This past year, I've been very fortunate to be asked by a few small- and mid-sized entertainment businesses to handle some or all of their Business Affairs and Legal Affairs work; Work that traditionally would be handled by in-house counsel, but is noow being outsourced to me. It's been great for my business, and I'm grateful for the opportunities to help.
In the course of working for these enterprises, I've come to see the tremendous value proposition effective outsourcing can offer. In this 3-part series of articles, I'll demonstrate this value, and offer some practical tips on what to outource, how to outsource, and to whom you'll assign things.
If you're an owner or general-counsel to a small-, mid-sized or even a large entertainment industry business, you are probably overwhelmed with a workload that at times seems insurmountable. You spend an inordinate amount of your time managing dealmaking processes, negotiating minor deals, and drafting contracts that really need to be handled by a staff lawyer. But, if you don't have that staff lawyer (for whatever reason), you find yourself doing that work, instead of focusing on the higher-level stuff that's really in your wheelhouse.
If this is you, outsourcing some of your work probably makes sense.
There are any number of good reasons to outsource legal services, rather than staff the work in-house. Not the least of these is, of course, cost. But let's not overlook the ability to leverage specialized knowledge and expertise, and the way outsourcing can free up your valuable time to focus on the bigger picture.
Outsourcing is cost-effective
When you outsource work to third-party, independent contractors, you save money. On top of salary, hiring lawyers and others to staff a legal or business-affairs department will require the usual employment-related add-on expenses. Payroll taxes, plus Pension, Health, and other benefits packages can easily reach 30-40% of the salaries you pay employees. On top of that, you have vacations, sick-leave, and other hidden expenses. Plus, maintaining a staff also requires that you provide a place for them to work… facilities expenses can be astronomical. Particularly in Hollywood and environs.
With independent contractors, you have none of these expenses. The fee you agree upon is the fee you pay. Period.
And, when you outsource, depending on the fee arrangement you make, you likely only pay for the services you actually use. Having in-house employees means paying for lunch-hours, break times, plus the usual down-time when employees are mingling ‘around the water cooler', and the like. Outsource lawyers bill you for their actual time spent on your work.
Outsourcing leverages specialized expertise.
Even if you have an in-house legal and business affairs staff, they can't possibly be experts at everything that might come up. If you're a film producing business, your staff is probably pretty good at dealing with film-related issues…. but what happens when you decide to adapt something that originated in another medium? Say a stage-play? Or, maybe one of your properties is crossing over to another area.
It only makes sense to depend on experts with the specialized knowledge, expertise and experience to handle the situation properly. But hiring that expert is inefficient and expensive, and training your existing personnel in a new field is time consuming and ineffective.
But, bringing an outside expert onto your team, on a part-time outsource basis is highly efficient, cost-effective, and will likely lead to better results.
When you think about it, this is really nothing new. In house counsel have historically “outsourced” litigation to law firms that specialize in the adverserial side of things. But really, why shouldn't the same approach work for negotiations, drafting projects, even day-to-day matters such as arise in the production environment? My recent experience proves that it can. By outsourcing dealmaking, negotiations, drafting and contract administration functions, you're free to assign work to the persons best suited to the particular tasks at hand.
Outsourcing can be faster
Depending on the situation, outsourcing legal services can result in faster turnaround. Time constraints can be communicated at the time of the assignment, and if the lawyer can deliver, great. If not, you can assign the task elsewhere.
My experience is that smaller firms and solo practice lawyers are better suited to the ultra-quick turnaround situations, since they don't have to content with the ‘overhead' of administration within the firm, before delivering the work. They also tend to be leaner, hungrier, and more accustomed to working quickly, a trait that traditional big-law hourly billing actually discourages.
Outsourcing is liberating
When you outsource , you gain freedom. Instead of being tied to a desk performing routine tasks, you and your people are able to focus on other priorities; the bigger picture stuff that generates revenue and fosters growth. Also, if your in-house staff is overworked, overwhelmed and falling behind, outsourcing your overflow is a great way to manage the problem, whether for the short- or long-term. Doing so frees everyone up to be productive, without the spectre of that backlog hanging overhead.
Whether you're a small-business owner, or General Counsel to a major entertainment enterprise, outsourcing business- and legal-affairs work just makes sense. In my next article, I'll be discussing the practicalities of outsourcing: How to do it, how to determine what to offload to outside counsel, and how best to manage the process. In the third part of this series, I'll explore the question of to whom you'll outsource.