Comparing Legal Outsourcing: How It Differs from Outside Counsel and What LegalAgent Provides

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

Requests from business units to review contracts keep increasing, and matters waiting for review pile up. The company has outside counsel, but it is unclear how much day-to-day work can be entrusted to them, so in the end in-house staff end up holding on to the matters. When companies in this situation look for outside support, they come across similar-sounding names such as "outside counsel", "legal outsourcing" and "external legal department".

However, looking only at differences in names will not tell you which provider suits your company. What you want to check is the substance of the practice: who makes the final legal judgment, through what channel day-to-day requests are received, whether specific proposed revisions to contracts are provided, and whether the background of transactions is carried over to the next matter. LegalAgent's fees and scope of work are available on our legal outsourcing service page.

The Difference between a Retainer and Legal Outsourcing

A retainer agreement is a contract to secure a point of contact for routine legal consultations. However, whether contract review and drafting, development of internal rules and the like are included in the monthly fee depends on the terms of the agreement. Even if the monthly retainer fee looks affordable, if individual tasks are billed separately, the annual total will vary greatly with the number of consultations and the content of requests.

On the other hand, legal outsourcing of the external-legal-department type refers to a form in which the provider continuously handles the practical workflow of legal work, not only legal consultations but also receiving requests from business units, revising contracts, managing response deadlines and drafting explanations for internal use. At companies with no dedicated legal staff, it supplements the legal function itself; in one-person or small legal teams, it takes on routine matters and frees up in-house staff time.

Legally, a retainer agreement and legal outsourcing are not defined as clearly different types of contract. Some law firms provide extensive support close to that of an external legal department even under a traditional retainer agreement, and even a service called legal outsourcing may cover only a limited range of work.

Point of comparison	Outside counsel	Legal outsourcing (external legal department type)
Main role	Ongoing legal consultation and advice on individual matters	Ongoing operation of day-to-day legal work from intake to responses and proposed revisions
Request channel	Methods specified in the agreement, such as email, phone or meetings	Connection to internal channels such as Slack, Teams and email
Deliverables	Legal answers, comments on contracts, opinion letters, etc.	Proposed revisions in Word, internal explanations, comments for the counterparty, records of handling, etc.
Accumulation of business understanding	Depends on the attorney in charge and frequency of consultations	Accumulates transaction background and internal standards on the premise of ongoing support
Scope	Legal work defined in the agreement	The agreed scope among contracts, labor, internal rules, personal information, corporate meetings, etc.
Fee structure	Combination of a monthly retainer fee and fees for individual matters	Fixed monthly fee, matter-count allowance, time allowance, etc.

The table above is an example of general tendencies and does not apply uniformly to every firm or provider. The key point of comparison is not the name of the contract but the operational difference: whether the service centers on answering consultations, or whether the outside provider also takes on intake, revision work and progress management of matters.

When comparing providers, presenting the same list of tasks and having each fill in whether each task is included in the base fee, quoted individually, or out of scope makes the differences clear.

When comparing costs, include not only the amount paid to the outside provider but also the in-house working time that arises before and after a request. If confirming facts with business units, preparing materials, rewriting the responses received and reflecting them in contracts remain in-house, that working time stays in-house even after outsourcing.

If the monthly fee comes with a matter-count allowance, check whether unused matters can be carried over, the unit price when the allowance is exceeded, and whether re-review of the same contract counts as one matter. With time-based billing, pay attention to how work by staff other than attorneys, internal meetings and travel time are treated.

LegalAgent's Support Structure and Features

As an AI Native Law Firm specializing in corporate law, LegalAgent provides legal outsourcing that combines attorneys and AI. AI supports the initial review of contracts, extraction of issues and reference to past matters, while attorneys take responsibility for the final legal judgment and the checking of deliverables.

Point of comparison	LegalAgent's support
Point of contact	Consultations received from the environment the company uses every day, such as Slack or Teams
Contract review	Returns Word tracked changes, comments for the counterparty and internal risk explanations separately
Response speed	Within one business day as a rule. Same-day handling as needed for highly urgent matters
Scope	Ongoing corporate legal work such as contracts, internal rules and compliance
Fees	Based on fixed fees, with the scope set according to workload and internal structure
Accumulation within the company	Past revisions, decision criteria and consultation history are referenced in the next matter

As deliverables, we provide not only tracked changes to the contract but, as a set, comments that the business unit can send back to the counterparty as they are, and explanations that show who within the company needs to decide what. At companies that already have outside counsel, a division of roles is also possible in which LegalAgent takes on routine contract review and first-line consultations, and highly specialized issues or major management decisions are referred to the existing outside counsel.

At companies without dedicated legal staff, we start by setting up a consultation channel and running contract review; in one-person or small legal teams, we take on routine matters and work during busy periods. Before entering into an agreement, we align individually on what scope we will cover as an external legal department.

Choosing Support That Fits Your Company's Operational Challenges

At companies without a legal department where executives or the administration department review contracts, receiving only answers to questions leaves the work of revising contracts and explaining to business units in-house. If you want proposed revisions to contracts, response text for the counterparty and even the course of action the company should choose, it is important to confirm the scope of deliverables before work begins.

For a one-person legal function, two approaches are conceivable: sending out difficult, unusual matters, or sending out routine matters. In the former case, the in-house staff member may remain swamped with routine contract checks and the workload may not decrease. A design like the latter, in which routine matters such as NDAs and service agreements are entrusted to an outside provider and time is devoted to work that should be decided in-house, such as fundraising, M&A and compliance, is also effective.

For companies with a high volume of reviews and well-established internal review standards, an arrangement in which routine matters are continuously passed to the outside provider and in-house staff review only exceptional matters that fall outside the standards is suitable. If the company launches many new businesses and wants to consult from the planning stage before contracts exist, decide on a channel through which business units can consult outside attorneys directly and on the person responsible for making the final decision in-house.

When choosing a provider, look not at the shape of the organization chart but at which stage of day-to-day work matters get stuck. Whether they stall at intake, at legal judgment, at revising Word documents, or at internal explanation and negotiation with the counterparty changes which work should be entrusted to the outside provider.

The handover structure for the people in charge is also worth checking. If only a particular contact person understands the business background, explanations will have to be repeated each time that person is transferred or leaves. Check where past consultation history, internal templates, negotiation policies and approved exceptions are recorded, and whether they can be handed over to another person. Also agree in advance on the format in which the records of handling and internal standards built up so far will be returned when the support ends.

Matters to Organize before Requesting a Quote or Consultation

Before consulting an outside provider, writing out the following matters based on recent matters makes it easier to compare each provider's proposal on the same terms.

• Trends in the types and number of contracts arising each month
• The current intake method and the in-house staff in charge
• Consultations other than contract review that are backlogged
• Desired response deadlines for ordinary and urgent matters
• Whether proposed revisions in Word, internal explanations and negotiation support are needed
• Final decisions you want to keep in-house and tasks you want to entrust to the outside provider

Services under the name legal outsourcing are offered not only by attorneys and legal professional corporations but also by providers that are not attorneys. Check in advance who makes legal judgments on individual matters, and whether a provider without attorney qualifications handles only document organization and progress management. Because the relationship with Article 72 of the Attorney Act (Japanese) is judged according to the actual nature of the work, the service name alone does not confirm legality.

Since confidential information will be entrusted to an outside party, security and information management are also important points of comparison. Check the cloud environment used, the management of access rights, the scope of subcontracting and so on. If the provider uses AI, ask for an explanation of whether your input data is used to train the AI, whether information is viewed by anyone other than those in charge, and whether usage history is properly managed.

There is no need to move all legal work to an outside provider from the start. One approach is to begin with operations limited to specific contract types or certain request channels, and expand the scope after determining whether the proposed revisions delivered can be used as they are in-house and whether rework arises in review. Even when setting a trial period, agree before work begins on the conditions for ending it, the fee structure upon full adoption, and how the data created will be handed over.

When comparing response speed, align how time is measured. Is it measured from when the consultation is sent from within the company, or from when all necessary materials are in place? And whether the initial acknowledgment of receipt is regarded as the response, or the response is when a proposed revision checked by an attorney arrives, greatly changes the meaning of phrases such as "same-day handling" or "within one business day".

For urgent matters, check not only the time until the final deliverable arrives, but also when a first response will arrive and when you will be contacted if additional materials are needed. This is because for some matters, decision-making can proceed if, by the internal deadline, you can grasp at least the overall picture or a provisional course of action.

When consulting, present actual example matters to candidates and confirm what deliverables come back, the steps by which the matter proceeds, and the conditions under which additional fees arise. By looking ahead not only at how polished a sample answer looks but also at the work that remains in-house after a request, the form of support that truly suits your company comes into view.

At the first meeting, we confirm the current number of contract reviews, how the consultation channel operates and the status of backlogged work. On that basis, we clearly separate the consultations LegalAgent will handle directly, matters to be decided in-house, and matters to be coordinated with existing outside counsel.

Even when starting with a request for contract review only, you can specify how far you need proposed revisions in Word, comments for the counterparty and explanatory text for internal use. When routine legal consultations are included, we set the Slack or Teams communication channel and the contact methods for ordinary and urgent matters. Details of our support are available at LegalAgent's Legal Outsourcing.

Specific ways of dividing work in a one-person legal function are covered in How a One-Person Legal Function Can Use Legal Outsourcing, and structures before hiring in-house counsel in Legal Advisers for Startups.

Frequently asked questions

What is the difference between outside counsel and legal outsourcing?

A retainer agreement is a contract that provides a point of contact for ongoing legal consultation. Legal outsourcing can be designed to cover, in addition to consultation, the ongoing workflow of day-to-day legal work, such as receiving requests from business divisions, revising contracts, explaining matters internally and managing matter histories. However, the actual scope needs to be checked based on the contract terms, not the name.

Is legal outsourcing a separate contract from a retainer agreement?

It is not defined by law as a separate type of contract. Some firms provide services close to those of an external legal department under a retainer agreement, so check, regardless of the name, whether request intake, contract revisions, internal explanations and matter management are included in the scope of services.

What information is needed to get a quote for legal outsourcing?

If you convey the contract types and volume trends, your current intake method, your desired response deadlines, consultations other than contract review, the deliverables you need, and the final decisions to remain in-house, you can compare the scope of services of candidate providers on the same terms.

What does LegalAgent's legal outsourcing include?

We provide request intake via Slack, Teams and the like, contract review using Word track changes, comments for the counterparty, risk explanations for internal audiences and more. Our standard is to respond within one business day as a rule, and we handle highly urgent matters on the same day as needed.