A Look at The Evolution of ALSPs

In episode 4 of The Law in Black and White, Jon Greenblatt and Bryan Parker speak with ALSP expert Dan Packel from Law.com about the history of ALSPs, the trends of innovation in the legal industry, and predictions for new law post-covid.

Below are some takeaways and highlights of Jon’s and Bryan’s conversation with Dan about ALSPs.

Predictable Costs:

Cost savings is always important, and cost predictability is another key area of focus when law firms and corporate legal departments consider ALSPs. “Clients want predictability in costs even more then they want to push down costs. They want to know what they’re going to be paying and have a sense of that down the line,” Dan points out. Quality work, even if costly, is palatable if it can be delivered to clients with predictable costs. Using innovative technologies, ALSPs, and other new services are important tools to constraining potential costs. Budgeting is critical for any client, and ALSPs can fit in to provide more stable legal expenses.

What Makes ALSP’s successful:

People. Process. Technology.

Dan, referencing Connie Brenton, Senior Director of Legal Operation at NetApp, identifies successful ALSPs as leading in those three areas. Utilizing those resources with flexibility drives success for ALSPs. It’s also why more legal services providers are providing a combination of contract attorneys, technology offerings, and process management rather than just one component. Delivering multiple resources in a way that fits a buyer, and provides a level of comfort, is key to wider adoption of ALSPs.

ALSP’s Next Frontier:

Contract management is a seemingly hot area, as Dan points out. One salient example is the legal implications of LIBOR being phased out. Clients need updates to all sorts of contracts in an efficient fashion, largely utilizing technology. This is a key current opportunity for ALSPs to increase usage in a more transactional role.

Additionally, law firms are creating in-house solutions to help provide predictable prices to buyers. Jon noted the delicate balance firms must strike when rolling out alternative services, and process management and technology improvements can be outside a firm’s core expertise. Analogizing to the history of discovery and e-discovery, firms that can identify works on deals that can be done through contract lawyers or technology will be an emerging practice.

Associate Class Size:

Associate class sizes are feeling the squeeze, and it poses long-term problems for law firms. Senior associates and partners remain in demand, but the pipeline is facing pressure and retention rates are not improving. A part of ALSPs’ role will be to augment smaller class sizes and offer an opportunity to correct the pipeline so that the senior associates and partners numbers do not suffer long-term.

Solving an associate class squeeze also must involve a focus on DEI. One of the few areas of the legal industry that has seen any improvement in DEI metrics is the diversity of some incoming associate classes. More diverse associate classes unfortunately have not meant more diverse law firm leadership on the whole, and smaller associate class sizes threaten even the modest gains that have been made.

Listen to the full podcast here.

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