About fifteen years ago, the world started realizing that the way legal services were delivered, inside the corporate environment and by law firms, was commercially flawed. The COVID-19 Pandemic has shined a spotlight on those flaws in recent months. Eric Eckhardt, Vice President, Legal Solutions weighs in on the The Rise of Alternative Legal Service Providers, and how to get started with the right ALSP.
Technology has historically outpaced the practice of the law and the delivery of legal services. As a result, organizations scaled around their legal departments, relegating them to the artisanal practice of law and their role as the costly ethical and regulatory compass for the enterprise. In the legal ecosystem, this separation of circumstance is further compounded by jurisdictional and practice specialization on the firm side, which has served to perpetuate objectively antiquated business practices. Enter the AFA and the ongoing death knell of the billable hour, the consolidation of law firms across the world, the Big 4 expansion into legal practice, the creation of the Legal Operations profession, and the role of the Alternative Legal Services Provider.
Most of these corrective measures, however, are at odds with each other and do not offer viable business continuity solutions when crisis hits. Legal Operations’ proposed Alternative Fee Agreements and billing guidelines are crafted to lower the cost of outside counsel spend and are, by nature, rarely commercially viable for the firm. Firms end up with more work at less profit, forcing consolidation to stay afloat. Those consolidated firms will likely end up attempting to compete with the Big 4, whose diverse and inherently commercial nature will allow price setting and market dominance. RIP traditional law firm models.
The Alternative Legal Services model offers a solution that balances out the current and likely future commercial reality. ALSPs, at the most basic level, offer legal support for less specialized (commoditized) legal tasks like document flagging and NDA reviews and business continuity solutions when internal resources must be diverted. In recent years, however, the ALSP has evolved to offer more specialized legal support as well as technology-enabled solutions and data-centric optimization. In this capacity, ALSPs have become an essential strategic partner to both corporate legal departments and law firms alike, offering lower delivery costs, enhanced value, and technology-supported analytic and commercial expertise. So how do you start working with an ALSP?
Ask Questions When Searching for an ALSP
Sometimes legal teams know that something isn’t quite right, but they aren’t entirely sure what it is or where to start. Often the questions are at the cross-section of risk mitigation and commercial alignment with organizational goals. How is the corporate legal department integrated with the rest of the organization and where are the gaps? What problems does this cause? On the firm side, active challenges often surround future fitness, pricing strategy, or keeping up with technology trends. Take a hard look in the mirror and ask what challenges you would like to solve, and look for common undercurrents. This exercise will allow you to identify the ALSP with all the capabilities necessary for solution development and strategic partnership.
Assess Resources & Resource Allocation
Sometimes the solution to a client’s immediate problem already exists within the organization, or, from the other angle, the problem is caused by unnecessary operational inefficiency. It’s easy to look at an operational bottleneck and try to solve the problem by stacking on resources – either in-house or from the outside. When we do this, though, it could compound an underlying problem that exists costing valuable time and money. The right ALSP partner can offer you an outside perspective with industry expertise to maximize current resource utilization (human and machine).
Select the Right ALSP
Not all ALSPs are created equal. The right partner should have both legal and commercial expertise, operational experience in the legal landscape, and technology-enabled solutions. The right ALSP will work with you to ideate solutions to your underlying challenges while meeting immediate needs, all the while measuring, reporting, and tracking commercial value for you. Without this mix of qualifications, the offered solutions will be akin to plugging a leak with a piece of tape.
Focus on Commercial Outcomes
That which is not measured cannot be objectively improved upon. We all work in the business of the law, so any service provider (including law firms) should be able to quantify the benefits of their service. Time and again in this industry we witness claimed success by volume of work (matters/files, number of hours, number of contracts processed using new technology) and not often enough in terms of financial outcomes. One million hours worked with zero profit is $0. Large volumes of contracts processed through new technology at great cost without quantifiable savings in excess of cost does not a good commercial decision make. If you are speaking with an ALSP and they aren’t measuring your current efficiency and proposing a solution that can quantifiably save you money or mitigate risk, you should walk away.
Think Forward: Scalability
Over time, conditions change. You should choose an ALSP who can grow with your organization and is agile enough to support strategic growth, economic pressures (like a pandemic), and immediate needs as they arise. This requires a relationship manager at the ALSP who can support your evolving needs and can anticipate potential commercial opportunities for you while working with their team.
Now, more than ever, organizations are under pressure to shift their operating models with a focus on balancing business as usual tasks and crisis management. Those with established ALSP relationships are in a better position to overcome the current challenges and position for strategic planning.
Do you think your company could benefit from working with an ALSP? Contact us to learn how we can help.