Click here for an audio recording of Kristy Foreman reading this post: https://soundcloud.com/user-381880794/forereach-consulting-audio-recording-of-whats-next-post-pandemic-legal-innovation-part-1
The pandemic has forced the practice of law to rapidly evolve like never before. We all know that the legal profession has been slow to embrace technology and automate processes that drive efficiency and reduce costs. But are we finally approaching a tipping point as we move toward a post-pandemic world?
My interest in legal project management was sparked in 2010 when I learned about the concept for the first time at a conference in New York City. I bought into it completely and, as a result, initiated a legal project management pilot project for lawyers in the BC Regional Office of the Department of Justice. The government has historically been resistant to change and innovation, but in this case the regional pilot project grew into a national policy for complex litigation files.
Over a decade later, the legal sector in Canada has still not fully embraced legal project management or other alternative approaches to legal services. The increased reliance on technology during the pandemic and the continued pressure from clients to be more efficient may finally bring these alternative service delivery models into the mainstream. One such model was the subject of a webinar I attended recently through the Canadian Legal Innovation Forum called “The Evolving Role of Alternative Legal Service Providers in the Canadian Legal Sector.”
The Rise of Alternative Legal Service Providers (ALSPs)
What are Alternative Legal Service Providers (ALSPs) and why are they having a growing impact on the legal industry? An article in Canadian Lawyer Magazine (October 21, 2019) explains that Alternative Legal Service Providers “provide specialized services in high-demand legal fields that support a client’s legal needs, such as discovery and e-discovery, document review, IP management, and other time-consuming processes”. ALSPs have gained traction in recent years because they apply their expertise in project management and technology to legal file management, resulting in the cost efficiencies that are now being demanded by clients. The ALSP market has grown substantially in the past 6 years and is now valued at nearly US$14 billion, an increase of $3.2 billion in 2 years.
A report published by Thomson Reuters entitled Alternative Legal Service Providers 2021: Strong Growth, Mainstream Acceptance, and No Longer an “Alternative” (attached) revealed that more and more law firms are choosing to work with ALSP’s. The study involved a survey of 586 decision-makers at law firms and corporate legal departments in Canada, the United States, the United Kingdom and Australia. The report revealed that 79% of the law firms surveyed are now using ALSPs to deliver legal services to their clients, a significant increase from the 51% reported in 2016.
The survey also identified that the range of ALSP services being used by law firms is expanding. While previously relied upon primarily for lower level services like e-discovery and doc review, ALSPs are now also being used for consulting on legal technology and operations, project management, non-legal factual research, and management of contracts, intellectual property and corporate transactions.
The Law Firm Response to Alternative Legal Service Providers
Given the expansion of these service lines and the recent growth of ALSPs, some lawyers view them as a threat to the business of traditional law firms. There is pushback from some who consider outsourcing these services to be below legal professional standards. Some firms cite concerns about client confidentiality as the reason they have not worked with ALSPs, and others say they prefer to keep the billable work in-house. However, as Alternative Legal Service Providers become less “alternative” and evolve to become the industry standard, it is likely that these resistant firms will need to adapt or else risk being left behind.
The firms that have adjusted their business model and now collaborate with ALSPs have adopted an “if-you-can’t-beat-‘em-join-‘em” approach. Rather than viewing ALSPs as a threat to their profitability and to the legal profession in general, these firms recognize that incorporating these services into their delivery model will free up their legal talent to work on more complex, high-dollar aspects of their files. The collaboration with ALSPs also results in lower costs to their clients, contributing to their retention and the development of new business. It’s a win-win.
What does this shift towards working with ALSPs mean for law students and lawyers just starting out? Outsourcing the lower level work that has traditionally been performed by them could have an impact on their professional development – but could it be for the better? The expertise offered by ALSPs is not acquired through the typical law school curriculum or developed through experience working for a traditional law firm. How will students and lawyers bridge this knowledge gap? Are we doing enough today to prepare our lawyers of tomorrow?
These questions and more will be discussed in my next blog post: What’s Next? A Look at Post-Pandemic Legal Practice Innovation – Part 2