The growth of client demands amid recent economic challenges has fueled the rise of alternative legal services providers or ALSPs, with a recent report from Thomson Reuters citing they now make up a US $20.6 billion segment of the legal market and Australian law firms showing the most sophistication in their use. Law firms are either incorporating an ALSP internally or externally, especially for consultations on legal technology, and more and more clients are delegating work to these providers than traditional law firms.
The Difference Between ALSPs and Law Firms
ALSPs are businesses that provide specialised legal services focusing on the routinised elements of legal work. These routine tasks ensure the successful execution of legal matters and not the legal matters themselves.
ALSPs typically provide the following services:
- Litigation and investigation support
- Document review
- Contract management
- E-discovery
- Intellectual property (IP) management
- Due diligence
- Compliance
- Legal research
These providers can be standalone or housed within law firms. They are classified into three different types: Independent ALSPs, the Big Four and those that operate within law firms, called law firm captives.
- Independent ALSPs – these providers are businesses solely dedicated to legal support services. They may be utilised for specific projects or on an ongoing basis, and are best suited for startups and small and medium-sized businesses.
- The Big Four – the group refers to the four largest global accounting firms – EY, PricewaterhouseCoopers, Deloitte and Klynveld Peat Marwick Goerdeler. They offer a wide variety of critical legal support services and are preferred by larger global companies.
- Law Firm Captives – these are specifically created law firm subsidiaries that offer alternative legal services. Many of these are focused on either software and product development or legal services targeted to innovation and consulting.
ALSPs combine cutting-edge technology with legal expertise while also cutting down on cost, making them a viable alternative for companies looking to reduce outside legal spending without reducing quality. Some ALSPs even offer temporary staffing solutions where legal advisors and consultants work with the business directly and in-house on a short to medium-term basis.
Advantages of ALSPs
If you’re a startup or business, hiring an ALSP will not only save you time and money – it can also lessen stress. Here are some benefits you can expect when you tap alternative legal service providers.
Specialised services
Unlike traditional law firms, ALSPs focus on solving specific legal challenges. This specialisation allows them to develop precise strategies for the problem and hire not just lawyers but also multi disciplinary staff who can perform these tasks well using cutting edge technology. By tapping ALSPs, you’re dealing with people with specialised expertise in this type of high volume work and can expect high quality output from engaged employees.
Less legal spending
ALSPs don’t usually bill based on the time they spend on work, so you won’t have to worry about being charged extra for extended hours. Having a fixed price helps you keep your budgets on track, and because you know how much you’re paying up front, you won’t be surprised by high accruals.
Turn legal data into actionable business data
ALSPs utilise third party technology to select the best tools for their clients and develop proprietary systems for sustainable competitive advantage. As such, they can help optimise business operations and help legal departments achieve their strategic objectives by turning legal data into actionable data. ASLPs are in charge of technology selection and deployment, which unburdens the legal department while still allowing them to receive the benefits of its use.
In-house teams can focus on priorities
Unexpected organisational workload and admin level tasks can derail your in house team. Sending this type of work to ALSPs will free them up so they can concentrate on more important matters, like business critical projects and supporting the company in reducing legal risk. This also helps relieve the strain on understaffed corporate law departments, preventing burnout and high turnover rates.
ALSP Trend Continues to Grow
According to the Thomson Reuters report, ALSPs are likely to continue growing in the years to come. An increasing percentage of law firms are expected to maintain or increase their outside spending on ALSP services, with the hope of differentiating, scaling and expanding their business and improving client relationships through this additional provision.
New lawyers looking for a different career approach and working style are also eager to diversify their skill set by working with a multidisciplinary team and being at the helm of legal transformation. ALSPs offer a viable and exciting career opportunity outside a traditional legal pathway.
As client demands grow and change, expect more firms to invest in these alternative services. It is an excellent way for them to innovate, modernise their operations and do things differently. Not only does it deliver greater flexibility in headcount and improve cost efficiency, but it also opens up possibilities for offering legal knowledge to existing or new clients who otherwise couldn’t afford the service.
As the legal market continues to evolve, the boundaries between alternative legal services providers, law firms, corporate law departments and even technology and software firms are rapidly blurring. ALSPs are particularly valuable as they can help law firms identify and implement the right technology solutions, as well as provide training and support, which is especially crucial for consulting on matters involving legal technology.
However, it’s important to recognise that traditional law firms should not be undermined by ALSPs or vice versa – both have distinct roles that complement each other. Just as other industries have automations in place, ALSPs function for routine legal tasks, while law firms have that essential human touch and expertise in handling complex legal matters.
Whether you’re a startup or small and medium sized business, Lazarus Legal can assist with all your legal requirements. As a full service law firm, we can help you navigate the law and overcome legal challenges, including providing in house legal advice and support. We offer a personalised and tailored approach to our fees so you can get the legal help you need without straining your budget.
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