'In a tribe of hunters or shepherds a particular person makes bows and arrows, for example, with more readiness and dexterity than any other. He frequently exchanges them for cattle or for venison with his companions; and he finds at last that he can in this manner get more cattle and venison than if he himself went to the field to catch them. From a regard to his own interest, therefore, the making of bows and arrows grows to be his chief business.'

And so, Adam Smith in his The Wealth of Nations described his view of what were the benefits of the division of labour. Projected into the 21st century, the above extract could be rewritten as:

In a typical industry, an outsourcing firm becomes an expert at providing services, with more readiness and process expertise than its peers. The company exchanges these services for a fee and makes service provision its chief business.

Outsourcing has been around for many years but not necessarily under that banner.  No modern corporation would seriously think about hand delivering its own mail to other companies—the service is outsourced to the post office or to a package delivery company. No corporation would consider holding on to cash in its own headquarters—the handling of cash is outsourced to banks. Auto manufacturers have long looked to their suppliers for components that are integrated into final assemblies. Public relations is often outsourced to agencies, recruiting to employment agencies, and auditing to the accountants. The examples are numerous.

Lawyers and law firms have come late to the outsourcing game. But most have now realized that the practice of law, where insights, experience, and sector expertise—along with costs—are among the key buying criteria of their corporate clients. Personal relationships and trust still play a major role in the choice of a law firm, but the profession is under ever mounting pressure from its clients to become more cost efficient.

Many repetitive legal tasks are now undertaken by specialists who offer efficiency, predictable quality and scalable processes—legal process outsourcing firms. With these firms providing non-core services, both onshore and offshore, lawyers can focus on delivering core advisory services to their clients while providing the end-client (ultimately, the General Counsel) with a competitively priced offering.  

Individuals employed in legal process outsourcing provide a genuine value-add to the clients they serve. As the current International Legal Technology Association (ILTA) conference in Nashville clearly demonstrates, the legal profession has increasingly become reliant on technology (provided by third-party developers, which again is fundamentally outsourcing) to meet the demands of both practice management and client requirements, ranging from e-discovery to managed reviews. The demand by lawyers to support their core business requires them to outsource these functions to specialists with legal domain expertise at a competitive price.

Adam Smith was right. The wealth of nations would grow by increasing productivity through the division of labour. The same is true at the level of the law firm. The more the firm concentrates on its core, the more profitable it will be. Outsourcers—however they are characterised—make this possible.

Robert Gogel is CEO of Integreon, a trusted, global provider of award-winning, legal, document, research and business support solutions to leading law firms, corporate law departments, financial institutions and professional services firms.