Over the past couple of years, the legal industry has suffered its share from the ailing economy, and is now facing the repercussions of massive layoffs, under-staffing and budget cuts. The same is true for large and small corporations in Florida as they are also feeling the economic crunch, and are forced to cut back or totally dissolve their legal departments.

As we end 2009 and enter a new year, the legal industry is experiencing ongoing changes and shifts in thinking as new trends in outsourcing begin to surface. Many corporations and legal departments are outsourcing various legal services to solo and small firm practitioners within the boundaries of the United States.

Fulbright Study: Corporate Attorneys are Outsourcing

In an earlier post, we discussed the 2009 Fulbright Study in which corporate attorneys in many countries were surveyed on topics affecting legal departments, and the manner in which they provide legal services.

Amongst other things, the survey results revealed that many of the corporate attorneys are relying on outside counsel, often solo and small firm practitioners, to provide the same legal services in-house attorneys would generally handle.

Approximately 76% of the corporate attorneys indicate their companies outsource certain tasks to outside counsel. And, when asked to rate their satisfaction with the outside counsel’s ability to meet their needs, nearly 90% indicate they are satisfied with the services provided by outside counsel.

Reasons Corporations Outsource to Small Firm Practitioners

Outsourcing is an attractive option for corporations that are trying to reduce their costs, control their spending, and continue to stay on top of their massive workloads. There are several reasons corporations turn to outsourcing. I will address a couple of the reasons below:

• Small firm practitioners tend to have lower overhead costs and can afford to offer their services at competitive rates; while large firms are often forced to set their hourly rates according to their monthly costs, expenses and total overhead.
• In many instances, solo and small firm practitioners provide higher quality work product and faster turnaround times as they tend to juggle fewer legal matters than typical large firms.
• A corporation’s legal department can more accurately estimate their budgets and control legal spending when they outsource to small firm practitioners that offer flat rate and other alternative fee arrangements.

Obviously, the above list of reasons corporations choose to outsource is not an exhaustive list. You can expect more discussions on outsourcing and small firm practitioners in the weeks to come.

In the meantime, I’d like to hear from you.

Are you a corporation considering (or currently) outsourcing to a solo or small firm practitioner, or are you a practitioner providing legal services to large corporations? How is it working for your corporation or small firm?