As alternative legal service providers (ALSPs) become significant competitors within the legal market, clients are increasingly viewing them as a serious standalone option, occasionally in place of traditional law firms.
The year 2019 has no doubt been a challenging one for traditional law firms. With options for clients growing, lawyers are acutely aware of the challenges they face in Asia’s increasingly hyper-competitive legal market. And as the year draws to an end, legal professionals are no doubt reflecting on just how rapidly the services landscape continues to change. But while lawyers expect consolidation and further specialisation in the future, one model of operation that seems to be thriving is the alternative legal service provider (ALSP). These providers are expanding across Asia and hoovering up talent, with a broad range of clients, including law firms and corporate legal departments, turning to them.
A report published this year by Thomson Reuters called “Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity,” found that law firms and corporate legal departments have increased and expanded their use of ALSPs, exceeding initial predictions. According to the data, 74 percent of corporations surveyed said they use ALSPs in at least one service category, up from 60 percent of corporations as reported two years ago. The report also found that ALSPs are offering more sophisticated services to customers, and moving up the value chain, having taken a “substantial market share in litigation and investigation support”, as well as harnessing technology and delivering market insights.
Now ALSPs have introduced them-selves and clients are comfortable with their services, they are no longer just an alternative option, with clients choosing to work with these providers based on their own merits, rather than just to fill in the gaps.
WORKING SMARTER
Lesley Hobbs, a NewLaw veteran and director of law company Elevate, tells Asian Legal Business that clients are vocally appreciative of her firm’s global coverage, understanding of needs, and technology investment and expertise.
But while ALSPs and law companies emphasise their innovation, there are still areas where traditional approaches cause niggles. Corporate law departments express frustration, Hobbs says, about certain areas of service delivery by their external legal services providers, “in particular, the continuing practice by some law firms and ALSPs/law companies to bill by the hour,” despite there being “well documented financial and resourcing inefficiencies of this practice,” she adds. This is something Elevate does not do, instead preferring to offer fixed-fee or per-transaction arrangements with customers, Hobbs says, adding “this has helped us differentiate ourselves from other providers.”
Having the tools to ensure smart and cost-effective problem solving, is an important part of the package in 2019, and a capability that is only becoming more important over time as businesses and law firms across every jurisdiction are tasked with doing more with less. Given these expectations, technology and AI use is a necessity and a competitive advantage. But innovation doesn’t just enable increased productivity, it can also help its users gain nuanced insights and develop strategies and services at the same time. Because of this, ALSPs are investing heavily in technology.
“Our multi-disciplinary capabilities range from strategy and legal operations and tech consulting, to providing efficient managed services and experienced lawyer resourcing, to enterprise matter management and contract management technology,” explains Hobbs, who notes that through these tools “customers have been able to gain insights into the latest global best practices of similarly situated corporate law departments around the world.”
Elevate has made several acquisitions during Q12 2018 and Q1 2019 across e-discovery, AI, contract lifecycle management, and the flexible lawyering space, which indicates how competitively important such offerings are, while enabling the firm to strengthen its global position “as the only true end-to-end legal services provider,” adds Hobbs.
THINKING DIFFERENT
Additional services are part of what makes ALSPs or law companies attractive, but they also trade on another reputation too — as an operation that values agility and understands the entrepreneurial mindset.
Yolanda Chan, the general manager of Axiom, says there are several ways ALSPs, including Axiom, support general counsel to “reimagine how to build their teams to address their organisation’s evolving legal needs.” The effect of this, Chan says, is that the legal department is then able to become “a real strategic partner and business enabler to the broader organisation”.
As well as trading on a broad global team of consultants and experts, key among ALSPs offerings is flexibility.
“The modern legal department needs - and should demand – more flexibility. Working with Axiom enables our clients to wrap a flexible layer of on-demand consultants around their core teams. What does that mean to our clients? It means they can build an efficient legal team that can scale to better address changing business requirements and market needs. In other words, with Axiom, clients have access to the consultants that best fit their precise and real-time subject matter expertise needs. And those experts are not fixed costs – they can flex up or down as work volume evolves or as business requirements dictate,” Chan says.
Another very important offering that clients may seek from ALSPs — and one that not all traditional law firms can boast — is an understating of “the business of law, and the business of business,’ says Chan, whose background includes a stint as vice president and general manager of Fitbit APAC.
For ALSPs, many of which were founded by independent entrepreneurs, this comes naturally. “They are consultants who understand the strategic imperatives and risk profiles of our clients, in addition to the legal issues. That not only allows them to seamlessly integrate within the core legal department, it allows them to help that department be a better business enabler and partner to the broader organisation,” Chan says.
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