Alternative legal service providers (ALSPs for short, “law companies”, or “New Law”) are fast becoming anything but ‘alternative.’ A recent report estimates that ALSPs have raked in over $14 billion in market share globally and are growing at an impressive 15% rate annually. Not only are more in-house teams leveraging legal service providers to maximize efficiency and save costs, but innovative law firms understand that working with ALSPs can also create productive relationships.
Alternative legal service providers are entities existing outside of the ambit of traditional legal service providers (i.e. law firms or in-house legal departments), but provide complimentary legal-related services. ALSPs provide outsourced resources that in-house legal teams and law firms can leverage to perform tasks more efficiently at a lower cost and without taxing internal resources.
While ALSPs provide legal-related services, the work they do usually occupy niches. Niches with common attributes such as high volume tasks that take up a disproportionate portion of lawyers’ time (think non-disclosure agreements or sales agreements), or legal processes that are amenable to documented process-driven workflows that can be automated by technology (like electronic discovery).
Common use cases and tasks handled by ALSPs are:
The most obvious distinction between alternative legal service providers and traditional legal service providers is that because they are not law firms, lawyers may not do all the heavy lifting. While lawyers often make up the bulk of an ALSP staff, their work is augmented with people from other disciplines. A typical ALSP team consists of project managers, software engineers, and data scientists.
A common task handled by new law companies is contract review and contract lifecycle management (CLM). ALSPs work in tandem with in-house legal teams and external law firm resources to tackle contract review processes.
ALSPs are best suited to handle volume, standardized contracts that do not require specialized legal expertise. Non-disclosure agreements and sales contracts are good examples of contracts that are often sent to in-house legal teams and take up a significant amount of a lawyer’s time, but are generally straightforward transactions requiring limited negotiation.
Outsourcing review of these types of contracts to alternative legal service providers allows in-house resources to be utilized elsewhere. It also fosters systematization of the contract review process that doesn’t rely on a single person or team and can be easily augmented or exchanged.
ALSPs are also good for contract-related tasks because they utilize project management techniques, documented workflows, and process automation. Because many of the legal projects they work on are repeatable and high volume, ALSPs are always refining and improving their processes.
Handling electronic discovery tasks and processes is a common use of alternative legal service providers. This is so because ALSPs are often a more cost-efficient option for in-house legal teams.
ALSPs rely heavily on technology and project management which are both important to e-discovery projects because they are often data-heavy and costly. ALSP companies heavily leverage technology, not only to get work done, but also to track metrics and quality control. As an indirect result, in house legal departments can rely on service providers to figure out which tool is best for the job, and also offload the burden of deploying and maintaining software (a task that some legal departments and law firms may not be best suited or may not want to handle).
For instance, we examined the e-discovery work we did over 18 months for an insurance industry client of ours. We handled their subpoena compliance and managed document review. Our client was able to save almost $400,000 on their project as a result.
Want to figure out if you can save with an ALSP too? Check out our document review cost calculator.
Savings were realized not only from lower rates (and different types of rates) than those charged by other legal services providers, but efficiencies gained from specialization, technology expertise, and the use of documented repeatable workflows, and quality control measures.
New Law companies are often called on by compliance departments to assist with internal investigations and responses to governmental inquiries. This is so because alternative legal service providers are well suited to assist with the review of voluminous information that is usually required in connection with governmental subpoenas such as Second Requests from the Department of Justice. They can also assist with review of information on behalf of legal departments conducting internal investigations and ensuring their companies are meeting regulatory requirements (such as Know Your Customer (KYC) rules).
Compliance with data privacy laws like GDPR and the California Consumer Privacy Act is another area in which alternative means of legal service delivery can be helpful such as complying with and responding to DSARs (Data Subject Access Requests).
Flexible legal staffing through ALSPs is common and a cost-effective and efficient means for legal teams to offload increased workloads to temporary or supplemental staff rather than hiring additional employees. Utilizing flexible legal staffing also allows firms to engage people with specialized skills on a project-by-project basis if the need is not permanent. This permits legal teams to engage professionals with the required technical know-how on an interim basis and augment existing talent and skills.
Flexible staffing through ALSPs has allowed many law firms to be more flexible in the face of economic downturns— such as in the COVID-19 pandemic.
Strategic use of alternative legal service providers is gradually becoming the norm in the legal landscape, with over 79% of law firms and 71% of corporations in the US employing at least one ALSP. They are a proven viable alternative to traditional legal service delivery models for contract review, compliance, electronic discovery, and flexible legal staffing.
Their primary advantage stems from their pool of experienced legal professionals who are willing to work with firms on an interim basis. Their expertise in respective domains allows them to be more efficient than in-house legal teams.
Want to know if an ALSP can help you? Reach out.