggling to develop a strong corporate project management capability and the tools that are necessary to manage the projects.
- Project Improvement: They are facing increased inefficiency in processes such as contract management and intellectual property (IP) management.
- Automation: Today, several corporate level departments lack automation and integrated technology solutions in areas such as matter management, billing and contract management, further draining costs and resources.
- Document Standardization: When it comes to transactional area, corporate legal departments are facing the problem of lack of standardization in terms of contracts. This can increase costs and time associated with transactional lifecycle.
- Build vs Technology: Now, there is rising need for technology and tools to streamline various legal processes. Companies have to meet the challenge of developing such tools in-house, or choose to outsource the work to an external provider with the right technology solutions.
Which Legal Processes can be Outsourced?
Companies should first consider whether outsourcing will compromise the legal department’s ability to establish and execute business strategies related to that service. Over the years, the market for outsourcing legal processes has grown beyond transaction-based legal processes to higher level capabilities, such as contract drafting and IP. There are mainly two areas of services that can outsourced:
- Core Services: Corporate legal departments may consider internal legal SDT options like shared services or internal technology enhancements for “core” legal services. For example, services such as corporate legal representation, mergers and acquisitions activities. In the case of legal processes considered as core services, specific components can be outsourced. Even though patents and trademarks are example of core processes, there may be transactional elements within these processes that can outsourced.
- Non-core Services: Legal departments may consider outsourcing non-core transactional services like document review, contract/IP management, and paralegal support. When doing this, legal departments should identify whether these functions are mature enough for such a transition. For legal services that are considered as non- core services, outsourcing legal process can minimize cost and increases resources.
It is important to identify the most important areas that would benefit from standardization of your legal departments. The most commonly outsourced legal processes are:
- Research: Legal research and drafting, pre-compliance monitoring, compliance implementation, and multi-jurisdiction risk assessment surveys.
- IT and Administration: Data collection and extraction, data entry, information management, billing, and legal eDiscovery processes.
- Contracts: Legal contract lifecycle management, from creation and negotiation through execution and approval.
Legal processes are usually divided down into five different sections and the processes within each category that are most commonly outsourced are:
- Administrative Support: Data extraction and entry, electronic document management; secretarial services, billing services and paralegal services
- Intellectual Property: Patent drafting and review, IP portfolio management, patent proofing and docketing, cease and desist notices
- Litigation Support: Document Discovery; E-Discovery Compliance; Database Creation and Maintenance
- Legal Research & Analysis: Statutory or Case Law Research; Legal Coding and Indexing
- Contracting Support: Contract Due Diligence; Contract management
At the time of the COVID-19 pandemic, many corporate legal departments and law firms all around the world faced the problem of additional demands of the new normal. Problems in budget allocation, resource management, and process optimization have strained businesses.
Legal process outsourcing has always been a popular strategy for legal entities that provides benefits like better availability of skilled people, increase in productivity and efficiency, and the potential to exchange new ideas with greater flexibility, and minimize risk. Over the past few years, legal process outsourcing has matured and transformed itself and it offers quality support service to industries like banking, healthcare, technology, telecom and so on.