5 SIMPLE STEPS FOR SUCCESS WITH ALTERNATIVE LEGAL SERVICE PROVIDERS

Alternative Legal Services Providers (ALSPs) have entrenched themselves as a valuable player in the legal industry’s ecosystem. Recent surveys project that over 12% of legal work will be re-allocated and deployed to ALSPs in 2021 due to strategic initiatives by legal departments and law firms to diversify how legal services are sourced and delivered. In the $400 billion legal industry, over $40 billion in legal work is being shifted to ALSPs in 2021 alone. ALSPs have irreversibly altered the legal industry’s service delivery model in which two distinct offerings of “legal solutions” have now emerged: (i) the traditional practice of law; and (ii) the business of delivering legal services.

With a unique and strategic mix of people, process and technology, ALSPs are uniquely positioned to deliver legal services to both legal departments and law firms. The use of ALSPs is part of the strategic plan of most legal departments and law firms; if it’s not, it should be.

A well-conceived, well-executed ALSP plan yields top tier work product and outcomes coupled with favorable economic results. When it comes to re-allocating legal work to ALSPs, a “Ready, FIRE, aim…” approach will fail. Like with most things, success lies in planning and the following steps are critical to any successful plan to embark upon an ALSP initiative:

Step 1. Classify Legal Work to Pinpoint “ALSP Work.” At a macro level, most legal work can be qualified into a 4-variable continuum of “low value / low risk” to “high value / high risk” and quantified as high volume or low volume. The best work to allocate to ALSPs is “low value / low risk” work that repeatedly occurs at a high volume. Equally important when pinpointing ALSP Work, it should be suitable for routinization, standardization and automation which are the strategic differentiators for ALSPs.

Step 2. Analyze Historic Legal Spend Data. Once ALSP Work has been macro-segmented, smart data analytics tools should be used for a micro-analysis. The micro-analysis should evaluate a sufficient volume of historical legal spend data (ideally, two or three years of data) categorizing ALSP Work at a task and phase level and identifying who, as a service provider (using seniority, efficiency and cost metrics), completed the work. Together with Step 1, an historic data analysis allows a legal department or law firm to set a baseline and identify and quantify the potential benefits that can be realized from (re)allocating ALSP Work. This Step 2 is so important that ALSPs themselves often bear the expense of a programmatic analysis to win and effectively deliver the ALSP work. It’s a fool’s errand to proceed with an ALSP initiative without establishing a baseline.

Step 3. Assess Whether Untapped Internal Capabilities Exist. Before looking externally to engage an ALSP, it is important to creatively re-evaluate whether under-utilized internal resources -- often from different departments or business units – are available to handle ALSP work with the same quality and at a comparable cost to an ALSP. Sometimes, this is the case; most often it is not.

Step 4: Conduct an ALSP Search. An external assessment of ALSPs should be undertaken next. It is important to evaluate the following items (NB: Cost is NOT one of them because ALSP rates are quite comparable with the economic benefits of overall lower rates already embedded):

              * Substantive expertise                * Degree of technology-enabled services

              * Workflow processes                  * Assignment of dedicated project manager

              * Turnaround time                        * Integration with other business stakeholders

              * Data security protocols              * Bench strength & depth

Step 5: Monitor and Quantify Results. No initiative is successful unless it is periodically monitored and re-assessed. In this regard, a qualitative analysis should be undertaken to ensure that outsourcing ALSP Work has not resulted in any diminishment in the quality of the services performed or work delivered. A quantitative analysis should also be undertaken to ensure that the projections contemplated in Step 2 have been realized.

Cutting corners on any of the steps above will doom an ALSP outsourcing effort to failure, which will inevitably happen in the very short term. By undertaking each of the aforementioned steps, an ALSP outsourced effort is poised for long-term success.

To learn more about how ALSP initiatives and fueling other initiatives with legal spend data analytics, visit www.legaldecoder.com