By Stephen Panik, Staff Writer
Anyone thinking about beginning a career in the legal field has probably considered working for a law firm or for a corporation’s legal department. While both career paths can be rewarding, any new attorney entering either of these fields should be aware of the increasing use of alternative legal service providers by both law firms and corporations.
Alternative legal service providers are businesses that typically consist of legal and non-legal staff who work to provide a cheaper solution for the completion of low risk or high volume, standardized legal tasks. Law firms have been increasingly using alternative legal service providers in their business model because of client pressure over the years to reduce the cost of some billable tasks such as e-discovery, document review, and contract management. For example, at least 51% of law firms and 60% of corporate legal departments are currently using alternative legal service providers for at least one type of service. Corporate legal departments have also been turning to alternative legal service providers to reduce costs for things such as corporate filings, compliance-related processes, and investigative support.
The use of alternative legal service providers is more prevalent among large and mid-sized law firms and corporate legal departments. Among corporations that use alternative legal service providers in their legal departments, the prevalence is highest amid corporations in particularly regulated industries such as energy, communications, pharmaceuticals, and financial services. The law firms that are most likely to use these alternative legal service providers are those that use the traditional fixed pricing system of the billable hour. Law firms are finding that, in addition to successfully addressing client complaints about the cost of retaining their services, their cooperation with alternative legal service providers has increased profit margins. However, alternative legal service providers are not always a potential business opportunity for law firms and corporate legal departments.[1]
In addition to alternative legal service providers collaborating with traditional legal service entities, many alternative providers are turning out to be formidable competitors. According to a study, companies such as these, including Consilio, Integreon, and KLDiscovery, will consist of 30% of the legal service providers in the upcoming years.[2] Part of the reason that they are so competitive is because of their lower operating costs than traditional law firms or in-house legal departments. These alternative providers will often utilize paralegals and specially trained personnel in order to provide basic and generalized legal services. This business structure is advantageous because of the decrease in labor costs that results by not having to hire as many attorneys as a firm or legal department.[3]
It is likely that any person beginning a career in the legal field will become involved with an alternative legal service provider at some point in time. Whether you work with one as a member of a large law firm or a corporate legal department, you work for one, or you compete against one, it is best to understand what these companies are now and how they will affect the future job market of the legal occupation.
[1] Thomson Reuters, Alternative Legal Service Providers, SRLN, https://www.srln.org/system/files/attachments/S043079_Long_Final.pdf (last visited Nov. 15, 2021).
[2] Alejandro Esteve de Miguel Anglada, Alternative Legal Service Provider on the Rise: A Threat or an Opportunity?, (Mar. 9, 2020, 9:00 AM), https://blog.biglelegal.com/en/alternative-legal-service-provider-on-the-rise-a-threat-or-an-opportunity.
[3] Mike Heuer, How Law Firms Can Compete with Alternative Legal Service Providers, Bigger Law Firm, https://www.biggerlawfirm.com/how-law-firms-can-compete-with-alternative-legal-service-providers/ (Jan. 8, 2019).
