On the customer side, you have a great sales pitch. Right now, Fortune 1000 companies have way too many in-house attorneys who provide work product of inconsistent quality, are referred to internally as the "sales prevention department" (or "where deals go to die") due to their lack of focus on sales and procurement needs, are often ignorant and dismissive of cutting edge corporate methods such as process improvement and knowledge management, and strenuously resist strategic sourcing methods to reduce outside counsel fees. In my experience, each in-house attorney costs at least $250K per year (when you factor in benefits, support staff and overhead). This means that even after paying labor and returning a significant per lawyer profit, the company could still offer pricing at a significant savings over maintaining a large in-house department.

So the competitive advantage would be higher quality work, at a much lower price, with higher budget certainty. The company could also take over many outside counsel billables charged using the unpredictable hourly rate. It would be hard to argue that a large in-house legal department could do better work, as a cost center, than a for-profit company such as this one, which is completely focused on providing better service while driving down cost through radical productivity improvements (which most law firms/legal outsourcing/legal staffing companies do not do). General counsels and legal departments will strenuously resist this, so the goal would be to sell to the CFOs, finance professionals, and procurement managers who are dying to get their hands on legal services, one of the last few areas in corporate America today that has avoided strategic sourcing.

Having large firms build a huge network of offshore resources like the"budget line" for commodity work suggested above seems to be unworkable since it is inconsistent with the premium services law firms are offering–particularly as they get rid of or de-emphasize non-premium services. It is quite difficult to maintain a premium brand and a commodity brand in the same firm at the same time. Conflict rules also seem to lend themselves to smaller firms/solos. For day-to-day work, a conflict check that takes a few minutes not a week is kind of important.

Here in Seattle, Microsoft and Amazon started to use smaller firm and solo lawyers for IP transactions work (in many cases seemingly leading to the breakup of IP transactions groups at larger firms particularly when combined with rate pressures), and the trend has carried over to mid-sized and smaller companies. There is a robust community of good quality lawyers at smaller firms or solos. Cisco is using firms all over the country, particularly for patent prosecution and similar work. My company uses law firms quite literally all over the country–Seattle, Silicon Valley, LA, NY, Maine and almost everywhere in between. We find the right lawyer, with the right skills, at the right rate to meet the need.

Outsourcing legal work is harder for small and mid-sized companies to manage, because it is too episodic. Maybe law firms can pull it off, but right now most seem to back into it via contract attorneys for litigation document review and similar projects. Not offshoring but potentially a precusor.