What has changed in the legal services market?
Despite the practice of law being reasonably static historically, there have been a range of changes in recent years, as we discussed in a previous article on changes in the legal services market.
The desire for change has many drivers: cost control and efficiencies, competition, growth, regulation and changing social patterns. The one truism remains: adapt or die.
Despite the Dickensian portrayal of law, the modern legal services industry has seen significant change in recent years, including: the introduction of professional standards for training and education, the growth of in-house law, the growth of the global law firm, the rise of mediation and arbitration and the growth of non-judicial tribunals, direct access provision, and movement away from the dominant partnership structure.
This is not an industry that rejects change but one that adapts.
What is an ALSP?
The biggest change of the twenty-first century is the growth of the alternative legal services providers (ALSPs), best defined as corporate entities, which are not established as law firms, who have entered the market for legal services.
These firms were started by those who spent their early years in traditional law firms or at the Bar, such as Johnson Hana’s Dan Fox and Axiom’s Mark Harris. They saw the weaknesses of the traditional model and the lack of choice for clients looking for solutions wider than advice or the conduct of litigation.
At the same time the corporate world was evolving: increased regulation, global expansion, technological innovation, contract volumes and the need for data and analytics combined to demand wider solutions for the modern client. Contract volumes grew, regulatory reviews increased, global expansion increased complexity.
ALSPs such as Johnson Hana have found a place in legal services markets by offering clients solutions to these challenges.
What is legal advice?
Legal advice is guidance provided by a solicitor or barrister who is qualified to provide a recommendation on how the law applies to their clients’ unique circumstances.
Legal advisory work is reserved for the legally qualified working in a law firm or at the Bar.
This means that any person or company who is unsure what action is required of them, or how the law applies to their circumstances, may use their own in-house legal team or a law firm for advice on how to proceed.
What is legal process work?
As ascribed to an ALSP, legal process work is the execution of repeatable tasks.
Thomson Reuter’s resource Practical Law describes the work of ALSPs as “high-volume activity, where the application of process, project management and technology can introduce efficiencies and reduce the cost of delivery.”
This type of process work does not require legal advice and can be conducted by multi-disciplinary teams, including technology specialists, data analysts and project managers, and either qualified or unqualified negotiators or reviewers.
Examples of legal process work handled by ALSPs that the industry has seen in recent years include:
Contract reviews driven by mergers/acquisitions or regulatory reviews.
Large scale litigation discovery.
Contractual amendments, negotiation or repapering for new legislation or regulation.
Routine reviews and submissions for registration such real property.
Clinical trials support in the medical sector.
Global procurement harmonisation and outsourcing.
Legal process work has a number of common factors:
Legal advice or legal sign off is not needed to complete each piece of work.
It can contain repetitive tasks which apply in all cases allowing standardisation of process and method.
It can be managed by non-legal resources, such as project management or business leads.
It can be performed by multi-disciplinary resources.
It can be supported by legal technology.
Can I use an ALSP?
Where any of the above apply, the answer is yes. And the impact is essentially that legal process work can be performed with a reduced reliance on expensive legal resources, leading to lower costs and greater efficiency.
At the outset of a project, a client may take legal advice and use that legal advice to devise and implement the solution to their problem. However, during execution, legal advice or sign-off is not necessarily required.
Legal resources – whether internal or external – may remain as a project stakeholder and input as needed, but they are no longer central to the completion of what was previously seen as a legal workstream.
It follows that if legal process work can be completed without expensive legal advice, then it should not cost the same as legal advice.
The comparable cost offered by ALSPs for legal process work has been one of the great drivers of their increased popularity, together with their ability to pull together and manage the multi-disciplinary teams required to complete the work.
Additionally (and arguably most importantly) due to the fact that ALSPs can also offer technology, data and project management as part of the solution, it becomes clear that the quality and transparency of services improves in tandem with lower costs.
Can ALSPs cope with complexity?
It is too simplistic to describe legal process work as non-complex.
In recent years ALSPs have led workstreams in the most complex fields. For example, in financial services Initial Margin implementation and Libor reform were examples of the most complex subject matter combined with significant volumes of contract negotiations to be completed in tight timeframes.
ALSPs delivered these projects by building teams led by very experienced people in each industry, but also using less experienced and expensive resources, keeping costs down.
The use of templates, playbooks, quality assurance reviews and project management ensure that pre-defined standard terms and parameters are agreed with the client and maintained.
This goes to show that central to the ALSP offering is flexibility to staff any workstream with the right people for that task at the right price, combining different skills, experience and staffing levels through the life of that project.
Whilst ALSPs do not pretend to be law firms and do not offer legal advice, they are not restricted in the solutions they can provide to the challenges faced by their clients.
How do ALSPs use technology?
As with other industries, technology is proving to be a game changer in the legal services market. ALSPs have pioneered the use of artificial intelligence, contract lifecycle management, document generation, digitalisation, data gathering and analysis.
Technology is being deployed not only to improve the service being delivered but also to add value to clients in addition to that service.
Examples such as e-discovery tools and AI analytics tools reduce costs and improve speed and accuracy but the output they produce is valuable data in its own right, transformed from paper contracts onto digital databases.
These can be interrogated to enhance a client’s understanding of its business, its contracts, its risk profile or similar patterns which can be aligned with specific corporate goals.
Should I use an ALSP?
If you require legal advice, no. If you require legal process work, yes.
An analogy we use when describing our services is that of construction. In this analogy legal advisory work is that of the architect. They are who you need to define the parameters of what is possible, and advise on what works best in for your space. For everything else, you need builders, quantity surveyors, landscape gardeners, project managers, etc. That’s the analogy for the ALSP market.
So, should you use the services of an ALSP? Well, if you have legal process work it would be completed at a lower cost, and to a higher quality than if you approach a traditional legal services firm, so yes.
About Johnson Hana
Johnson Hana is Ireland’s leading alternative legal solutions provider. That means we disaggregate legal advisory and legal process work, and focus on the latter.
We offer:
Legal Process Outsourcing – whereby a specific legal process is carved out and outsourced to us
Legal Process Secondments – to augment a busy legal team or fulfil a temporary requirement for an experienced legal professional.
Historically, legal advisory and legal process work were tackled and billed in the same way. This means that all legal work has been as costly and time consuming as legal advice.
It doesn’t need to be.
We deliver legal process work through a combination of innovative legal technologies, robust project management methodologies, and expert lawyers. This approach reduces client legal spend by over 50%, while also providing totally transparent reporting and billing. This leaves our clients free to focus on the strategic, advisory work that really adds value.