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Beyond Traditional Law Firms: An Introduction to Alternative Legal Service Providers

One-in-four corporate legal departments anticipate increasing their spending on alternative legal service providers in the next half-decade, according to Ernst & Young.

The alternative legal service provider (or ALSP) model was once seen as direct competition against traditional law firms for corporate clients. That view has increasingly fallen by the wayside as even law firms now contract with, or create their own, ALSPs to offer more legal services at better prices.

It’s easy to see why the legal world has had a change of heart. While traditional law firms are critical for handling high-stakes and complex matters, ALSPs fit into a cost-conscious legal department’s overall engagement strategy. ALSPs can be extremely efficient at doing certain kinds of work, and are deployed at a much lower cost than law firms.

What Are Alternative Legal Service Providers?

The ALSP market is a broad category that encompasses many organizations built to serve the outsourcing needs of in-house corporate legal teams.

They typically provide specialized assistance with high-volume tasks. Many ALSPs also specialize in specific practice areas, which makes their expertise and honed processes even more valuable to in-house teams.

The Difference Between ALSPs And Traditional Law Firms

Law firms excel at delivering legal counsel on complex matters. This includes strategic advice related to big-ticket litigation, mergers and acquisitions, and corporate and regulatory matters. Law firms help in-house teams reduce risk related to these important matters with their staff of experienced attorneys who specialize in providing advice in niche or intricate areas of law.

ALSPs are generally not suited for delivering advice on highly complex legal issues and are more efficient at providing support with routine work. Also, ALSPs usually have a narrower scope of services compared to full-service law firms. They might not be able to handle all aspects of a legal issue.

Finally, ALSPs often focus on efficiency and scalability, which can sometimes mean less personalized attention compared to a traditional law firm. This can be a drawback for clients looking for tailored advice or a deep understanding of their specific business and legal needs.

For example, an in-house team might rely on an ALSP to keep them informed of changes in regulations in all jurisdictions in which the company operates. However, the same in-house team may turn to a law firm to get specific advice on how the regulatory change impacts a product or service the company sells.

Types Of ALSPs

Alternative legal service providers come in many forms, specializing in different areas of expertise.

Legal Process Outsourcing (LPO) Firms

In-house counsel uses LPO firms to handle repetitive work at cost-effective rates. Some of these firms are “captive” LPOs, which means they are wholly owned by a law firm. Firms create these LPOs as a way to offer more affordable services while still retaining their clients’ business.

Accounting and Consulting Firms

Accounting and consulting outfits are diversifying into legal services by creating ALSPs. This allows them to gain market share in the legal industry.

Contract Staffing Providers

Contract staffing providers have been around for decades. They recruit both temporary and permanent legal staff for in-house teams.

There is some debate about whether they should be considered alternative legal service providers. Labels aside, they are another alternative to the traditional law firm that can help corporate legal departments work more cost-effectively.

These providers shine brightest when the in-house team gets a spike in a particular type of work, such as if your company experiences an increase in sales contracts at the end of each year. That flurry of paperwork is intense but temporary, so it doesn’t warrant a permanent hire. Instead, legal teams can send some of that work out to contract staffers.

The Services ALSPs Offer

While different ALSPs provide just about every legal service offering under the sun, their core competency is accomplishing repeatable tasks with efficient processes and the right legal technology.

Most legal department teams use ALSPs for:

E-discovery

E-discovery services provided by ALSPs involve the identification, collection, and analysis of electronic data in legal cases. These services are particularly valuable in litigation and regulatory investigations where large volumes of data need to be processed efficiently.

ALSPs use advanced technology tools and methodologies to filter and analyze data, making it easier for legal teams to identify relevant information quickly.

E-discovery services often include data preservation, forensic analysis, data processing, document review, and production of electronic documents.

Contract Management

Contract management services prioritize and manage a company’s contracts more effectively.

These services include drafting, reviewing, and negotiating contracts and managing contract databases.

ALSPs can provide legal support throughout the entire lifecycle of a contract, from initiation through execution, renewal, and termination.

Artificial intelligence and machine learning are often used to automate routine tasks, identify risks, and ensure compliance with legal and regulatory requirements.

Legal Research

Legal research services involve conducting thorough investigations into case law, statutes, legal articles, and other legal sources to support legal decision-making.

ALSPs use a combination of legal expertise and technology tools to provide comprehensive research services that help clients make informed legal decisions.

They may also offer specialized research services in particular areas of law, providing valuable insights and perspectives in complex legal scenarios.

Document Review

Document review services are essential in due diligence and compliance audits, where large volumes of documents must be reviewed to determine their relevance and importance.

ALSPs use trained legal professionals and sophisticated software to review, categorize, and analyze documents quickly and accurately.

These services are often critical in reducing the time and cost associated with manual document review processes, enabling legal teams to focus on more strategic aspects of their cases.

The Benefits of Alternative Legal Service Providers

ALSPs bring a unique combination of cost-efficiency, scalability, and technological innovation to the legal industry, providing businesses with a versatile option for managing their legal affairs. This adaptability makes them an increasingly popular choice for corporations looking to optimize their legal operations.

Cost-effective processes

ALSPs often use rigorous project management techniques to streamline legal processes. With the help of process automation tools, they can handle repetitive tasks faster and with fewer errors.

Though not universal, many ALSPs offer flat fee billing for projects. Legal teams benefit from a more predictable cost structure and easier budgeting in those cases.

Flexible service model

ALSPs offer a middle-ground solution, bridging the gap between in-house legal work and outsourcing to law firms. This flexible business model allows companies to choose the most efficient and cost-effective option for their legal needs.

Scalable services

In-house legal teams can engage with ALSPs for specific, short-term projects or enter a long-standing relationship to manage ongoing legal tasks.

This adaptability allows in-house teams to scale their capacity when workloads surge without adding headcount.

How To Decide If An ALSP Is Right For You

Your data will help you determine whether an alternative legal service provider suits your needs. Use your legal spend management tool to assess your spending on high-volume work like discovery, audits, contract review, document review, and due diligence.

If you find that type of repeatable, process-oriented work is taking up the lion’s share of your outside counsel spend, that indicates an ALSP might be helpful for your team.

As you explore potential partnerships, dive into specifics with prospective ALSPs. You want to know what they charge, what kind of expertise the team has, and how they use legal tech to achieve a quality, cost-effective result.

Maximize Your Use of Alternative Legal Service Providers With Brightflag

ALSPs can revolutionize your in-house legal team, shifting the balance from high-cost outside counsel to more efficient, specialized service providers.

However, to truly harness the power of ALSPs, it’s crucial to have a deep understanding of where and how they can best support your legal operations. This is where Brightflag’s legal spend management system becomes indispensable. With our platform, you gain critical insights into your team’s spending patterns, enabling you to pinpoint areas where ALSPs can deliver the most value.

See how Brightflag's A.I.-backed reporting capabilities provide in-depth insights into legal spend.

Brightflag’s A.I.-powered analytics go beyond superficial data, offering you a comprehensive view of your legal spend. This allows you to make informed decisions about employing ALSPs in a way that aligns with your business objectives and maximizes return on investment. Whether reducing costs for routine legal tasks or leveraging temporary assistance for high-volume work, Brightflag equips you with the knowledge to make strategic choices.

Learn more about our legal spend management solutions and take the first step towards a smarter, more cost-effective approach to legal services by booking a demo with Brightflag today.

Alex Kelly

Chief Operating Officer & Co-Founder at Brightflag

Alex co-founded Brightflag after spending more than six years at Matheson, Ireland’s largest law firm, in its financial institutions group. A legal technology thought leader, Alex is a frequent speaker at legal operations conferences on topics related to legal innovation and legal transformation.