Taking a look at the THE 2017 ALTERNATIVE LEGAL SERVICE STUDY
As the legal profession continues to evolve and in-house counsel seek partners to assist them in creating value within their enterprise, more and more companies are turning to Alternative Legal Service Providers (ALSPs). When I saw earlier this month that Thomson Reuters, along with Georgetown University Law Center’s Center for the Study of the Legal Profession and the University of Oxford Saïd Business School, published a comprehensive study on Alternative Legal Service Providers, I was curious to hear their findings.
The study shows that 60% of corporate legal departments already work with ALSPs, while another 14% are planning to do so within the next 12 months. Even more interesting than the continued adoption of ALSPs were the reasons why in-house counsel chose to work with ALSPs: expertise, flexibility, and cost.
While the three biggest reasons in-house counsel value ALSPs is likely not all that surprising to most in the industry, the ranking of those reasons may raise a few eyebrows. Many legal professionals might expect cost reduction to be the primary driver of ALSP adoption but, in fact, the most cited reason for use of ALSPs was “access to specialized expertise not available in-house.” This aligns with the evolving role of ALSPs in corporate legal departments, more closely tied to helping solve strategic business problems and adding new capabilities, rather than simply augmenting existing capabilities at a lower cost. Closely following expertise, the second most cited reason to work with ALSPs was “to meet peak demand without having to increase permanent headcount.” Helping to reduce costs, although still an important consideration, ranked as only the third most cited reason why in-house counsel choose to work with ALSPs.
The findings are consistent with what we see at Axiom, where we work with well over half of the Global Fortune 100. While some clients initially turn to Axiom as a potential avenue to reduce outside legal spend, the value proposition becomes increasingly driven by the in-house expertise of our 1,100 person global attorney team (~80% of whom worked in-house prior to joining Axiom), our use of technology, and our business intelligence. Combining that expertise with the flexibility of a variable resourcing model seems to be working for our clients, which probably explains why 95% of our business is repeat.
Leading, innovative legal departments have already begun a material shift to Alternative Legal Service Providers. We may have to wait until next year’s study for confirmation, but the ability to supplement in-house teams’ expertise and bandwidth in a flexible, cost-effective manner is a competitive advantage that is so compelling that it would only make sense for the pace of that shift to continue to accelerate.