Ask yourself: How is outsourcing different than the way we’re currently practicing law?

Few words in business language create as strong opinions and emotions as the word “outsourcing.” Indeed, much of the media coverage on legal outsourcing focuses on ‘whether to’ rather than ‘how to’ outsource. If you’ve followed the practice of hiring contractors or freelancers, then according to the American Bar Association, you have engaged in outsourcing.

Perhaps the distinction is that many define outsourcing as “offshoring” work for the primary if not sole purpose of saving money. This is a politically charged issue that many are particularly sensitive to during tough economic times. Done right, outsourcing should certainly help reduce labor costs so that ultimately providers are more streamlined and the end customer pays less. The healthier a business, the more likely it is able to sustain and support its employees for the long haul. True, maintaining in-house counsel and support staff is costly, and fringe benefits and withholding costs add an average of 25% over wage costs. However, there are other benefits that should come into play when considering an outsourcing strategy:

• Enhanced resource allocation and operational scale
• Ability to source expertise that may otherwise be elusive
• Elimination of non-core business activity associated with managing the cycle of recruiting, hiring, training, ramp up to proficiency, attrition
• Ability to effectively delegate while maintaining oversight and control

In fact, the American Bar Association’s Standing Committee on Ethics and Professional Responsibility has made clear its stance in support of outsourcing legal work. In its landmark opinion issued in late 2008, the ABA indicated that the established practice of hiring contract labor qualifies as outsourcing. The opinion also stated that “U.S. lawyers are free to outsource legal work, including to lawyers or non-lawyers outside the country, if they adhere to ethics rules requiring competence, supervision, protection of confidential information, reasonable fees and not assisting unauthorized practice of law.”

Done correctly, there should be no discernable difference in the work product of contract vs. outsourced lawyers – it should be indistinguishable if the qualifications of those performing the work are identical. The number one reason why outsourcing relationships fail is because of poor communication, ostensibly due to having remotely based resources. In some instances, instructions are very clear; there are few nuances and little is left to interpretation. With the possible exception of these types of assignments (data entry is a good example), initiating an effective outsourcing relationship requires a commitment to clear communication and mutual dedication between client and provider to be in contact on frequent intervals. So many outsourcing failures are preventable and limit the true potential that exists.

Recently, I visited a client to review an ongoing assignment for which we have four full time dedicated resources. The purpose of the meeting was to discuss initial ramp up for work begun in January. The client expressed their satisfaction with the initial results, and mentioned that we have exceeded their quality expectations and ramped up faster than the time they had allotted. The reason to me was clear: from Day 1, the customer was proactive in providing our team with all the information it needed to succeed. Feedback was constant and consistent, allowing our group to quickly learn and adapt to their unique ways and preferred practices. In those instances where a learning curve exists, it’s critical that the partnering aspect of the relationship start right away. Similarly, where higher end services are concerned, it is unreasonable to hold a service provider to a higher standard than a new full timer starting the same work in-house would be expected to deliver on.

With the right commitment on the part of the customer, and the right provider selected to do the job, outsourcing legal services can create a win for both parties and, most importantly, the end customer. Outsourcing allows smaller firms to obtain the same economies of scale of their larger competitors, and it’s an effective way of leveraging the global economy to “do more with less.” The potential exists to match in-house quality levels for less than half the cost.

Law firms and corporations are right to proceed cautiously because there is a lot at stake. In an ideal relationship, there is as much visibility and accountability as there would be in hiring temps, freelancers, and hopefully in-house staff. Remember that the trend is your friend and legal outsourcing will only continue to grow.

Green Point Legal Services is staffed by US-born lawyers who were admitted to the bar and have practiced law in the states before relocating to Israel, where there is a significant population of American professionals. This enables us to provide their services to you on flexible terms at about 40% – 50% of what it might cost in-house.

If you have a project in mind or are just interested in real work examples as you contemplate taking the plunge, please contact me. Ken Wollins, General Manager, ken.wollins@gplegalservices.com

For the full text of the ABA’s official opinion Ethics Opinion 08-451 click here.

Green Point Legal Services joins Council on Litigation Management

With Green Point’s commitment to supporting the insurance industry with legal services, it has joined the CLM’s Fellowship. The council’s mission is to advance ethics, cooperation, and education among general & corporate counsel, litigation and risk managers, claims executives and adjusters, and service providers. The Council is committed to furthering the highest standards of litigation management and is comprised of thousands of corporations, insurance companies and law firms.

For more information, visit www.litmgmt.org.