Almost three quarters of in-house legal departments are now outsourcing services to cut costs and deal with rising volumes of work, a report by accountancy giant EY has found.
Some 72% of law departments are currently delegating work to an external or affiliated organisations, according to EY, with contract management, employment law and records management among the most common services to be outsourced.
Legal departments at large and medium sized organizations are most likely to outsource work, with 55% of such departments tasked with 10-20% cost reduction targets over the next 24 months. Meanwhile, a third of firms with more than 1,000 employees spend nearly one out of every three hours on ‘low‑value’ tasks, according to a survey of 1,058 senior legal practitioners worldwide.
Peter Krakaur, managing director of EY Law Americas, said: ‘This data reveals something that many legal industry watchers already knew — that attitudes toward the use of managed services and the extent to which these services are used vary widely.
‘Larger law departments have the resources and bandwidth to innovate and leverage new models. They, along with their legal managed services providers, are innovating together and creating new services. Smaller law departments have difficulty doing that — they need pre-packaged solutions that are ready for use on day one. Up until recently, these types of “ready‑for‑use” solutions were not available, although that is changing.’
Last year, research by Thomson Reuters Legal Executive Institute found that so-called alternative legal service providers - including the Big Four accountants - are growing more quickly than previously predicted and moving up the value chain.
The new entrants, offering such services as litigation support, legal research and document review with the help of new technology, now make up a $10bn (£7.6bn) a year market.