Market trends in Chambers ALSP 2023 research
Learn about the latest legal market insights and trends across the Alternative Legal Service Providers sector and see what findings the Chambers ALSP team discovered during research into the 2023 guide.
Cost control pressure
Recent years have seen General Counsels (GCs) at large corporates, facing ever-tighter cost control pressures, look for innovative ways of managing their in-house legal functions and external legal spend.
“The big [trend] is the increase in law firm cost,” says one source, adding that “a lot of clients, for lower-risk type tasks they are looking for alternatives that are cost-effective.”
This is where Alternative Legal Service Providers (ALSPs) come in. By offloading repetitive, low-value and time-consuming tasks to ALSPs and Legal Process Outsourcing companies (LPOs), in-house legal free up time to focus on strategic matters and value-adding work. They can also save on their external legal spend.
“Clients are looking to use their legal or other budgets cost-effectively,” says another interviewee; “everyone is facing cost challenges, and they are asking their legal service providers how to use their service innovatively.”
ALSPs can enhance efficiency and provide much greater cost-effectiveness, especially when compared with the cost of using outside counsel from traditional private practice law firms. These providers use technology platforms and automated processes that facilitate quicker turnaround times, reduce errors, improve productivity and allow for lower overall external legal spend.
Contract Lifecycle Management
One significant area in which ALSPs and LPOs can create efficiency and cost savings is in managing high-volume contracting operations using project management, outsourcing and the implementation of legal technology.
Firms such as Elevate and QuisLex use process mapping and other project management techniques, as well as artificial intelligence, machine learning, and data analytics, to manage high-volume contracting efficiently, effectively and much more cheaply than the traditional model.
An in-house lawyer at a well-known global business reports that an ALSP is “at the heart of many of our complex negotiations,” reporting that, “through guided review, they are able to handle all but about 5% of matters we ask them to process.”
“We help companies contract better,” explains an interviewee from a leading ALSP; “we focus on helping them envision business case building, their challenges, programme chartering and how to process legal data. For us, it's our bread and butter.” This interviewee adds that, “in this world, there's always regulatory change; so, we are advising companies on the regulatory landscape and the impact and understanding of the contractual risks.”
The use of AI and machine learning, both to analyse existing contract libraries and automate the creation of new agreements, was a particular theme in this year’s research for the Contract Lifecycle Management category. By partnering with ALSPs, in-house legal teams and law firms can make use of these technologies without the upfront investment of acquiring them for themselves.
For instance, newly ranked firm D2 Legal Technology, which specialises in work with capital markets clients and trade associations, often uses Natural Language Processing technologies to analyse huge volumes of contracts clauses as part of large-scale digitisation and standardisation processes.
Flexible Legal Staffing
Legal staffing businesses offer flexibility and scalability for in-house teams: during periods of heightened legal activity, such as a big transaction or litigation matter, organisations can swiftly scale up their legal function by engaging a flexible legal staffing provider such as Axiom, Elevate, Peerpoint or LOD. When the transaction completes or the dispute settles, the in-house team can return to business-as-usual just as quickly.
To many legal professionals, working with these flexible staffing businesses has become a very attractive alternative to traditional private practice or in-house career paths. A source reports that:
“post-Covid, people decided they like working flexibly, and we have seen a lot more interest in lawyers wanting to be contract lawyers. The market for talent has changed, and we can attract more high-calibre lawyers than before.”
Providers such as LOD and Spanish firm Ambar Partners, acknowledging the increased competition for the best legal talent, have begun offering professional development, community benefits and other perks designed to replicate the feeling of being part of a traditional law firm.
“Being a legal consultant has become more mainstream for a lawyer to consider,” says another interviewee; “we are seeing that you can mix it up in your career.”
eDiscovery and Litigation Services
The use of AI and machine learning to create efficiencies for in-house teams and private practice litigators was also a major trend in the research for our Litigation Services category.
“We've been using AI very much as business-as-usual for a good few years,”
reports one ALSP;
“pretty much every matter that passes our desk, we use AI.”
This source reports that they use AI technology to assist with early case assessment, and other interviewees said that machine learning was a vital tool for managing large-scale document review as part of major discovery/disclosure exercises.
Law firms like Redgrave Data and Elevate use these technologies to search vast volumes of electronically stored information to find relevant material, identify duplicates and create dashboards to allow for easier review by litigation teams.
We saw an increase in mandates involving training in-house legal teams on the use of AI and machine learning systems for use in eDiscovery exercises, regulatory compliance and general data engineering. One GC reported that an ALSP:
“consulted with us on an enterprise-wide training for inside and outside counsel on artificial intelligence in eDiscovery,” explaining that “their work was critical to helping us understand the ways that we can expand the services we offer to our internal clients.”
Conclusion
With corporate legal budgets being squeezed, intelligent use of ALSPs and LPOs enables General Counsels to optimise their legal operations, reduce costs, improve productivity and free up time and resources to focus on strategic matters where the in-house team and their external advisers can add real value.