GLOBAL-WIDE: An Introduction to Litigation Services

ALSP Adoption Accelerated 

As COVID-19 policies were lifted in 2022, we entered a period filled with technological innovation, economic turmoil, cybersecurity threats, inflation, falling demand for law firm legal services and shifting client outlooks. Necessity during the COVID-19 era spurred innovation, and now the financial declines of 2022, combined with uncertainty regarding the depth and duration of the current economic downturn throughout the world, cost-cutting measures and lay-offs demonstrate that the time is right for more clients to turn to alternative legal service providers in 2023.

Clients are more willing than ever to move work in search of high-quality and cost-effective litigation services. Clients will face challenges in 2023 due to current economic uncertainty and not knowing how long the current downturn will last, how deep it will be and what the recovery will look like. The present uncertainty is driven by external issues outside the direct control of regulators, like the war in Ukraine, the lingering effects of the pandemic and the challenges of global inflation. In October 2022, the International Monetary Fund downgraded its forecast for the global economy. It warned that the worst was yet to come and that 2023 would feel like a recession for many people. Additional evidence of the current financial downturn in the US economy came with the March 2023 collapse of Silicon Valley Bank and Signature Bank, the biggest bank failures since the Great Recession of 2008. Another US bank and a prominent European bank were forced to seek lifelines from other banks as well, prompting fears about the stability of the global banking system.

On a more optimistic note, the current economic downturn is different from the Great Recession. Today’s economic troubles stem from the continuing effects of a global pandemic that shut down the world’s economy and not from inherent weaknesses in the financial system itself. Plus, in today’s economy a number of US elements remain strong. In addition to robust housing and auto industries, strong corporate and household balance sheets, and a low unemployment rate, the US has a healthy labour market. Granted, with the recent rounds of tech lay-offs, the types of jobs available are not the same high-paying corporate opportunities that many of the recently laid off are accustomed to.

The ALSP market has been growing rapidly in recent years, driven by the increasing demand for cost-effective legal services and advancements in AI technology. The market for alternative legal service providers was valued at USD15.83 billion in 2022 and is expected to reach USD25.17 billion by 2028, growing at an 8.4% compound annual growth rate. Several factors contribute to the ALSP market’s continued growth, such as increasing legal complexity with respect to data privacy and cybersecurity – about which ALSPs can provide specialised legal expertise at a lower cost than traditional law firms – technology adoption, businesses’ changing legal needs and increased global competition. In the growing and competitive ALSP environment, there is a sense of urgency around client retention, client acquisition and being able to deliver a wide range of services that can address shifting client needs to further integrate into clients’ business processes. ALSPs will need to continue to embrace innovation, create more efficient technology-powered workflows that increase value and deliver higher customer satisfaction to come out on top.

The following examines expected themes in the litigation services landscape in 2023 and as we look further out to the near future. First, we will explore the new technological advances in the age of generative AI and how they could shape the legal industry. We will then assess the continued cybersecurity threats, their impact on litigation services and how to manage them. Finally, we will highlight the legal trend of lawyers being held accountable for technological mis-steps in 2023.

Generative AI’s Explosion Onto the Legal Scene  

In recent months, generative AI has taken the legal world by storm with its capabilities and sophistication advancing at a rapid pace. The emergence of generative AI, ranging from ChatGPT to Dall-E 2, is perhaps the foremost technological breakthrough of our time. Generative AI has the potential to reshape entire businesses from art, advertising, publishing and software development to litigation services. Many people are now wondering how this powerful tool can be applied to the legal profession.

There have been discussions about whether generative AI will take the place of lawyers. However, the general consensus is that it is more a matter of lawyers who are adept at using generative AI replacing lawyers who do not know how to use generative AI. This is a signal to ALSPs, as the foremost innovators of the legal services industry, of the need to adopt generative AI quickly to get ahead of the curve and lead the way for the legal profession.

In the past year, generative AI has learned to be more precise, improved its accuracy, added expertise, and it can now prepare high-quality summaries and comparisons, which can be incredibly helpful in e-discovery and document review. A note of caution, however: the content produced by generative AI chatbots may look trustworthy and professional, but often is not. Generative AI is still in its infancy. It makes things up or “hallucinates”, cannot fully reason and apply logic and is not up to date with the newest information as the models are only updated every six months or so. Thus, the time is right for ALSPs to become familiar with generative AI technology and begin to integrate it into their workflows to create efficiencies. However, the human element and need for quality control of its work product are still absolutely required. Relying completely on AI solutions without additional human checks would be detrimental for ALSPs and the legal services industry generally.

The Increased Threat of Data Breaches and the Need for Cybersecurity Preparedness

For most companies, the discussion around data breaches is about not if a breach will occur but when. The unfortunate reality is that the pace, scope and consequences of ransomware attacks and data theft are on the rise. As organisations generate and store increasing volumes of personal and sensitive data, they are becoming an even greater target for cybercriminals wanting to extort data for financial gain.

To limit potential liability and risk, ALSPs must ensure that they are only taking in the client data required to complete the necessary work. It is also important for ALSPs to prioritise removing client data as soon as possible after the work is completed in order to avoid operating at an unnecessarily elevated risk level. By understanding the types of sensitive data they have access to, where the data is stored and for how long the data is required, ALSPs are ensuring that they are taking proactive steps to limit their liability in the event of a potential data breach.

Additionally, ALSPs should ensure that all employees are provided with periodic mandatory cybersecurity training. The increasing number of cybersecurity threats and the sophisticated manner in which attackers are luring in potential victims mean that everyone in the ALSP should be on guard at all times and up to speed with the most recent attack methods.

By taking these preventative steps and by bolstering cybersecurity practices, ALSPs will prevent the most catastrophic effects of a cyber incident and should be able to weather the storm in the event that they become the next victim.

Legal Trend – Lawyers Being Held Accountable for Technological Errors

Within the privacy space, organisations and lawyers are beginning to be held more accountable for their actions and whether or not they made “reasonable efforts” to prevent the inadvertent or unauthorised disclosure of information. Evidencing the priority bar associations are beginning to place on cybersecurity and technology, New York and 39 other jurisdictions now specifically mandate technology competence as a component of lawyers’ ethical obligations. Additionally, among the growing impacts of data breaches is the risk of class-action lawsuits. As more people understand the effects of having their data compromised, they are taking action by joining or initiating class actions against small to mid-size organisations, forcing companies to demonstrate that they undertook reasonable efforts to prevent the unauthorised disclosure of data. Case law will continue to develop over the course of 2023 and beyond, fleshing out what is reasonable to prevent punitive liability in the event of inadvertent or unauthorised disclosure of information.

Sanctions against counsel for discovery ineptitude are also increasing in frequency. What was once thought of as too technical for a lawyer to comprehend is now necessary knowledge for defensible discovery in litigation. As complex discovery has become a specialised field, courts have also grown more sophisticated in their understanding of the hallmarks of competent e-discovery counsel. Discovery counsel must have a thorough understanding of their clients’ information systems in order to properly defend or prosecute their cases. In an e-cigarette trade mark case, defendants and their counsel were sanctioned more than USD2.5 million for discovery violations that stemmed from counsel’s lack of competency in e-discovery. The court chastised counsel for their incompetence and admonished that lawyers can no longer expect to catch a break in e-discovery compliance because it is technically complex and resource-demanding.

Given the current economic conditions, organisations being asked to do more with less resources and the breakneck advances in technology, the time is more right than ever for ALSP adoption and growth. To be successful, ALSPs must continue to be at the forefront of technical innovation. They must develop processes to integrate evolving technologies quickly into their workflows while retaining proper quality control measures surrounding their output. ALSPs and lawyers generally cannot be afraid of technology and must study new developments and become knowledgeable in the fields of cybersecurity, discovery and generative AI in order to demonstrate they have taken reasonable efforts in the event of a lawsuit, as well as to continue to be competitive in the market.