In-house vs. outhouse: How to optimize your legal department with LSPs

Work is piling up. How do you decide what to keep and what to send to outside counsel? Today, those are no longer the only options. You can also now use legal service providers who are relentlessly focused on process and efficiency. Options are always good. But, we are still back to the initial question: How do you decide what to keep and what to sent to outside counsel or to an LSP?

Mark Le Blanc

Work is piling up. How do you decide what to keep and what to send to outside counsel? Today, those are no longer the only options. You can also now use legal service providers who are relentlessly focused on process and efficiency. Options are always good. But, we are still back to the initial question: How do you decide what to keep and what to sent to outside counsel or to an LSP? 

Typically, one would send out complex work or work where you and your team lack any deep capabilities. This would leave the in-house team to deal with, effectively, the more routine and lower complexity work. This simple dichotomy of division of work oversimplifies the process. LSPs can help change this. The real value to your organization is to ensure that you keep in-house the high value-add work that has the greatest impact on the success of the organization. We are back to return on resource investment. 

How do LSPs change this?

The fact that LSPs are set up to better do lower-value, repeatable work allows you to move some of that work off the desktops of your team and onto those of an LSP, for example, high-volume, standardized contracts. Especially where you have a mature line of business, LSPs aren’t the only way to do this. You can also bring a small team in-house to do this. This is work that would never make financial sense to send to a firm. Nor does it make sense to keep it inhouse, where you would be underutilizing your legal talent. To do so would deprive your business teams of the value of having your legal team spend more time deep in the business of the organization where they can add real value. As a bonus, it helps with employee retention by raising their interest and engagement, while accelerating their professional development.

Keep Inhouse what is most important to your organization

By moving the lower value repeatable work to LSPs (or in-house equivalent) you can free up time for your in-house team. And, let’s be honest, we all have a sizable piece of this lower value repeatable work. This leaves you with all your higher value, one-off and complex work. You will still go outside with your one-off work. This is work where you will not have the skill-set internally. This can be collective agreement work when you have unions, litigation on unique matters, or complex regulatory work that is not core to your business, such as tax work. Complex legal work may or may not go outside. That will depend on how specialized it is and how aligned it is with core strategic objectives. It does not go outside simply because it is complex and certainly not because it is high value. The goal is to leave on your desktops the work that is most deeply tied to the strategic objectives of your organization. In short, the highest value work that will truly move the needle for your organization.

Triage

Triage your work. LSPs get repeatable work; Firms get, what I call, one-off steep and deep work; and we keep the high value work. Exactly where you draw the line will depend upon the size and skills of your legal team, the industry you operate in and how regulated and mature it is, and the typical business problems you are experiencing. There is no formula on how to determine the mix for every legal department. But, there is a need to make the determination for all legal departments.

In-house team

The idea is to keep in-house what is most critical to your organization – not what is least complex. This will cause you to re-examine the structure of your inhouse team, and possibly to restructure it. You will need fewer deep subject matter lawyers, and more T-shaped lawyers. Lawyers that will have solid legal skills and have the broader skills that will make them better able to directly support and align with the needs of the business units of your organization and the high value problems they are trying to solve. These additional skills can include, project management, financial literacy, data analysis, budgeting, team management, etc. This same rationale will apply to your non-lawyer legal professionals as well.

You will still need lawyers with specialized skills. Particularly if you are a larger organization. This could include lawyers skilled in employment law, IP, M&A work, public companies, etc. But, even they will have to have these additional skills to fully participate in the complex problem solving for your organization.

Maximize your RORI and be the trusted advisor

We are a small legal department that operates in both a mature (broadcast) and evolving (digital products) industry and we have three unions. Our repeatable work is our broadcast production agreements. For us, it makes sense to operate our own small inhouse LSP team to negotiate and draft these deals. This is work that, in the past, we either hired lawyers to complete or it sent outside. This frees up significant money in our Legal budget.  As well, it puts the work in the hands of a team that is not only focused on doing the work well. But, also focused on constantly improving the process and efficiency with which we deal with this work. It is a commodity where we can constantly work on service delivery improvements. We send our CRTC regulatory, union, charitable work and complex litigation outside. The rest, we keep in-house. You will note that no big piece of our evolving digital product work goes outside. This ensures that our scarce highly skilled legal resources are applied to our highest value work, where we can contribute to moving the needle on our organizational objectives and max out your RORI. This is how we become a trusted advisor for our client business units. Now, this sound more like the work of a modern inhouse counsel.

 

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