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Firms look to outside vendors as pressures mount to contain costs

Competition in the legal industry is increasingly fierce. With more than 1.3 million licensed active attorneys in the United States, pressure is intense to perform faster and to contain costs. That’s why many firms have looked to legal process outsourcing to remain competitive, industry observers say.

Tunji Williams, CEO of dealWIP, a Brooklyn, N.Y.-based legal-tech startup that seeks to change the way deals are done, says his company’s cloud-based integrative project management tool is an attractive option for lawyers who are pressured to reduce and control costs.

Outsourcing legal tasks also frees up time for lawyers to do other work. By delegating repetitive and labor-intensive tasks such as due diligence, discovery, research, motion drafting and document review – anything that does not require appearances in court or face-to-face negotiations – lawyers have more time to focus on developing top-value services, Williams said, adding that firms can also outsource work such as bookkeeping and marketing.

“Outsourcing allows the legal industry to change the business model,” said Williams, who was inspired to create dealWIP as a junior associate at Hogan Lovells, where he observed that many tasks — such as due diligence — were repetitive and could be performed by a computer program.

“You can create the best assortment of legal services and offer more to clients, ultimately creating more value,” Williams said.

While statistics about the extent of legal outsourcing are hard to come by, industry sources say outsourcing is commonplace. Outsourcing to firms abroad – also known as offshoring – is also reported to be common, with India one of the most popular countries for outsourcing. The main reason: significantly lower costs. An in-house attorney in the United States may charge $150 per hour and up, while an attorney in India may charge only half that for the same service, according to industry observers.

Because of outsourcing’s increasing popularity, the American Bar Association has issued guidance to ensure that attorneys adhere to ethics rules. This means law firms must inform clients if work is to be outsourced and obtain their consent.

“Clients trust that their information is private and safe with their law firms and we, as lawyers, have a legal (responsibility) to keep that information private and safe,” Williams said, noting that news travels fast if a firm has had problems with a vendor.

Quality control is key. Basha Rubin, CEO of New York-based Priori Legal, a marketplace for in-house counsel, says her company has a vetted network of independent boutique law firms and solo practitioners for hire. When outsourcing legal work, she said, firms must give vendors a a clear idea of what is expected of them and how the work is to be performed.

“We try to give our clients best practices for setting standards of communication and encourage regular check-ins,” Rubin said.


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