Alternative Legal Service Providers Are No Longer Alternative (LMA Annual Program Review)

As we look to the future for legal services, it’s an exciting new world. Legal service providers in 2019 and beyond are no longer exclusively provided by traditional law firm partnerships and the speakers made a compelling and enthusiastic argument for why this is ultimately a good thing.

“Alternative Legal Service Providers (ALSPs) Are No Longer Alternative” was presented by Mark Ross, Executive Vice President and Global Head of Contracts, Compliance and Commercial of Integreon; Stuart Wood, CEO of Caravel Law; and Heather Suttie, Legal Marketing and Business Development Consultant of Heather Suttie and Associates. Mark, Stuart and Heather were able to collaboratively paint a clear picture of the complex and diverse offerings in today’s market by ALSPs.

Legal service providers of all varieties have become an integral component of the marketplace over the past 20 years. These include Axiom, Pangea3, LOD, UnitedLex, LegalZoom, Rocket Lawyer, as well as providers such as the speakers’ firms, Integreon and Caravel Law. Since the early 2000s, clients continue to express the desire for collaborative offerings from traditional law firms and alternative legal service providers today.

Some of the common perceptions of ALSPs today are outsourcing to India, paralegal farms and routine work. While these are a small percentage, they do not account for the majority of legal services provided by ALSPs. Back office, procurement, middle office, paralegals, associates and partners are all well represented in non-traditional legal services. As technology and opportunities for sourcing continue to improve, the sophistication and diversity of offerings will continue to grow as well.

ALSPs have rapidly matured over the past 20 years. In the early 2000s, E-discovery in India was the only alternative service provided. Now services include multiple practice areas, consulting, multilingual capabilities and well-established strategic collaborations with law firms. The profession of law has been around for hundreds of years. For context, the speakers provided an overview of the history of ALSPs:

  • 2000 – 2007: Back office services are located off-site and alternative legal service providers begin to permeate the market. Most law firms come kicking and screaming to the conversation.
  • 2008 – 2011: Procurement and delivery centers are developing. Thomson Reuters acquires Pangea3. Many firms will acknowledge the use of ALSPs, even if only superficially. The first public law firm is established.
  • 2012 – 2015: Alternative Business Structures (ABS) apply for licenses in the UK. Some firms embrace strategic collaboration.
  • 2016 – 2020: Bifurcated ownership increases. All the Big Four achieve ABS licenses. Ernst & Young acquires Riverview Law. Axiom announces IPO. Will an ALSP acquire a major law firm?

As noted earlier, the driver for growth over the last two decades has primarily been clients’ desire for there to be strategic collaboration between ALSPs and traditional law firms. They want a blend. One subset of ALSPs, the Big Four accounting firms (Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers), is helping to drive change as they are acquiring legal service providers and are likely to acquire law firms in the near future. They reinvest in themselves, are complex and fiercely organized but fluid and focus on industries rather than practices. They are rapidly responsive to their clients’ needs and have a heavy focus as a sales culture. The Big Four are bringing sophistication and predictability to the legal discussion.

In response, some large law firms are adapting a model similar to Caravel Law for an arm of their business. Caravel Law has 48 attorneys, all working remotely. There is a very small administrative staff and all sales functions are completely separate from the legal services. Lawyers focus on law. As well, ownership structures of law firms are rapidly changing from the traditional partnership model.

Much like a sales funnel, many ALSPs can provide soup-to-nuts coverage for both corporate transactional and litigation work. Cumulative scoring of past work to date in the industry allows for careful identification of sophisticated work that requires additional, specific expertise, as well as accurate unit pricing methodology.

As we look toward the future, communication with clients is still key. Firms can act as strategic advisors to ALSPs, providing good collaboration and creative and cost effective solutions.

By Mindee L. Mosher, Director of Marketing, Whiteford, Taylor & Preston

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