1. Cost Savings
One of the most significant advantages of outsourcing legal functions is cost savings. Oragnizations can reduce their cost structures through labor arbitrage - the wage differential between in-house legal personnel and outside vendors - to reap tremendous cost benefits. For example, an in-house attorney might cost the firm $150 an hour while a vendor attorney might cost $75/hour.
Offshoring overseas can sometimes produce even greater cost benefits. Legal employees in overseas markets earn 30–70 percent lower wages than comparable employees in the U.S. and U.K. Infrastructure costs in India and other overseas markets may also be lower.
2. Access to External Talent
Outsourcing legal work to external vendors allows organizations to access high level talent and niche expertise that does not exist within the firm. For example, litigation firms lacking litigation support expertise may outsource certain aspects of litigation support, such as coding and document review, to niche providers. Access to external talent is particularly useful for small boutique firms to fill in gaps in internal competencies. Legal offshoring also allows domestic firms to tap into global expertise. Offshore destinations such as India and China boast a large, highly-trained and motivated labor force, ensuring a large pool of qualified workers.
3. Reduced Turnaround Time
The use of external personnel can expand internal bandwidth to reduce turnaround time for pressing legal projects. The use of a combination of onshore and offshore teams can also allow organizations to complete a project in a shorter time frame. For example, the 12-hour time difference between the U.S. West Coast and India permits 24/7 operations. Offshore teams can work through the night to complete a project by morning.
Employing a combination of in-house and external talent allows law firms and organizations to tailor their capabilities in response to workload and client demands. Workflow challenges are particularly prevalent for small and mid-size firms. These firms may find it more difficult to spread variability due to a smaller number of attorneys, support staff and clients. Outsourcing legal work allows firms to quickly scale up for a case or project, leveling the playing field with larger firms. Flexible staffing also reduces firm overhead; by outsourcing to external vendors, law firms can avoid the fixed costs of salaries and benefits associated with full-time, permanent personnel.