Managing Legal
The Point
ALSPs — alternative legal services providers — use sophisticated business processes and technology to perform routine, recurring legal tasks at lower cost, with greater speed, and more accurately than law firms and in-house departments can do with attorneys.
To Question 1:
Yes. Conventional wisdom says that a potential economic downturn is likely to prompt more use of ALSPs to save on Legal costs.
History supports this expectation. (“Producer prices in the legal services industry after the Great Recession”, Bureau of Labor Statistics, 2019).
To Question 2:
It’s more of a jump ball, longer term.
Because of ALSPs’ cost efficiencies, anyone who urges their adoption runs headlong into the law firms’ resistance: Those firms bill clients for services of recent J.D. graduates who are one, two, and three years out of law school . These juniors / trainees are not yet capable of doing sophisticated work on their own, but they can be deployed on routine, recurring law tasks — while their law firm / employers bill clients for such work at hundreds per hour.
That’s why the current usage rate for ALSPs is so low (see here and here).
On the other hand, paying juniors / trainees to do manually what ALSPs can do with their automated systems is a huge waste. Last week The American Lawyer (subscription required) observed:
“The combination of legal departments’ tighter budgets, an openness to explore alternative legal services born out of the pandemic and an increased maturity in [ALSP] services … has created a favorable environment for ALSPs’ market to grow.” Continue reading