The rise of Alternative Legal Service Providers, better known as ALSP, has been significantly high in the past several years and that can be either an opportunity for you or a threat. Together with Natalia Martos, CEO & founder of Legal Army, we have ALSPs thoroughly explained for you.
The increasing demand for affordable and more efficient legal services has made room for ALSP companies to compete against regular service providers, like in-house legal departments or Law Firms, when it comes to completing certain tasks, and with Legal tech being as big as ever, ALSPs are using it to their advantage.
The growth of ALSPs has made a significant change in the overall client expectation; clients are now asking for greater predictability and transparency in the legal services provided, yet at the same time, at a reduced cost, and this, as a result, has urged practitioners to reconsider how they run their business.
Consequently, in-house legal departments and law firms are under immense pressure to accommodate the paradigm shift and utilize the plausible applications of ALSPs.
As it is noticeable, not only big corporations and enterprises are going with ALSPs, but also legal consultants and law firms are shifting towards new ways of providing legal services.
ALSPs are companies that provide legal services apart from the conventional paradigm of legal services and systems. They ultimately use legal technology in order to provide more efficient services in a faster span of time and with a drastically cheaper price.
According to The Saïd Business School of the Oxford University, Center for the Study of the Legal Profession of the Georgetown University that published a report on the matter back in 2017, ALSP activities are usually carried out by individualistic legal service providers (for example independent affiliates of law firms), that are immediately linked to the procurement of legal services. The ALSP individual will communicate the process with the client under fixed charges and then provide the service with transparency.
ALSPs are alternative in two manners. Firstly, the legal entity or the person who provides legal services is generally not a law firm. Secondly, with the help of legal technologies, the services are performed through a model that deviates from the conventional law firm delivery method.
There are numerous services offered by ALSPs. They tend to be niche companies that specialize in one or more legal tasks. These tasks usually need a certain measure of know-how and are in huge demand due to their frequent need. ALSPs sometimes offer other outsourced services under custom circumstances, however, they breakdown the general traditional process into different services depending exactly on what the client wants.
Here are the main services offered by ALSPs:
Other customized tasks are also provided by ALSPs based on their clients capabilities. With more innovative legal technology introduced, more services can be provided by ALSPs.
According to Natalia Martos, CEO and founder of Legal Army, ALSP's are very useful in solving repetitive tasks such as the revision of ordinary day-to-day contracts, confidentiality agreements or clauses of all kinds, allowing the legal advice of the company to focus on the issues that involve a decision making or are key to the development of the company.
On the one hand, we have the traditional law service providers and the way it is offered to clients. On the other hand, we have businesses driven by ALSPs to be cost-effective and efficient in a major way due to their understanding and their use of innovation and legal technologies.
For several decades, corporate clients have been able to afford law firms which held the market dominance. However, law firms’ dominance in the market is fading out and the work they get assigned is not as frequent as it is supposed to be, given the rapid rise of demand to legal services.
Whereas law firms who are administrating minor alternatives and adapting towards the legal technologies, in their business and service delivery models, manage to sustain their competitiveness and maintain their clientele.
The intense desire for profit has started to force corporate legal departments and law firms to embrace technologies that drive them to be more efficient and effective. Presently, the legal industry is more complicated than before (there are more branches of law, more rules and regulations) and the legal responsibilities required from law companies or individuals are higher than in the past.
Nevertheless, the budget of companies or individuals for legal services has been reduced. Due to their structure, traditional law firms usually cannot stand to be too flexible on fixed fees or rates. All transactions rotate around the billable hour, and as a consequence, clients of traditional law firms tend to pay higher for their legal services.
Natalia Martos from Legal Army says “Since ALSPs only uses a closed and previously agreed pricing system with the client, it has perfect control of its budget and can outsource many of the tasks that it cannot cover. In this way, the ALSPs constitutes to an efficient, reliable and cheaper alternative than the traditional law providers”
ALSPs have initially grown between 1999-2007, as it was the time that witnessed the evolution of outsourcing companies such as Integreon, Exigent, and Axiom that made their entry in the market, due to observing an increasing number of international law firms, which are conferring reliability to the idea of legal service offering.
Following are some prominent ALSPs currently in the market:
There is no chance to turn the clock back; ALSPs will stay and continue to rise. The transformation that it will generate in the legal services industry, I believe will also be decisive and intense. Ambar, a new ALSPs that has reached a partnership with Axiom, has launched its operations in Latin America and Spain. Ambar will render the Latin American and Spanish market with flexible, high-quality and agile legal expertise, supported by information-driven services and technology-enabled solutions.
How can you adapt to these changes and be able to compete with ALSPs?
Legal Technology is the secret ingredient that helps ALSP’s in reducing their operational budget. For clients, cost-saving is an essential factor in their choice to go for a legal service supplier, and those that can offer a faster service at a more competitive price will earn their trust.
Understanding and adapting to legal technologies can help you be on top of your game, ready for competition and aware of not losing your lovely clients. Even though the way of charging the client might be different, the number of clients that can manage would drastically increase due to the available technologies.
“Legal technology is essential for an ALSP to function based on efficiency, excellence and scalability. You cannot understand an ALSP without several legal technologies integrated in your business operation, both internally in the teams that already work with them and externally, offering added value to the client.” Ms. Natalia Martos - CEO and founder of Legal Army.
Given how legal technology is the main factor that helps ALSPs rise over traditional legal service providers, it will ultimately come down to the type of legal technology you use.
Document automation is ultimately one of the most significant legal technologies out there and is used heavily by legal service providers as it is what saves most of their time.
ALSPs are here to stay and are on the way towards a larger presence in the market and with innovative legal technologies to support them and enhance their services.
According to Natalia Martos, the ALSPs will consist of 30% of the legal service providers in the upcoming 4 years and the legal tech companies will be perfectly designed and tailored for ALSPs and corporate law departments with a more modern and technological mindset.
Ask yourself the following question.
Why are talented and creative lawyers engaged in repetitive manual tasks and endless paperwork? Is that what a lawyer is supposed to do with their time? And worst, is that what clients should pay for their time?
I think we can all agree that the answer is no. Clients don’t want to pay for time spent on something that a machine can easily perform. While at the same time, lawyers don’t want to spend their time doing something that doesn’t add any value to their practice and can be easily automated.
Believe me, I am a lawyer and I have been there, it is frustrating to spend so many hours in the office copy-pasting documents. And that is the reason why I created Bigle Legal, because it is the solution lawyers have been dreaming of for decades.
See for yourself! Learn more about the next-gen document automation tool.