Legal Outsourcing for Small Firms

Outside the legal profession, this is common practice for many, if not most, small to midsize businesses. Every day, countless organizations and legal departments are technically outsourcing their legal functions by working with lawyers and legal firms rather than hiring in-house counsel.

Within the legal industry, outsourcing was less established but has rapidly grown in acceptance and popularity over the past few decades. These days, numerous attorneys delegate aspects of legal work that once seemed intrinsic to their roles. Such activities include but are not limited to…

• Drafting agreements, motions, memos, and briefs 
• Litigation support
• Legal research
• Data entry
• Document review
• eDiscovery
• Due diligence
• Expertise in niche areas like GDPR
• Communication with website visitors, callers, and potential clients
• Growing a firm’s presence through marketing, advertising, and business development
• Case intake
• Contract management and review

Often referred to as legal process outsourcing (LPO), the fragmentation of legal work and the availability of on-demand legal support services have fueled growth for small and midsize law firms that lack the resources of their BigLaw counterparts. For small and growing legal departments, partnering with process outsourcing companies has allowed them to better manage growing workloads and optimize operations while staying within outside counsel and head count budget constraints. Indeed, many law firms and legal departments rely on outsourcing to maintain and grow in ways that wouldn’t be possible with full-time hires. It’s no surprise the sector is poised for explosive growth in the 2020s.

For all its growth and advantages, however, legal outsourcing can have drawbacks—and even pose risks—if not carefully managed. Success frequently depends on the kind of work being outsourced, as well as the quality of the contract attorney, paralegal, or service provider.

Before we examine what to look for in an outsourced solution, let’s explore some of the pros and cons of the practice in general.

Pros of Legal Outsourcing

Cost-effectiveness: Using an outsourced solution is typically more affordable than hiring a full-time or part-time employee—by a wide margin. A firm can not only avoid the direct expenses associated with employee wages and benefits, but the myriad costs related to recruitment, onboarding, and training as well.

Learn more about contract attorney and paralegal hourly rates.

On-demand expertise: Legal outsourcing gives you access to attorneys, paralegals, and other professionals who are knowledgeable and experienced in their fields. This leads to optimized processes and client experiences, along with improved efficiency in key areas of your business. Why do something such as marketing or client service yourself when a dedicated expert can do it for you, faster and more capably?

Breadth and depth: Legal outsourcing gives you access to attorneys, paralegals, and other professionals who are knowledgeable and experienced in their fields, when you need them. This provides small to midsize firms and legal departments with the breadth of a much larger firm or legal department without unsustainable overhead.

Mental focus: If you need more time for deep, uninterrupted focus, legal outsourcing can make a major difference in your daily work. There are undeniable costs to context switching, especially for busy attorneys juggling multiple responsibilities at small firms. Outsourcing protects your brain; you can enjoy peace of mind knowing qualified professionals are handling all those other important tasks.

Sustainable staffing: In many cases, outsourcing is the most flexible staffing option for securing and retaining skilled workers. It optimizes staffing levels, allowing you to flex your staff during peak times to prevent burnout and churn of your permanent associates and in-house attorneys. It’s also more cost-effective and better for morale than hiring additional permanent employees who may need to be laid off when peak seasons are over or economic cycles soften. Outsourcing also insulates smaller firms or legal departments from unplanned departures and labor shortages—improving business continuity and reducing stress for your team, which has less capacity to absorb the resulting work than larger organizations do.

24/7 coverage: Some outsourced legal providers are available to work around the clock as well as during weekends and holidays, maximizing productivity and capturing more opportunities for your firm or managing emergencies that arise in your legal department. This can be a critical advantage in terms of client communication, lead generation, or managing organizational crises that fall to legal teams to fix and manage, since many of these activities extend beyond traditional business hours.

 

Cons of Legal Outsourcing

Less oversight: When you use an outsourced solution for your law firm or legal department, you trade some degree of control for efficiency. You may not be able to keep a close eye on everything a contractor or legal process outsourcing service is working on, or how they’re working, at a given moment. That said, many solutions keep you in the loop with rigorous vetting and tools that offer visibility into tasks, conversations, and performance.

Variable quality: The results you see from outsourcing depend largely on what solution or solutions you use. Not every option may provide the level of service, flexibility, and consistency you and your clients need. Keep in mind that low upfront costs typically indicate low overall quality, so take time to consider each choice along with the value of what you’re outsourcing, and budget accordingly.

Security and confidentiality concerns: As with quality, data security and confidentiality measures vary from one outsourcing solution to another. To protect your and your clients’ sensitive information, always assess a provider’s data security infrastructure, confidentiality policies, and track record—and make sure to ask the right questions (more on that later).

Upfront time investment: Just as with an employee, you must set up your outsourced providers and consultants for success. Taking the time to prepare and organize information and investing the time in properly onboarding contract attorneys or other outsourced providers is a necessary investment to make outsourcing consistently successful. A quality outsourced provider should require less monitoring and oversight than would an in-house legal department employee executing the same function.

We don’t suggest outsourcing anything and everything all at once. To minimize complexity and make the transition a positive one for you, your firm or legal team, and the people you serve, start with those processes that have the greatest impact on your productivity right now.

What do you or your team spend too much time doing? What distracts the most from billable hours or mission-critical work for your organization? For small to midsize firms, the answer is often administrative tasks or work outside their areas of expertise. For small in-house legal departments, it’s often high-volume and important but rote tasks like contract review. These challenges are the best candidates for outsourcing.

The majority of law firms and legal departments today, regardless of size, use contract attorneys. Larger firms have particularly realized the benefit, with >70% of law firms of 250+ attorneys using contract attorneys. If you’re a legal department outsourcing your work to a large law firm, there’s a good chance that some of your work is already being done by contract attorneys.

Solo and small firms were early adopters of the use of contract attorneys for mission-critical work—midsize firms and small legal departments are increasingly realizing the value of this option. The new options available today that help firms and in-house teams connect with pre-vetted contract attorneys and paralegals allow the HR infrastructure of smaller firms and legal departments to smoothly manage the hiring and vetting of contract legal talent.

 

Top 5 Reasons to Consider Contract Attorneys

 

1. Provide a full-service firm.

Your clients or organization may have matters that touch aspects outside of your core practice specialties. Rather than referring the case to other firms or spending on outside counsel, consider whether you can handle the matter in-house with the expertise of a contract attorney. Contract attorneys are often highly specialized and often stake out a niche practice area where they continue to develop deep expertise that might otherwise only be available at large firms. Hiring a specialist to lead the charge will help your firm or organization ease into new practice areas or legal issues that arise.

2. Gain more time for rainmaking and high-value work.

Bringing in new business and maintaining existing client relationships determines success and growth for small and midsize law firms. Likewise, managing the key legal needs of a growing legal department on a budget that is practical for your organization can make or break your organization’s viability and success. Hiring contract attorneys or paralegals for work that can be easily delegated provides law firm owners and associates with more time for rainmaking and to focus on work that commands the highest billable rates and value to your clients. For in-house legal teams, it ensures you can focus on the key legal areas of your organization that drive growth and mitigate risk.

3. Reduce costs while improving client and organization experience.

The most significant benefit of hiring contract attorneys is the overall cost reduction. Over the course of their engagement, the spend on a contract attorney is roughly one-third the cost of a permanent hire doing the same work. And there is no risk of sunk cost and an extended management and morale burden if the attorney turns out not to be the best fit. And you’ll save budget (and stress) during lower-revenue seasons or downturns when there is less work by not paying the overhead of a full-time salary. Further, you can create efficiencies for your clients and organization by not demanding they pay experienced attorney rates or salaries for work that doesn’t necessitate this level of expertise. Freeing up the time from the details also allows you to be more responsive to your external or internal clients and frees up your brain power for higher-level strategic legal thinking by taking you out of the weeds.

4. Stay competitive in the legal talent wars.

With the current eye-popping attorney salaries, it can be hard for smaller firms and legal departments to remain competitive. Contract attorneys have often opted out of a full-time associate lifestyle, allowing you to access quality talent and experience on an as-needed basis without the stress and financial burden of a full-time associate who may also be difficult to recruit and afford in today’s market. Plus, contract attorneys can help you retain and attract full-time talent by creating work-life balance for your team when workloads become too high. It can allow your associates and staff to truly take vacations, sick leave, and mental health days as needed. And you will no longer feel the repercussions of a team member going on leave for an extended period or risk losing other team members who become stressed when another employee is on leave.

5. Prevent burnout and achieve better work–life balance.

Hiring contract attorneys to level workload can prevent your own burnout as a leader at a small to midsize law firm or organization. The burnout and related turnover of your staff discussed above put even more stress on you as you absorb their work while trying to hire and onboard a replacement. Further, if you are absorbing work that is better left to less experienced attorneys or paraprofessionals because you or your organization are hesitant to take on the financial pressure of a full-time attorney or staff hire, you are likely sacrificing your own mental health and ability to have a life outside of work. Keep in mind that having an unmanageable workload is a prime cause of burnout. Being overworked is not just bad for you personally; it’s also bad for business since burnout causes a drop in productivity, creativity, and problem-solving—the key executive functions that you need as a leader. Delegating and outsourcing legal work to contract attorneys and paraprofessionals can help you be more relaxed and successful while practicing law and in life.

 

5 Steps to Successfully Engage Contract Attorneys

 

1. Decide what to outsource to contract attorneys.

It’s often a glaringly obvious or discrete task that leads law firms or in-house legal teams to consider or hire contract attorneys: a large discovery project that pops up when a case goes to litigation, an associate or in-house attorney on parental leave, or a large project outside of your organization’s area of expertise. But contract attorneys and paralegals can add the most value and scale if you examine your firm and talent operations holistically to see where you can create the most efficiency and the best experience for both your clients and your team.

The concept of applying lean manufacturing principles to law, known as Lean Law, has been increasingly adopted in the legal industry as firms and in-house legal departments look to create more efficiencies, improve their client experience, and create work environments that better retain talent. You can apply lean principles to hiring and integrating contract attorneys and paralegals. Learn more about how lean principles can apply to your firm and talent operations.

2. Screen, vet, and assess fit.

In law, your people are your product. Hiring temporary attorneys or otherwise outsourcing your client’s or organization’s trust should not be taken lightly. If you do take a DIY hiring approach, it’s important to put together a structured hiring process to uniformly assess all contract attorney candidates and make sure you are not missing any important steps in vetting those whom you will entrust with work that is critical to your clients or organization.

Working with an agency or other source of talent that pre-vets legal talent can save time and even money considering the internal cost of valuable time spent on vetting rather than billable work. Further, if you’re looking to build a bench of go-to contract attorneys who fit into your firm or organization and culture that you can turn to again and again, it is a good investment of time to assess soft skills and create and evaluate a standard hiring exercise that is representative of the type of work you expect to outsource to a contract attorney.

A service like Hire an Esquire that pre-vets attorneys with a data-driven structured hiring process and provides digestible soft-skill data for a flat-rate monthly access fee can save you time and money on vetting without the obligation to indefinitely pay staffing agency fees or a large buyout fee on your go-to contract attorneys and paralegals.

3. Ensure your arrangement is compliant with employment and professional responsibility regulations.

There are two major compliance pitfalls to look out for when engaging contract attorneys.

• Proper employment classification (in-house legal departments and law firms): You can face state and/or federal penalties and fines for classifying your contract attorney as a 1099 independent contractor if their work behavior more closely resembles that of an employee.
• Fee-sharing (law firms): The ABA Model Rules have carved out an exception to fee-sharing rules for staffing and placement agencies that the majority of jurisdictions have adopted, but there remain jurisdictional quirks. Be wary of legal talent marketplaces that charge transaction fees and disclaim they are staffing agencies; their fine print reads that attorneys can only do paraprofessional work. By allowing contract attorneys whom you engage through these legal services to do attorney work, you may be violating fee-sharing rules in your jurisdiction.

When hiring contract attorneys and paralegals directly, be sure to examine the federal and your state employment classification guidelines to make sure you are properly classifying your contract legal professionals. Legal staffing agencies like Hire an Esquire can provide payroll services that assume compliance responsibility for state and federal employment classification while also providing professional liability insurance to cover your contract legal professionals.

If the service you are engaging to hire contract attorneys charges a percentage of the amount paid to the attorneys on an ongoing basis, be sure that it is structured as a staffing and placement agency and that you are compliant with professional responsibility rules around fee-sharing in your jurisdiction. If you are using a service that disclaims being a legal staffing and placement agency, take care to ensure that the contractors you hire are only doing paraprofessional work. If you are in a jurisdiction that has stricter rules around fee-sharing with staffing and placement agencies, you can avoid violating these rules while getting the full benefit of agency vetting with Hire an Esquire’s subscription service. With this service, you can also opt in to payroll services at cost to ensure proper employment compliance for your contract attorneys and paralegals.

4. Determine a competitive rate.

While no longer at their peak, the legal talent wars are still going strong, and big firms continue to up the pay scale ante as of the writing of this guide in 2024. Small to midsize law firms and legal departments can benefit from being able to engage the skills of attorneys with rich experience and training who have opted to be freelance lawyers in order to get out of the law firm grind. Being able to pay for this level of experience on an as-needed basis as opposed to a fully loaded, full-time senior associate or in-house attorney salary gives midsize law firms the opportunity to expand their work capacity with the highest-quality talent (including many BigLaw refugees) without a proportional increase in firm overhead.

Properly and competitively pricing contract attorney hourly rates is crucial to attracting the best talent. Hire an Esquire’s hourly rate suggestion tool can provide suggested contract attorney hourly rates based on job description, experience, and market data. If you’re taking a DIY approach to hiring, you can conduct online research of what similar jobs are paying to ensure your rate is competitive. Further discussing rates with candidates of interest can provide further context and insight into what is a competitive rate for the experience and expertise that you need. For more information about setting the right rates for contract attorneys, check out Hire an Esquire’s Definitive Guide to Contract Attorney and Paralegal Hourly Rates.

5. Properly onboard your contractor.

One of the biggest morale killers noted by attorneys and paralegals with regard to past permanent legal jobs was entering a chaotic environment without clear goals and expectations, where they were not given the information or context to execute smoothly and/or successfully on projects and cases.

The same is true—even more so—for contract attorney and paralegal relationships. Contractors have even less access than do standard employees to firm or organizational materials, members of your team, and time to build context regarding operations, clients, or key organizational players. This is why having a defined contract attorney and paralegal onboarding process where you clearly define the scope of work and create clear written confirmation and deliverables is important for success. Putting together a project outline or engagement agreement that clearly defines the deliverable and billing expectations is key, particularly the first time you work with a contract attorney. A project outline for longer or more complex engagements should also include milestones as well as scheduled check-ins and feedback. A kickoff call to explain the project and answer follow-up questions—along with written confirmation of what was discussed—can also prevent misunderstandings and begin contract attorney relationships and projects on the right foot. If possible when building longer-term contract attorney relationships, starting off with a small project can be a great, low-stakes way to test a relationship. As you continue to work with and build relationships with contractors and they become more familiar with your firm and operations, the time and management burden will decrease significantly.

1. Outsource one process at a time. Start with a process that’s time-consuming, unrelated to your core practice area, or both.

2. Develop your project management and communication skills. Effective legal outsourcing is a relationship—the easier your firm is to work with, the more success you’ll see from the arrangement.

3. Ask for recommendations and look for solutions you can trust. Tap into your network and learn what solutions others are using, and make sure to check business listings and reviews.

4. Set aside time for onboarding. Set up your outsourced legal help for success with clear goals and expectations by taking proactive steps such as creating a scope of work and/or project outline, scheduling a kick-off call, and assigning a small project to begin with.

5. Remember: it’s an investment, so don’t set it and forget it! The best contact attorneys, paralegals, and outsourced client communication specialists are members of your team. Keep them (and yourself) informed and accountable and you’ll drive optimal results for your firm.

 

9 Questions to Ask an Outsourced Solution Provider

1. Where are you or your workers located?
2. How do you ensure data safety and privacy?
3. How do you train or vet your workers?
4. What capabilities and features are included in your service?
5. Does your solution integrate with my existing tools and systems?
6. Do you own the technology powering your solution?
7. Do you offer flexible plans or options?
8. Do you have real people who provide ongoing support?
9. How will you help grow my business?

Compound this by the same number of missed calls each day and you could be looking at more than $2,000 in lost revenue per week, or more than $100,000 every year.

That’s not all. There’s a cost beyond productivity loss and billable hours—the potential damage to your client experience.

A caller doesn’t know they’re the fifth interruption in the past hour. They don’t know other people have asked you the same question multiple times that day. They expect your full attention and a great experience, with time to discuss all their concerns. By losing your patience, rushing through a call, or not answering a call at all, you could prompt them to move on to another option—or, worse, share a negative review of your business.

So, how do you optimize this business process while still delivering a fantastic experience? Virtual receptionists make it easy.

Many virtual receptionist services can…

• Answer and transfer calls
• Take messages
• Relay information on your behalf
• Field frequently asked questions

The best virtual receptionist services for small law firms can also…

• Provide 24/7/365 coverage
• Schedule appointments
• Perform new client intake
• Qualify leads
• Filter robocalls
• Communicate in more than one language
• Make outbound calls on your behalf
• Host your business number
• Give you the option to text from your business number

Different firms have different needs, and the right team of virtual receptionists offers flexibility with full-time, part-time, and backup answering options. To determine which is the ideal fit for your business, consider which of the below best describes you.

Bear in mind that phone calls are just one channel for people to communicate with your firm. The right outsourced client communication solution will also improve your ability to connect with website visitors through live chat.

If you’ve ever visited a website and happened upon a pop-up box encouraging you to “chat now,” you’ve seen live chat in action. You may have even initiated a chat and received an answer or service you were looking for. Many people regularly use live chat to do things like modify orders, book doctor’s appointments, and notify their banks of travel plans.

Chat can be a powerful service and sales tool for small law firms looking to better attract, engage with, and retain business. Through chat, client experience specialists can provide virtually all the same capabilities that a representative could over the phone—offering answers, collecting information, and even transferring interested parties to attorneys.

 

Six Reasons to Consider Outsourcing Client Communication

1. Save money without sacrificing quality. Gain a team of model professionals who are never sick, late, or on vacation, at a fraction of the cost of a single on-site employee.

2. Meet demand around the clock. Ensure clients connect with a friendly, capable professional whenever they contact your firm.

3. Answer questions and qualify clients early. The best virtual receptionists are client communication experts trained to put callers and website visitors at ease while obtaining actionable information about them.

4. Get more freedom to focus on your practice. Funnel your energy toward the big picture while resting assured your receptionists are representing your brand with enthusiasm.

5. Create client loyalty through personal connections. Build trust and meaningful relationships for increased referrals and recurring opportunities that can result in a quantifiable ROI.

6. Earn business with every answered call and chat. Turn more callers and website visitors into clients when you have virtual receptionists serving as an extension of your firm.

For more information about virtual receptionists, live chat, and outsourced client experience: