To the chagrin of some law firms, alternative legal service providers (ALSPs) have become an important and growing player in the legal industry landscape. According to a recent report, the overall market for ALSPs grew by about $5 billion between 2015 and 2019, reaching almost $14 billion. Nearly 80% of law firms and 71% of corporate legal departments have used ALSPs at one time or another, a strong sign they are becoming a mainstream legal option.
If your firm still views ALSPs as competitors, it may be time to reframe your perspective. When law firms collaborate with ALSPs, rather than compete, it can be a benefit for all involved, including clients.
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Advantages override concerns
Thomson Reuters’ report, Alternative Legal Service Providers 2021: Strong Growth, Mainstream Acceptance, and No Longer an “Alternative,” predicts that the ALSP market might have reached its tipping point. Widespread acceptance of the business model and benefits that are well-suited for current conditions, it says, position ALSPs to quickly expand market share.
You are not alone if you are skeptical, though. The report finds that about half of law firms continue to harbor some doubts about the quality and security of ALSPs. But the negative perceptions seem to be subsiding as firms increasingly embrace ALSPs for tasks such as e-discovery, legal research, document review, and regulatory risk and compliance matters.
Several reasons are driving the shift in attitudes. ALSPs can provide firms cost effective access to specialized expertise and proprietary tech-driven solutions. They also can function as consultants on legal technology for firms. This access is particularly valuable for smaller firms, helping to level the playing field when they are competing against larger, deeper-resourced firms. Regardless of firm size, an openness to ALSPs also demonstrates to current and potential clients an openness to innovation and new, more cost-efficient ways of doing business.
Outsourcing to ALSPs can lead to greater client satisfaction, too. Pressure to cut costs has intensified in recent years, and outsourcing can satisfy that objective, to the benefit of both the law firm and its clients.
At the same time, taking tasks like research and document review off of the plates of attorneys can free them up to focus more of their time on higher-priority work with higher profit margins. They probably even prefer such higher level work, so outsourcing also boosts their satisfaction and engagement, in turn, enhancing retention.
Finally, outsourcing to ALSPs can bring the same benefit to a law firm that many types of outsourcing provide, starting with lower personnel costs. The firm can shrink its payroll and related benefits and occupancy costs, and it can reduce its investments in recruiting, training, employee management and overhead and other nonbillable employee expenses.
Proceed with caution
Outsourcing to ALSPs comes with numerous advantages, but it is important to remember that law firms still own the transferred processes. You cannot afford to take an entirely hands-off approach — it truly must be a collaboration with the provider.
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For more information, contact Joel Herman at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Law Firm Group.