At the recent Legalweek gathering, one session dove into the growing ALSP market and how both corporate clients and their outside law firms are taking notice
NEW YORK 鈥� The alternative legal services provider (ALSP) market may be a 21st century revelation, but it鈥檚 clear that ALSPs have integrated themselves into client matters and deal teams in a short amount of time.
In fact, law firms that use ALSPs are doing so for more than 40% of their intellectual property management work and more than 20% of their legal drafting and legal research, according to the 成人VR视频 Institute鈥檚 recently published ALSP 2023 Report. Corporate law departments that use ALSPs, meanwhile, are tapping them for more than one-third of their regulatory risk & compliance matters and contract management tasks.
Yet, despite ALSPs鈥� rising prominence, the report also reveals that law firms and corporate law departments alike don鈥檛 yet fully trust ALSPs. Almost two-thirds (62%) of law firms indicated that concerns about quality affects their willingness to use ALSPs; and 46% of corporate clients said the same. Meanwhile, more than half of law firms had concerns about turning over confidential client information to ALSPs, and firms also felt their traditional business model was challenged by ALSPs鈥� use of technology. Further, 38% of corporate law departments indicated they would rather have their outside law firms deal with ALSPs rather than deal with ALSPs directly themselves.
So where is the disconnect? At a recent聽听蝉别蝉蝉颈辞苍, Changing Nature of Legal Practice: Impact of ALSPs, Tech Companies, and the Big 4, panelists explored not only how ALSPs are increasingly entering legal matters, but what they will need to do to keep their place at the table. No surprisingly, it all starts with the relationship, said panelist Vedika Mehera, Director of Orrick Labs at Orrick, Herrington & Sutcliffe. 鈥淲e can鈥檛 overemphasize how important trust is, and it begins with constant communication,鈥� Mehera said, adding that many view this as constant communication of problems.
鈥淲e don鈥檛 get to fail more than once [in the legal industry],鈥� she explained, noting that there is a flip side to that 鈥� proactively explaining how ALSPs can help. 鈥淲hen you have a success, share it. When you have a challenge that you鈥檙e running up against, communicate it. 鈥 think that really helps build trust.鈥�
Showing clients the value
Of course, this can mean communicating positive return-on-investment for a matter as well. However, as panelist David O’Hara, Director of Legal Business Solutions at Big 4 firm PwC, added: 鈥淚t鈥檚 not just about the dollars and cents.鈥�
O’Hara noted that PwC has worked to bring in diverse teams to matters, in some cases pairing legal experts with IT, bringing in regulatory experts into a cross-border matter, or even identifying internal skills 鈥渢hat helps us build trust with clients, to say we have a world of resources鈥� to tackle different jobs.
鈥淭he more [we] can ease that [concern] and create different ways of working for them, that鈥檚 the intangible value we always need to remember,鈥� he noted.
Of course, this can be easier said than done. Often, clients may not even know the different jobs that an ALSP can do. Indeed, 33% of global corporations within the ALSP Report said that not being aware of services or where to find them was a factor in not using ALSPs.
To help solve for this, O鈥橦ara recommended approaching the problem with more than just a technology solution. 鈥淎ttorneys are going to forever be skeptical of technology, and that鈥檚 good,鈥� he explained, adding that by centering the human and casting the ALSP鈥檚 offerings as part of a wider team鈥檚 efforts, ALSPs can help ease client fears of trying something new.
鈥淲e can鈥檛 overemphasize how important trust is, and it begins with constant communication.鈥�
鈥淎s we integrate all of these different elements, that鈥檚 where I鈥檝e seen the most success,鈥� O鈥橦ara said. 鈥淚鈥檝e seen that be the best delivery of the best combination and use case for how to leverage these teams.鈥�
Mehera added that identifying the client鈥檚 culture is important when approaching those conversations 鈥� as is reflecting how a team with diverse skills can supplement that culture. For example, some corporate law departments may be more tech-savvy than others. 鈥淎ll of these clients are using AI in their business. Can we be reflective of that as well?鈥� Mehera asked.
Finally, O鈥橦ara noted that it鈥檚 important to be realistic when talking about what an ALSP can do. 鈥淲e realize that driving a lot of these changes takes an investment. We鈥檙e pragmatic鈥� and not guaranteeing immediate return-on-investment if it鈥檚 a long-term project, he explained.
O鈥橦ara also said that rather than looking for new tools, lawyers often take the mentality that 鈥渨e need more hammers to break more rocks.鈥� However, for those that take the plunge to try a new path, ALSPs can supercharge a matter 鈥� a value that law firms and corporate law departments alike are beginning to see. More than two-thirds of law firms (69%), in fact, believed that using ALSPs can help them scale and expand their own business.
鈥淚 think there鈥檚 all sorts of different ways that you can partner with vendors and providers in the industry to accomplish what you need to,鈥� Mehera added. 鈥淚 think it鈥檚 in our best interest that everyone succeeds. If you succeed, we succeed.鈥�
