Legal outsourcing services refers to entrusting a company’s legal affairs to external experts or services. By delegating tasks normally handled by in-house legal staff, such as contract creation and review, risk response, and compliance support, to external resources, companies can improve operational efficiency and ensure expertise.
For companies facing challenges such as difficulty in recruiting legal personnel and the rapid increase and complexity of legal matters, this is attracting attention as a way to strengthen legal systems while keeping costs down. Virtual assistant for lawyers will breakdown everything you need to know about legal process outsourcing.
Virtual assistants for lawyers usually take care of the non-legal related tasks such as: legal transcription, document translation, legal document writing, email marketing, and even search engine optimization.
Advantages and disadvantages of legal process outsourcing
While legal outsourcing has many advantages, such as improving work efficiency and ensuring expertise, there are also disadvantages to be aware of when introducing it. Here we will explain the main advantages and disadvantages.
Benefits of legal process outsourcing
- This will enable personnel with legal expertise to handle the case.
- You can receive high-level legal support without the costs of recruiting and training.
- Streamline routine tasks such as contract review and document management
- Support for establishing a risk management system
- Ability to respond flexibly to unexpected legal issues
First, a major benefit is that you can secure highly specialized legal resources. Developing contracts and internal regulations while keeping up with legal reforms and updated precedents requires advanced knowledge and experience.
However, hiring and training legal personnel in-house takes time and money. By utilizing outsourcing, you can entrust the task to external personnel who are ready to contribute.
Another advantage is that it makes it easier to focus in-house resources on core business. By outsourcing part of the legal affairs, you can reduce the legal-related workload of other departments, such as corporate planning, business development, and sales support, and allow them to focus on their core business.
Disadvantages of legal process outsourcing
- There is a possibility of security risks such as information leakage.
- Lack of deep understanding of internal operations can lead to misunderstandings
- Not all tasks can be handled, and there are limitations
- Legal know-how is less likely to remain within the company
On the other hand, there are some points to be aware of when outsourcing. The biggest risk is the management of confidential information. Since important information such as contracts and internal company regulations will be shared with external parties, it is essential to establish a system and contract conditions to prevent information leaks.
You should also expect limitations in the scope and quality of your services. Not all legal matters can be handled, and in many cases, strategic legal matters and areas closely related to a company’s unique business flow must be handled in-house.
In addition, there are concerns that relying too much on outsourcing will make it difficult to accumulate legal know-how within the company . In the medium to long term, it will be important to strike a balance between in-house production and outsourcing.
As such, there are advantages and disadvantages to legal outsourcing, so you should decide whether or not to request it based on your company’s situation.
Legal tasks that can be outsourced
Although it is generally called legal process outsourcing, the scope of work that can be requested varies depending on the service provider.
From routine tasks such as contract reviews to highly specialized tasks such as M&A and internal control support, you can flexibly outsource according to the phase and challenges of your company.
Here, we will organize legal matters that can generally be outsourced into categories and help you determine which areas should be handled in-house and which can be made more efficient by outsourcing.
| Contract Law | ・Drafting/reviewing contracts ・Preparing contract templates ・Establishing a contract management system |
| Labor and Personnel Related Law | ・Preparation/revision of work rules ・Preparation of labor-related regulations ・Preparation of employment contracts |
| Compliance | ・Formulation of internal compliance policy ・Establishment and operation of internal reporting system ・Support for dealing with harassment |
| Internal regulations and document management | ・Establishment/revision of internal regulations ・Establishment of approval flow ・Design of information management system |
| Risk management and legal dispute resolution | ・Handling problems with customers and business partners ・Supporting in the preparation of warning letters and certified letters ・Initial arrangements for litigation and dispute handling |
| Strategic Law and M&A | ・Legal support for M&A and business alliances ・Due diligence support ・Intellectual property and license negotiation support |
| Advertising and Display Law | ・Legal checks of advertisements and display contents ・Support for compliance with the Act against Unjustifiable Premiums and Misleading Representations and the Pharmaceutical and Medical Device Act ・Establishment of an advertisement review system |
| Listing preparation legal affairs | ・Support for compliance with J-SOX Act ・Preparation of materials for auditing firms ・Legal due diligence, construction of a contract management system |
| Legal consultation desk (external legal department) | ・Accepting inquiries from within the company ・Advising on minor legal decisions ・Advising on business flow |
In this way, legal outsourcing is a means of covering a variety of tasks according to a company’s growth phase, such as drafting and checking contracts, establishing a compliance system, handling advertising reviews, etc. For example, by utilizing a contract drafting service, you can effectively utilize in-house resources while reducing the risk of documents that require specialized knowledge.
What does legal process outsourcing mean?
Legal process outsourcing involves hiring lawyers or legal advisory firms outside the organization. These professionals are given specific tasks to represent the company. That is, they work on lawsuits and petitions, attend hearings, and provide other services on behalf of the company.
Nowadays, there are many outsourced services offering legal advice and legal support. When agreeing to outsource legal services, the parties sign a service provision contract with the stipulated tasks. At least one in-house lawyer is required in your legal department to lead this professional or team. This way, it is possible to monitor the progress of performance.
When to outsource legal services?
There are many reasons for outsourcing a legal department. It is not always possible to meet all demands with professionals hired internally. However, to reflect on these reasons, we will present them below:
1. Volume of demands: a good reason to outsource legal services
Outsourcing legal services can be a good idea if your department’s workforce cannot meet the volume of demands. Large companies deal with an overwhelming number of lawsuits and contracts, which can even compromise the organization of tasks. By hiring an outsourced law firm, your lawyers are free to focus on the core business objectives.
2. Physical distance
If the organization needs to be physically represented in another city or state, it is possible to hire corresponding lawyers. Avoiding the need for your professionals to travel saves money on accommodation and food. After all, traveling every time there are lawsuits in distant courts can be very costly!
3. Specialized labor
In addition to the large volume of demands, the lack of specialized labor can be an obstacle in the legal sector. The department does not always have professionals specialized in specific demands, which often does not allow for errors. On the other hand, outsourcing legal services means having employees capable of carrying out complex and specific tasks.
4. Meeting deadlines
Meeting procedural deadlines is part of the reality of any law firm or legal department. By hiring outsourced professionals, your department can be sure that there will always be a lawyer to be assigned to cases. As a result, routine will be optimized, since the most complex tasks will be under specialized supervision.
5. Mass litigation
Many organizations that deal with mass litigation decide to outsource a portion of their cases. This is beneficial for the legal liabilities, which helps to relieve the department and develop more critical and strategic tasks internally. In the long run, it will be easier to deal with the complexity of the cases and direct their lawyers to tasks aligned with the company’s core business.
How to choose a company to outsource your legal affairs
When considering legal outsourcing, the results and cost performance you can obtain will vary greatly depending on your chosen outsourcing type. Here, we will compare and explain the characteristics of the three main types: “Legal BPO/Consulting,” “Lawyer/Law Firm,” and “SaaS-based Legal Tools.”
Legal BPO/Consulting – Companies that do not have a dedicated legal staff or have a small number of staff
Legal BPO and consulting companies are characterized by their ability to provide a wide range of support, from the practical level to system creation, such as reviewing and assisting in the creation of contracts, establishing internal regulations, and supporting the creation of compliance systems. Another advantage is that it is easy to receive ongoing support, and many of the services are packaged, such as monthly subscriptions, making it easy to forecast costs.
On the other hand, since they are often specialized in “business support”, they must be used in conjunction with a lawyer for litigation or cases where a legal opinion is required. Also, since the quality of the services provided and the depth of legal knowledge vary between companies, it is best to check their track record and the background of the person in charge before adopting them.
Lawyers and law firms – Companies with frequent high-risk contracts and legal decisions
Outsourcing to lawyers and law firms is the most reliable option for tasks that require advanced legal judgment, such as handling disputes and litigation, reviewing and creating high-risk contracts, etc. Lawyers can help companies minimize legal risks by drafting contracts, providing legal advice, writing warning letters, and checking the legality of advertising reviews.
However, it is important to note that costs are high, and responses tend to be one-off. To entrust ongoing tasks such as daily contract reviews and the creation of legal workflows, it may be necessary to introduce a separate BPO or tool-based service.
SaaS-based legal tools – Companies that have in-house legal staff but want to automate routine tasks
SaaS-based legal support tools excel at streamlining and standardizing tasks such as creating, reviewing, and managing contracts. For example, services that can automatically generate contracts based on templates and AI-based risk check functions can prevent dependency on individual skills while ensuring a certain level of quality in legal work.
In addition, some services cater to individual needs, such as “contract drafting services” and “outsourcing of internal reporting services,” which can be flexibly used even by companies with limited human resources.
However, since there are limitations to dealing with complex contracts and company-specific circumstances, it is appropriate to position these services as an option that specializes in “improving the efficiency of operations that can be systematized.”