The legal services industry continues to surge in demand and value. With a projected compound annual growth rate of 2.5% until at least 2030, the legal sector is expected to remain strong throughout the rest of the decade.
However, that doesn’t mean law firms don’t have to remain budget-conscious—even if they’re maximizing their efforts with AI products. Marketplace competition is notoriously fierce, which makes it imperative for firms to look for ways to optimize financial performance. One effective strategy for firms of all sizes is strategic outsourcing.
Let’s explore how law firms can strategically outsource to maximize overall efficiency and cost-effectiveness.
Understanding Strategic Outsourcing for Law Firms
Strategic outsourcing seeks first to identify fiscally inefficient areas within a law firm and then address those areas by outsourcing some or all of the key responsibilities being performed. In layman’s terms, it’s a way to trim budget fat and “get lean” by reducing the firm’s headcount without reducing its core capabilities.
For example, a law firm might realize its in-house attorneys are wasting time in court appearances that aren’t very profitable for the business. In that case, hiring freelance lawyers to attend those court appearances on a per-appearance basis could be a good solution. The freelance lawyers are only paid when needed, and the in-house attorneys can concentrate on higher-paying and complex case consultations.
The key element of strategic outsourcing is in the word “strategic”. When mapped out carefully against a law firm’s historic data insights, strategic outsourcing can produce several appealing benefits. The first, not surprisingly, is a reduction in overall business expenses. Since you’re only paying for what you need with outsourcing, you can quickly eliminate places of waste.
Another benefit related to strategic outsourcing is gaining access to experts, as well as the tools they use. Rather than trying to find the most talented person to fill every position, you can simply hire contractors who have the expertise and tools you want. It’s efficient, and if the contractor doesn’t work out, you can just end your contractual arrangement. You’re not locked into a staffing headache.
Strategic outsourcing can improve the credibility of your law firm, too. Client complaints and bad reviews can hurt your ability to attract new cases, even if you have a team of top attorneys, paralegals, law clerks, and administrative personnel.
By outsourcing responsibilities, your attorneys and staff members can focus on what they do best and deliver exceptional experiences. As a result, your firm’s reputation should edge up and serve as a beacon for people and companies in need of legal advice and help.
How to Start Strategic Outsourcing at Your Law Firm
While it’s true that not every legal task can or should be outsourced, many tasks and positions at your law firm are ripe for strategic outsourcing. Some may surprise you, such as traditional C-suite roles.
Historically, C-level executives within law firms have been salaried, full-time individuals. Not anymore. Today, it’s not unusual for law firms to outsource several C-suite positions, and this could be a great place to begin. Let’s take a look at some common C-suite outsourcing opportunities.
CMO Outsourcing
Marketing in the digital era is critical for your law firm. That’s why you don’t want to risk making errors or overspending in the wrong places with your paid ads or organic content. Setting up a relationship with an outsourced Chief Marketing Officer (CMO) allows you to stay on top of trends and make effective, smart marketing budget decisions. However, it’s wise to choose a fractional CMO who understands the nuances of the legal marketing realm.
As the data-informed legal marketing experts at PMP Marketing Group explain, picking an outsourced CMO who can share a portfolio of impressive law firm client case studies is essential. You’ll have peace of mind knowing that you’re working with a CMO who understands how to increase legal client acquisition rates, design a website to improve conversions, and leverage social media engagement.
Consequently, be sure to vet CMO candidates with questions like “What marketing strategies do you recommend for our firm, and why?” and “How do you use data to achieve ROI and other business goals for firms like ours?”
CFO Outsourcing
Though small and mid-sized law firms may be less likely to have a Chief Financial Officer (CFO) position than their larger counterparts, they still depend on someone to perform CFO duties. These include everything from overseeing the firm’s finances to attending and contributing to strategic planning sessions.
By hiring a fractional CFO, you can get the same operational advantages as having a CFO without bringing one aboard full-time and incurring unnecessary expenses. As fractional CFO hiring firm CFO Hub explains, the average CFO salary can soar into the $400,000s, and that doesn’t include benefits or other employer-related costs. In contrast, fractional CFOs typically charge a few hundred dollars per hour. This means you could save instantly without losing the value of having a CFO on demand.
CHRO Outsourcing
Interviewing, hiring, onboarding, and managing your attorneys and staff members can take up serious amounts of time. If you’re handling all your HR responsibilities internally, you may be missing opportunities to make money for your law firm. That’s why it’s advisable to evaluate whether or not partnering with a contractual Chief Human Resources Officer (CHRO) could be helpful.
An outsourced CHRO can remove most or all of the HR responsibilities from your team’s plate. According to executive-on-demand provider TechCXO, your contractual CHRO could bring serious skills, including a hustle mindset and decades of experience. Having a fractional CHRO can also be beneficial if you hope to scale up your law firm in the coming months. Rather than being knee-deep in recruitment, interviewing, and onboarding processes, you can focus your energies on how to sustain fast growth.
CIO Outsourcing
Need a Chief Information Officer (CIO) but only part-time? Opt for outsourcing. Many law firms simply don’t have enough work for a full-time CIO. However, they want to have a technical and operations-based person on call. That’s where working with a fractional CIO makes sense because they’re ready when you need them. Plus, they can play the role of cybersecurity advisors.
An outsourced CIO can help lower your firm’s risk against phishing, fraud, malware, and related cyber crimes. Remember, all law firms amass a wealth of private, secure documents. IBM estimates that a single data breach can incur more than $4 million in expenses for an average company. In other words, the amount you’ll pay to hire a fractional CIO is much smaller than the amount you could incur if a preventable breach occurs.
Outsourcing Services Beyond C-Suite Positions at Your Law Firm
When you’ve established which C-suite positions to outsource, you can move on to other roles and responsibilities. For instance, why not take a look at how you’re handling your firm’s customer service applications?
Customer service is a notably broad function that can encompass different elements of what happens daily at your office. Some of those elements could be conducive to outsourcing, starting with how you’re fielding calls to your attorneys, paralegals, and law clerks. In a recent article, call center company Westpark Communications discusses the rise in desire for outsourced legal intake experts, often with bilingual capabilities. These are individuals who understand how to qualify potential clients and can be especially useful if you experience large volumes of unqualified callers.
In addition to customer service and support, document retrieval is another place to consider strategic outsourcing. If you’re paying employees to retrieve documents such as medical records, you might be better off outsourcing to an individual or group that can do it for less. You’ll want to crunch the numbers, of course. But don’t be afraid to try a trusted document retrieval service if you’re on the fence.
The Bottom Line on Improving Your Law Firm’s Bottom Line
Is strategic outsourcing going to magically make your law firm more profitable? Maybe not right away. It’s a solid solution for trimming excessive business costs from your budget.
Before you begin, keep a few pointers in mind.
Number one, start small and systematically. Let’s say you evaluate your financial data and determine you want to hire a fractional CMO, a fractional CHRO, and a document retrieval company. Move ahead one at a time. That way, the process will feel less sudden and jarring. Plus, it will give you time to get accustomed to working within a new operational flow.
Number two, look for ways to measure your success. Everything outsourced should be monitored against some type of metric. An example might be to measure the number of client case conversions your law firm sees after outsourcing your incoming call center duties. It’s much easier to know if you’re getting your desired results if you can follow the numbers.
Finally, be open to adopting emerging strategic outsourcing techniques, trends, and practices. Years ago, outsourcing executive roles wasn’t as frequently seen as it is today. But times have definitely changed. Who knows what will happen in the future? The more willing you are to adapt, the more likely you’ll be to remain on the leading edge of your industry—and make a nice, healthy profit in the process.
