Deciding whether to hire an in-house lawyer or outsource to a legal services provider can be tricky - each approach has its own advantages and disadvantages. Here, we explore what those are, and how to make the right decision for you and your business.

Advantages of hiring in-house

Firstly, you can control their salary and working hours (within reason!) - it's much easier to agree upon salary and working hours with someone in-house. This aids in business planning processes, and knowing the cost of employing them helps with long-term budgeting. Having someone in-house who can successfully take the reins on certain tasks creates the perfect opportunity for you to develop your own leadership capabilities. And, as they expand upon their skills, they will become an even more valuable asset to your company. Speaking of assets - if you choose to build your skillset from within, it can help set your company apart from the competition. And, if you treat your employees well, chances are they’re committed to the company’s success. When they know that success is within reach, it can be a strong motivator for professional growth and development.

If you have the perfect employee in mind to develop, or the perfect candidate looking to work with you, the above reasons can be pretty compelling. As with any good thing, though, there are some drawbacks that you need to bear in mind.

Disadvantages of hiring in-house

When it comes to cost, you might be tempted to look at just two numbers: the salary of a new employee vs. the cost of outsourcing. The latter will almost always tip the scales, probably to the point of strongly considering the prior without even thinking twice. But this simplistic comparison leaves out the additional short and long-term costs of hiring in-house. For example, NI contributions, benefits, share options and training. Not to mention any management time required for supervision and general pastoral care.

None of us want to be a ‘jack of all trades and master of none’ and, for this reason, you’re not going to want to hire a lawyer who claims to be an expert in a multitude of legal specialisms. Hiring someone is therefore not going to completely fill a knowledge gap in your team, meaning you’ll still need to outsource in some circumstances.

A new employee requires a lot of support and, even after their onboarding is complete, line management is a time-consuming task. If you can’t spare the time for proper management and training to keep your employee motivated, hiring in-house is probably not for you.

Legal work isn’t always predictable, but an employee is a fixed overhead. There are some tasks that are better contracted out simply due to their unpredictable nature. Take, for example, contract reviews. Often legal teams experience a peaks and throughs depending on where they are in a quarter. Outsourcing these will enable you to flex your resources up and down to meet your business’ needs, so you’re not paying for resource you don’t need.

Advantages of outsourcing

Access to expert knowledge is a biggie! If your in-house team doesn’t have the knowledge to handle a particular issue, outsourcing is likely to be your best option - it certainly helps to de-risk as you can go to an expert who does that type of work all of the time. Those expertise might only be needed for a short period of time, or for a specific project. In this case, outsourcing is recommended, especially if your in-house team don't have the skills or time.

Outsourced legal service providers should be dedicated to your needs - they depend on their clients to succeed and, by their nature (and necessity), they take time to understand clients’ needs and problems so they can provide the best possible service. If all goes well, the first time you work with a particular legal services provider probably won’t be the last. It’s easy to return to someone you trust for new or repeat tasks and, when they know you and your business, it means they can hit the ground running each time.

A solution to reducing the burden on your in-house team is to outsource to a legal services provider. Whilst your team might have the capability to work on a particular task, they simply might not have the time. Outsourcing can greatly reduce or completely lift that burden, allowing your team to focus time and energy on the tasks that add the most value to your business. They're also there to take work off your plate - with no management or supervision required - meaning your time is freed up to focus on more important work.

Hiring in-house can quickly make the costs add up between training, bonuses, salary increases, overtime pay, equipment and office costs. When you outsource, you pass the risk of rising costs onto the provider, making it easier to have cost certainty over time. Equally, a legal services provider should be transparent and upfront about their costs, making it easier to stick to a budget.

Disadvantages of outsourcing

Finding the right resource solution can be challenging. You’ll probably spend a lot of time browsing websites and reaching out to your network for recommendations. But a legal services provider with the skillset and approach you need is out there! Any way you cut it, the cost of outsourcing will almost always be higher than employing someone in-house. But when you factor in the increased flexibility you’re getting, the fact you’re not paying for ‘dead time’, and having access to a broader knowledge base, the cost can often be justified.

The first time you work with a legal services provider your team will have to fill them in on your needs and specific requests. As outsiders to your company, they rely on that information to be better service providers. Getting them to that point of familiarity takes time and patience but, if you’re looking for a long-term relationship, it’s a worthwhile investment.

To conclude, there are three key factors to consider when deciding whether to hire an in-house lawyer or outsource to a legal services provider: cost, expertise and flexibility. It’s definitely not possible to have your cake and eat it, but this list of advantages and disadvantages will hopefully help you make a more informed decision.

If you need help from an outsourced provider, we might be able to help you with your commercial, technology, IP, data protection and/or employment needs. You can reach the team here.