The Law Firm and ALSP Relationship Status: It's Complicated
Law firms may see alternative legal service providers as a small to medium-sized threat, but that doesn't mean ALSPs aren't a force to be reckoned—or even partnered—with on the job.
October 03, 2019 at 09:30 AM
4 minute read
The original version of this story was published on Legal Tech News
One lawyer's convenience is another's small to moderately-sized threat. Findings from the 2019 LTN Tech Survey show that respondents predominantly consider alternative legal service providers (ALSPs) to be a small to medium-sized threat to the current law firm model. Still, the jury is still out on whether firms are simply in denial or have figured out how to fold potential rivals into their existing services.
From the survey, 38 law firms technology leaders were asked if they believed the rise of ALSPs to be a threat to their current model. Very few (16.2%) believed ALSPs represented a large threat, but the "medium" and "small" threat categories each garnered 40.5% of the vote.
John O'Connor, director of advanced services for Clark Hill, largely agrees with the assessment that ALSPs present a small to medium-sized threat to the current law firm model. However, he believes that the size of the ALSP threat is also relative to just how aggressive law firms are being with regards to broadening their own menu of client services.
"If they're saying it's business as usual then it is a threat," O'Connor said.
To be sure, O'Connor believes that legal advice and expertise will remain the exclusive domain of law firms. Still, he said that clients are also starting to come to their attorneys for services that extend beyond the traditional advisory role.
Clark Hill, for example, has a cybersecurity program that pairs the legal knowledge of privacy attorneys with non-lawyers who coach clients through some of the more technical aspects related to a breach.
"Oftentimes it's not just legal advice that's needed," O'Connor said, "but it's technical advice as well."
It's even possible that ALSPs could become a vital part of that equation. Ram Vasudevan, CEO of the ALSP QuisLex, said that between 25% to 30% of the company's business comes through law firm referrals, with attorneys becoming more receptive to partnering with ALSPs to execute tasks like complex agreements in a timely fashion.
"I think that's where it's headed in my view," Vasudevan said. "I don't think that law firms necessarily need to view [ALSPs] as a threat."
But while supplementary legal services may be readily available, that doesn't mean that corporate clients are any more eager to shell out the cash. Ben Weinberger, legal operations director at Dentons' Nextlaw In-House Solutions, pointed to in-house legal departments facing a corporate mandate to cut costs wherever possible. He thinks law firms are no longer competing just with each other, but with their own clients as well.
Weinberger pointed in the direction of the growing legal tech market, which continues to attract investment and could potentially yield solutions that make corporate legal departments less reliant on the services of outside law firms.
"Ideally stuff will come out of that," Weinberger said. "That it will effect the ability of these law departments to do more work without having to send as much off to law firms at such a high margin."
O'Connor thinks such an outcome will depend largely on the business philosophy of the client, but stressed that he doesn't think technologies such as artificial intelligence (AI) have quite reached that point yet.
In the meantime, he envisions more AmLaw 100 and eventually AmLaw 200 firms continuing to move in the direction of holistic services, with attorneys working hand-in-hand with other professionals in the public relations or even intelligence space to address a broader range of needs.
Not everyone may thrive in that new environment.
"I think that during the growth of the industry, there are smaller law firms perhaps that may get left behind," O'Connor said.
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