Law Firms Are Growing Profit Margins with Law Companies

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(Photo : Sora Shimazaki)

Law firms are outsourcing legal work to "law companies" far more than anyone expected 20 years ago, even 10 years ago. These companies, sometimes called "alternative legal service providers," provide law firms with legal research, drafting, and a variety of other functions normally performed by paralegals, associates, and partners. LawCompany, for example, is an outsourcing industry leader in both thought and practice. LawCompany has specialized in expanding bandwidth of the small firm office by ensuring reduced costs, efficiencies, and compliance.

A 2021 Thomson Reuters study found that nearly 80% of law firms outsource to law companies, a dramatic increase from the early 2000s. While most industries sought efficiencies decades earlier, lawyers reluctantly waited for bar associations to approve the practice. In 2008, they got it. 

That's when the American Bar Association wrote, "There is nothing unethical about a lawyer outsourcing legal and nonlegal services...Outsourcing affords lawyers the ability to reduce their costs and often the cost to the client." State bar associations have said the same since then and continue to do so. Just last year the Virginia Bar described outsourcing as "highly beneficial to the lawyer and the client," focusing in particular on giving "small law firms more flexibility in not having to hire staff or employees when they experience temporary work overflows." 

With approval from bar associations, and strong demand from law firms and clients, the largest firms have been the fastest to use law companies. We soon saw articles by Forbes asking "What's a 'Law Company'?" and Reuters reporting on "Legal tech, law companies bet on collaboration."

LawCompany has been supporting and fast-tracking law firms for more than a decade. They're a one-stop shop, doing everything you'd expect of outside counsel, save court filings and communicating with clients. They perform legal research, draft pleadings, motions, and contracts. They even ghostwrite legal articles for law firm marketing.

Says the Richey and Richey Law Firm in South Carolina, "They've been absolutely fantastic. A life-saver. I highly recommend them to every lawyer and law firm." Says solo practitioner and settlement advisor Anthony Alfieri, "Their service is a game-changer for any small firm. The quality and price are excellent."

LawCompany has led the legal outsourcing community in thought leadership, publishing in Law360 and elsewhere on compliance issues. Melissa Khalil co-authors their writing and serves as LawCompany's Director of Legal Services. Says Khalil, "Our role is to support lawyers and law firms. Our goal is to minimize any time and effort needed to serve their clients. If we do our job right, you'll review our work, add your letterhead, and send it on to the client."

They've also presented for the Federal Bar Association, other legal groups, and at law schools. And often in partnership with Jeremy Babener of Structured Consulting, Chair of the Ethics Committee for the Society of Settlement Planners, and an expert advisor to law firm service providers.

LawCompany was co-founded by a lawyer, is managed by lawyers, and its work is performed by lawyers. Says Khalil, "We have experience supporting in nearly every area of law. And when specialized areas come up, we're ready to dig in and become the specialists."

Co-founder Tariq Hafeez established the company more than ten years ago with a goal of empowering law firms. Says Hafeez, "We've consistently seen a need for this service, especially once we began to provide it." LawCompany has become a regularly invited expert at conferences and a sought-after advisor to small law firms.

LawCompany has also supported the legal industry by sponsoring new paths to education. For example, by sponsoring a CLE Trip to the Virgin Islands for personal injury attorneys by Destination CLEs, a fantastic way for lawyers to make vacations deductible.

Thomson Reuters' 2021 study of law companies found "an increasing sense of collaboration, rather than competition between law firms and [law companies]." Since the early 2000s, the legal industry has clearly adopted the efficiencies of outsourcing like every other industry. Next, we'll probably see law firms start learning to better use and manage this resource. Fortunately, LawCompany and others also serve as consultants on outsourcing, software selection, and many aspects of law firm business. In working with so many law firms it's hard not to learn what works best.

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