Niels Bohr, who won the Nobel Prize for physics in 1922, once quipped, "Prediction is very difficult, especially if it is about the future." That said, predictions exist along a continuum, with those based merely on speculation on one end, and those deeply rooted in data on the other.

In preparing a forecast about some of the alternative legal services provider trends we expect to see in 2020, my team and I drew upon research surveying those who will have the greatest impact on those trends: in-house counsel and other buyers of legal services. While macroeconomic factors will undoubtedly affect in-house counsel decision-making in the year ahead, when it comes to their approach to utilizing ALSPs, it's reasonable to expect that trends that began in 2019 will continue—and possibly pick up steam—in 2020. As another famous physicist, Sir Issac Newton, taught us, an object in motion tends to stay in motion.

We have identified five trends, discussed below, that we believe will drive the increased utilization of ALSPs in 2020. All of the trends have something in common—namely, they are part of an overarching objective shared by in-house counsel to increase efficiency and effectiveness across their departments.

In examining the trends, we relied upon various studies meant to capture in-house counsel sentiment and behavior. The research that underpins our predictions includes the 2019 Chief Legal Officer Survey, by Altman Weil; the 2019 Law Department Survey, by HBR Consulting; and the Alternative Legal Service Providers 2019 study by Thomson Reuters, Georgetown Law Center on Ethics and the Legal Profession and Acritas.

The Rise of Legal Operations

Historically, business leaders have treated legal expenses—both internal and external—as a cost of doing business and not as an investment that moves the business forward. Today, expectations have changed, and corporate law departments are adapting in order to demonstrate their value. Among the steps they have focused on include optimizing, and in many cases reducing, legal spend with outside law firms, and putting in place processes and technology that increase efficiencies.

These efforts have been driven forward through a newfound emphasis on legal operations. In many law departments, legal operations roles have been established for the express purpose of bringing more operational sophistication and efficiency to the way in-house departments manage and spend resources. According to the Altman Weil study, 74% of chief legal officers reported that adding personnel to law department operations functions in 2019 resulted in a "significant improvement in efficiency of legal service delivery."

Not surprisingly, the rise of legal operations correlates with increased utilization of ALSPs by corporate law departments. According to the HBR study, while total legal spending rose only 2% in 2018, spending on ALSPs rose 11%. The Thomson Reuters study found that 25% percent of corporations intended to increase their spending on ALSPs in 2019, while only 4% planned to reduce it. In sum, as corporate law departments continue to place greater emphasis on legal operations now and into the future, expect them to turn to ALSPs to help accelerate efficiencies.

Going After High-Hanging Fruit

In his book, "The Lean Startup," Eric Ries popularized the concept of developing a minimum viable product, or MVP, to expose customers to a new product and gather feedback before building out lots of new features and functions. The MVP that most corporate law departments first sampled from companies that came to be known as ALSPs was some form of e-discovery service or technology offering. Utilizing an ALSP for e-discovery is now standard practice in most litigation matters above a certain size and scope. It's low-hanging fruit, because almost everyone recognizes the efficiencies that can be achieved at scale through e-discovery.

A trend that we believe will continue to pick up steam in 2020 is the increased utilization of ALSPs to assist with a broader range of functions within law departments—in other words, high-hanging fruit. According to the Thomson Reuters study, "ALSPs are steadily moving up the legal value chain to offer more sophisticated services."

Two of the areas that we expect to see significant growth in 2020 include the outsourcing of commercial contract review as well as assistance with temporary and permanent staffing of corporate law departments.

Turning Fixed Costs Into Variable Costs

Outsourcing allows a business to turn fixed labor costs into variable ones. In the past, the only outsourcing option available to corporate law departments was to send work to outside law firms. While costs for outside counsel may be variable, they're typically high. Today, more corporate law departments are outsourcing work through the use of contract attorneys. This is helping them to control costs yet still obtain the expertise they need.

The Altman study found that, by a 3-to-1 margin, more corporations plan to add contract attorneys than reduce them. Utilization of contract attorneys was also cited as a major driver of improving efficiency and controlling costs for law departments. We expect this trend to continue, and ALSPs will play an important role in facilitating matches between contract lawyers and corporate law departments. There are more talented lawyers in the marketplace today looking for flexible working arrangements, and ALSPs are helping law departments find them. This allows law corporations to get the hands-on, specialized expertise they need, often at a lower cost than traditional outside counsel and without the overhead associated with hiring more full-time staff.

Technology Is a Means to an End

"ALSP" and "technology" have become somewhat synonymous. While technology is an important component of delivering effective alternative legal services, technology alone is not the answer. What allows ALSPs to be effective is using technology to complement and enhance talented people and finely tuned processes.

Corporate law departments recognize that technology is merely a means to an end, not an end in itself. In the Altman study, a majority of respondents said it was "too soon to tell" whether greater use of technology tools was resulting in significant improvement in efficiency. However, strong majorities of respondents indicated that investments related to people, such as adding more legal operations personnel and contract attorneys, were leading to greater efficiencies. In 2020 and beyond, technology will continue to play an increasingly important role in the delivery of alternative legal services, but people and process will remain paramount.

Increased Collaboration

As I previously wrote, there is a persistent, yet false, narrative in the legal industry that ALSPs and law firms are locked in a winner-take-all struggle for supremacy. It's often perceived that when a law firm wins, an ALSP loses, and vice versa. The reality of the competitive environment involving ALSPs and law firms is far more nuanced.

Instead of directly competing with ALSPs, many law firms are partnering with them to procure a wide range of services, such as e-discovery, legal research, litigation and investigation support, and document review—services that many law firms used to provide themselves but are now more appropriately outsourced.

The Thomson Reuters study found that, compared with 2016, large law firm use of ALSPs for certain functions such as legal research and document review increased significantly in 2018, from 21% to 54% and 38% to 52%, respectively. While midsize and small law firms' adoption of ALSP services is not as widespread, the percentage of firms in those categories using ALSPs is growing rapidly.

According to the Thomson Reuters study, the reasons law firms cite for using ALSPs include: "to save money; to access specialized expertise; and, for client satisfaction." By taking on some of the more administrative functions of legal services, ALSPs also allow lawyers and law firms to perform to their highest and best potential for clients. For all these reasons, there will undoubtedly continue to be competition among ALSPs and law firms in 2020, but also increased amounts of cooperation and collaboration.

Dave Galbenski is the founder and executive vice president, strategic initiatives, of Lumen Legal, an ALSP specializing in commercial contracts outsourcing, secondments, document review, contract staffing and legal spend analytics. He is the author of "Legal Visionaries" and "Unbound: How Entrepreneurship Is Dramatically Transforming Legal Services Today." Follow him on Twitter @davegalbenski.