By Diljeet Titus

Outsourcing legal services is not a new concept. Successful companies outsource arrangements as a key component of doing business effectively in an environment which requires greater compliance. Strategic outsourcing of legal work can reduce business cost, enhance efficiency and ensure that you receive expert legal advice in areas where your in-house resources may be inadequate.

Requirements for SMEs

> Responsibilities
You are responsible for ensuring applicable legal, regulatory and procedural compliance. You must build up resources, including a talent pool and research material and make cost assumptions to meet your company's legal objectives.

> Role
Identify and assess the need to outsource legal services, define the purpose, scope and method for outsourcing.

> Objectives
The biggest challenge facing you is to improve collective performance of in-house resources while focusing on core competencies. You must evaluate alternative approaches to maintain the right mix and scope of in-house and external resources. In addition, outsourcing legal services saves you time and headache, if the employment of your in-house lawyer ceases.

Why should you outsource
You may typically outsource for these reasons:
Policy and accepted practices: Outsourcing primarily happens in areas where your company requires assistance in intellectual property, tax, prosecutions, enforcement, civil and criminal litigation and other areas outside the scope of the core areas of your company's in-house resources.

> Cost and HR management: At times, retaining a law firm is less expensive after an assessment of certain issues. Take into account these factors:
(i) What is the cost of providing legal services internally? Is that cost competitive with prices offered by the law firm?
(ii) What benefit does the law firm bring to the company by handling the work? Are there particular services or areas of work that would be better handled by a law firm?
(iii) Does the company have, or want to develop, the necessary skill sets to effectively handle specific areas of work?

> Growth and expansion: Outsourcing legal services is common in times of growth and expansion which creates a short-term need for a larger resource base. This is both in terms of unavailable manpower and research material.

> Expert opinion and second opinion: An expert opinion on specific laws such as direct or indirect taxes, IP enforcement and litigation matters favor outsourcing. In such situations, a law firm is able to provide specialized services and a broader perspective which may not always be available in-house. Sometimes critical issues relating to a transaction may compel a company to obtain expert opinions from two independent law firms to achieve greater comfort.

This is the first of a two-part series

© Entrepreneur India August 2012

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