Legal Outsourcing: A Powerful Tool for Small Firms

Updated: October 25, 2020

Legal outsourcing is a smart business strategy that can save an attorney time while simultaneously increasing profits, lowering client costs and improving the quality of service. Contrary to what many attorneys believe, outsourcing is not limited to large law firms sending simple work offshore. Smaller firms and their clients can reap substantial benefits by outsourcing complex work, including legal research, motion practice and appellate briefs, to experienced, local freelance attorneys who take assignments on a contract basis.

Small firm attorneys face growing pressure from clients to reduce costs while continuing to provide high quality representation. They also face periodic work overloads and sometimes encounter unfamiliar legal issues. Additionally, a small firm may have the opportunity to take on new business but not want the added expense and responsibilities that come with hiring, training and paying a new associate. In response to these challenges, an increasing number of small firms and solo practitioners are outsourcing projects such as legal research and writing to seasoned contract attorneys.

The benefits of outsourcing.

Outsourcing legal work offers small firm attorneys and their clients a number of potential advantages, while maintaining the small firm practice model:

• Save time and avoid work overloads. A well-written motion, pleading or brief, based on quality legal research, can make the difference between winning and losing a case. But research and writing take time that an attorney may not have. Work overloads and difficult deadlines are facts of life. By outsourcing an assignment to a contract provider of legal services, an attorney can regain control of his or her schedule while ensuring that the client receives the highest quality legal research and writing.  The outsourcing attorney gains time which can be devoted to maintaining existing client relationships or developing new ones.
• Increase revenue by taking new business. There are a number of ways in which outsourcing can help an attorney make more money. First, by outsourcing part of his or her workload, an attorney can take on additional work from new or existing clients, increasing revenues and profits, without having to hire a new associate. In addition to the costs of hiring, training and paying a new associate, a solo or small firm attorney must assume the other obligations that come with “employer” status, including managing employee benefits. By outsourcing work to a contract attorney on a project-by-project basis, the outsourcing attorney reaps additional profits while avoiding those added costs. Outsourcing is particularly useful if it is unclear whether the growth in a practice is permanent. While hiring a new associate involves many fixed costs (salary, office space, etc.), an attorney pays for outsourced legal work only when there is a need for it.
• Increase profits by charging a premium on outsourced work. A small firm can also improve its bottom line by charging its client a premium for outsourced legal work, above the amount charged by the contract attorney. The American Bar Association has opined that “a law firm that engaged a contract lawyer could add a surcharge to the cost paid by the billing lawyer provided the total charge represented a reasonable fee for the services provided to the client.” ABA Formal Opinion 08-451, quoting ABA Formal Opinion 00-420.
• Increase efficiency and save the client money. Few attorneys specialize in legal research. Most also lack the time to focus on the latest developments in legal research sources and technologies. A provider of outsourced legal services does both. Such a provider also is likely to complete a project more efficiently and more economically, reducing the outsourcing attorney’s costs and saving his or her client money (even if the attorney adds a reasonable profit).
• Gain access to greater research resources. Another advantage of outsourcing is that it allows a solo or small firm attorney access to greater resources. A provider of outsourced legal research and writing is likely to have access to a broad array of electronic and traditional research sources. Outsourcing can give the attorney the same research resources as a much larger firm that may represent the client’s litigation adversary, thereby leveling the playing field when a small firm faces off against a behemoth.
• Access the expertise required to win complex cases. Outsourcing also makes available another important resource: knowledge. A solo or small firm attorney may encounter unfamiliar legal issues. In the past, a small firm offered a case which presented such an unfamiliar issue would have had to either decline the new business or refer the client to another firm. Either option entails both the certain loss of revenues from the case in question and the potential loss of the client and all future revenues. By outsourcing, a solo or small firm practitioner can team up with an experienced, freelance attorney who has expertise in the relevant areas of law. The amount and kind of knowledge obtained will depend on the contract attorney chosen. A legal services provider may work alone or in a larger firm whose attorneys practice in diverse areas of law. Such a firm may offer a larger knowledge base. A good provider of legal research and writing will help with issues that may be outside the outsourcing attorney’s expertise and will identify additional issues raised by the facts of the case.
• Maintain client relationships. By outsourcing, the solo or small firm attorney gets needed help while retaining and protecting the relationship with his or her client. A provider of outsourced legal services works for the outsourcing attorney and does not deal directly with the attorney’s client.
• Retain control. An attorney who outsources remains responsible for overseeing the work and for the final product. He or she reviews and approves all final documents and also controls every aspect of the project, agreeing with the provider on scope of work, timetable and budget.
• Focus on more profitable and enjoyable activities. Many attorneys simply don’t like spending long hours doing complex, demanding legal research and writing documents which comply with equally complex court rules. In addition, a solo or small firm lawyer may find that after completing research, writing and other substantive legal work, there is no time left for the attorney’s other critical obligation: rainmaking. By hiring a contract legal services provider to help with legal research and writing, a solo or small firm attorney can pay increased attention to business development, work on more enjoyable projects, and perhaps even have some time left over to spend with friends and family.

How outsourcing works.

When outsourcing legal research and writing, the attorney becomes the provider’s client. No relationship is created between the provider and the attorney’s client. The provider does not become counsel of record for the attorney’s client.

Providers of outsourced legal research and writing offer a wide variety of services. They can produce anything and everything from a simple list of citations to a signature ready appellate brief. An outsourcing attorney may want a trial brief, a memorandum providing objective analysis, a jury verdict search, legal content for a website or help with an article for publication. A contract attorney can become familiar with a complex case and assist with motion practice and discovery, in consultation with the outsourcing attorney. When outsourcing, the attorney defines the precise work to be done.

While outsourcing has an obvious role to play in cases where the outsourcing attorney is paid hourly, it may also be useful in contingent cases to the extent it frees time to devote to well-paying hourly cases. In addition, outsourced legal research may be useful in determining the viability and value of a case, informing the decision whether to take a case at all and, if so, whether to do so on a contingency.

Though each provider of outsourced legal services has its own procedures, the process generally involves the following steps.

• The outsourcing attorney contacts the provider and gives the names of the parties and attorneys involved in the case as well as a general description of the project (e.g. researching a particular legal issue or preparing a motion seeking certain relief).
• The provider performs a conflicts check.
• The outsourcing attorney discusses the project in more detail with the provider, defining the scope of work, when the project needs to be completed and the budget for the project.
• After the attorney and the provider agree on the project and the budget, the attorney signs a contract and may be asked to pay a retainer. The provider then starts working on the project.
• The outsourcing attorney should be able to contact the provider throughout the project and the provider should alert the attorney to any questions or new issues raised by the research.
• The provider sends the attorney a draft of the memorandum, pleading or other work product. After receiving feedback, the provider produces final copy.

It’s that simple.

Is it ethical?

The ABA has made clear that “[t]here is nothing unethical about a lawyer outsourcing legal and nonlegal services, provided the outsourcing lawyer renders legal services to the client with the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” ABA Formal Opinion 08-451. (Internal quotation marks omitted). See also ABA Formal Opinion 17-477.  The Massachusetts Rules of Professional Conduct also approve of outsourcing under appropriate circumstances. Readers should consult their state’s ethical rules and applicable ethical opinions.

Ethical issues arising from outsourcing include:

• Conflicts: The provider of outsourced legal services should check every incoming project for conflicts, applying the standards of the Massachusetts Rules of Professional Conduct and applicable ethical opinions.  See ABA Formal Opinion 08-451. 
• Confidentiality: The provider should treat all information provided by the outsourcing attorney as confidential and subject to the attorney-client privilege and work product doctrine. ABA Formal Opinion 08-451 states that, “the outsourcing lawyer should be mindful of the obligation to ‘act competently to safeguard information relating to the representation of a client against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision.’ This requires the lawyer to recognize and minimize the risk that any outside service provider may inadvertently – or perhaps even advertently – reveal client confidential information to adverse parties or to others who are not entitled to access.”  (Footnote reference omitted).
• Oversight: According to ABA Formal Opinion 08-451, an outsourcing attorney has a duty “to ensure that tasks are delegated to individuals who are competent to perform them, and then to oversee the execution of the project adequately and appropriately.” Where the outsourcing attorney has direct oversight of the contract attorney, she must “make reasonable efforts to ensure that the [contract lawyer] conforms to the Rules of Professional Conduct.”  Id.  ABA Formal Opinion 08-451 and the comments to Massachusetts Rules of Professional Conduct, Rule 1.1, list factors relevant to the reasonableness of a decision to outsource to a particular provider.  You should consult your state’s ethical rules and applicable ethical opinions concerning outsourcing.

• Informing the outsourcing attorney’s client of the outsourcing: ABA Formal Opinion 08-451 provides that unless the outsourcing lawyer exercises a “high degree of supervision and control” over the contract attorney, the client’s consent must be obtained before any confidential client information is revealed to the contract attorney. Comment [6] to Rule 1.1 goes somewhat further, stating that the outsourcing attorney should “ordinarily obtain informed consent from the client.” Readers should consult their state’s ethical rules and applicable ethical opinions on this issue.
• Billing for outsourced work: ABA Formal Opinions 00-420 and 08-451 govern the amount which an attorney may charge a client for outsourced legal services. As noted above, in general, an attorney who outsources work may add a surcharge so long as the total fee charged to the client is reasonable. Readers should consult their state’s ethical rules and applicable ethical opinions.
• Licensing of the contract attorney: ABA Formal Opinion 08-451 states: “Ordinarily, an individual who is not admitted to practice law in a particular jurisdiction may work for a lawyer who is so admitted, provided that the lawyer remains responsible for the work being performed and that the individual is not held out as being a duly admitted lawyer.” Again, readers should consult their state’s ethical rules and applicable ethical opinions.
• Outsourcing to foreign attorneys: The ABA notes that particular care and extra diligence may be required when outsourcing to lawyers in foreign countries.

  When engaging lawyers trained in a foreign country, the outsourcing lawyer first should assess whether the system of legal education under which the lawyers were trained is comparable to that in the United States. In some nations, people can call themselves ‘lawyers’ with only a minimal level of training. Also, the professional regulatory system should be evaluated to determine whether members of the nation’s legal profession have been inculcated with core ethical principles similar to those in the United States, and whether the nation’s disciplinary enforcement system is effective in policing its lawyers.  ABA Formal Opinion 08-451.

Choosing a provider of outsourced legal research and writing.

Among the primary considerations in choosing a provider of outsourced legal services are whether the provider is competent to perform the work and the arrangement is such that the outsourcing attorney can exercise proper oversight of the project. Consider the education and experience of those who will be performing the work. Ask them how they will approach the project. Does the provider have access to the types of resources which the project requires? For research projects, access to Lexis or Westlaw on a flat rate plan is an important tool. Access to a major law library is also useful.

It is not necessary that the provider be licensed to practice in the outsourcing attorney’s state, because the attorney will be overseeing the work. However, additional due diligence may be required before outsourcing to a provider in a foreign country. Any provider should have malpractice or errors and omissions insurance.

The outsourcing attorney will also want to review samples of the provider’s writing, examining it for grammar, command of the English language, style and any obvious errors. The quality of the provider’s brochure or website is often illuminating. Writing samples also reveal the provider’s legal reasoning skills and ability to craft clear, concise and convincing legal arguments.

Is the provider familiar with the types of legal issues he or she will be required to understand and write about when completing the project? While a provider probably will not have dealt with the specific legal questions raised by a project, a lawyer outsourcing a personal injury issue, for example, should reasonably expect a provider to have some prior experience in tort law.

Finally, is the provider’s billing method acceptable, in light of the complexity of the project, the time constraints and the attorney’s budget?

Outsourcing: An opportunity to grow your practice and level the playing field.

Until recently, a solo or small firm attorney, faced with complex litigation against a well-funded adversary represented by a large law firm, was at a distinct disadvantage. Referring the case or at least obtaining co-counsel was often the only prudent option. Similarly, a solo or small firm attorney whose practice was growing had only the choice of taking on the new business and hiring one or more new associates or referring the extra business to other attorneys.

Outsourcing offers additional options. The solo attorney in a David v. Goliath litigation can now level the playing field by outsourcing labor intensive tasks, including research and writing, to an independent provider of legal services. By outsourcing, a solo practitioner can instantly increase productivity to whatever level the case demands and can acquire expertise in new legal areas. In like manner, an attorney whose practice is growing need no longer either hire new associates or forego the new business. A contract attorney can handle the new work when and as necessary. Outsourcing offers these advantages while helping the small firm attorney deliver high quality legal services more efficiently. In sum, outsourcing offers a powerful strategy to meet the challenges faced by small firms today.

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