The Evolution of ALSPs into an Invaluable Member of the Legal Ecosystem
The differences in economics and operations of the typical law firm and legal department surely are multi-faceted. While the two sides sometimes perceive aspects of the engagement differently, the unifying aspect of their relationship has always been the adherence to the legal strategy and a matter centric philosophy. Along these lines, re-imagining the corporate counsel and outside firm relationship around optimized skill matching for each matter will bring the most value out of the relationship. Skill matching historically has been something law firms have handled internally and independently. What has been incredibly interesting is how many law firms are establishing “captive” legal process outsourcing arms (LPOs) or alternative legal service providers (ALSPs) that are owned or affiliates of the law firm to extend their skill matching capabilities. Clearly, clients and law firms themselves are seeing ALSPs bringing needs skills to the table.
eDiscovery got its foot in the door over a decade ago as the initial proof of the ALSP concept and has in many ways revolutionized the way lawyers and legal teams handle resource intensive legal work. With the COVID-19 pandemic writing a new chapter in the change management book, legal teams everywhere have had to adapt to new solutions and innovations more rapidly than ever. According to the most recent edition of Thomson Reuters’ Alternative Legal Service Providers Report, TRI considers ALSPs to be a matured sector of the legal industry, after having sustained growth over the last six years. Most legal teams that have engaged with ALSPs use their offerings simply to handle the most resource intensive work, but we think the rise in deployment of ALSP engagements will help legal teams everywhere align better with business drivers and stakeholder interests as the sector becomes more proliferated.
While law firms most frequently employ ALSPs for tasks like managed document review, legal departments are telling a more complicated story. Corporate counsel and legal operations personnel contract ALSPs for a variety of tasks including regulatory compliance, invoicing automation and billing analysis. Most legal department usage of ALSPs is in service of recovering legal costs and making more sense of the resources required to complete engagements. In other words, they are using more tech enabled tools to become better business people.
Some “traditionalists” in the legal professionals have been skeptical of ALSPs for a variety of reasons. But ALSPs of all kinds have proven their worth through quality legal skill and analysis at a fair and predictable cost with effective reporting capabilities.
If anything, ALSPs’ more flexible and, often, fixed fee service model allows outside counsel more time focus their skills and expertise on complex legal matters, instead of grueling rate negotiations. Finally, after many years, legal departments can show their CFOs exactly where the money is going and how efficiently it is being spent when it comes to routine, recurring, “commoditized” work. The first step is launching an effective ALSP strategy is effective data analysis to understand where and how to (re)allocate legal work. For more information on how Legal Decoder can facilitate your ALSP strategy or how we offer crucial insights on your legal pricing or spend compliance, reach out to us for a demo.