Legal Decoder Blog

There has been a rising trend of the use of alternative legal service providers (ALSPs) in the legal industry, as legal departments are now utilizing these third parties to handle routine tasks. ALSPs collaborate well with legal departments as well as law firms due to their expertise in assisting with recurring tasks, handling mass customized work and providing technology enabled services. Utilizing a traditional law firm or in-house personnel for this type of work may not translate to optimized value as it would result in higher costs and often a lawyer is not necessarily needed for the high-volume, low risk task. The ALSP market segment is growing between 12 and 15 percent per year as more and more companies and law firms are investing in ALSPs. When making that investment decision, what factors should be considered?

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On Wed, May 19 2021, Legal Decoder hosted the first in series of four webinars focusing on how ALSPs have made significant inroads in the legal industry. The panel included Stephanie Corey, Co-Founder and General Partner at UpLevel Ops and Co-Founder of CLOC; Mike Russell, Head of Global Legal Operations at Expedia Group; Daniel Young, Legal Operations Manager at Boston Scientific; Vince Cordo, Chief Revenue Officer and Head of Legal Ops at Holland & Knight; and Katy Werner, Managing Director of Legal Transformation Services at Epiq. Joseph Tiano, CEO of Legal Decoder served as the moderator for the discussion.

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We have been studying the general counsel surveys for years now, and if there is one aspect of legal engagements we’ve internalized from them, it’s that legal departments often embrace the Skinner-like approach with their law firms when it comes to matters of disengagement or confrontation with firms about pricing and bills that are not up to their standards as memorialized in outside counsel billing guidelines (OCGs). Often, this looks like quiet compromises between general counsel and law firms where the metaphorical “Bart Simpson red hands” is smattered all over a legal bill (non-compliance with OCGs) but the legal department ignores the noncompliance or pays the bill on the promise that the same billing malignments won’t happen again.

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While the corporate legal departments and outsourced law firms 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

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Roughly 95% of firms do not internalize the event of not receiving business from a company after an engagement synonymous with being fired from their post. On the flip side, only about half of law departments consider firing an outside firm for a failure to comply with outside counsel guidelines. Ultimately, this distinction causes a few problems for the inside-outside counsel relationship. As matter centricity has become the operating standard for general counsels’ engagements with outside counsel, it’s important that law firms bring their best practices for each and every engagement.

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