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5 Reasons Corporate Clients Are Interested in Captive ALSPs

October 21, 2020


At B+B NewLaw, we have extensively researched the trend toward the Am Law 100 and Global 100 firms building captive ALSPs, and we are big believers they can provide immense value to their firms and clients. And clients think so, too. Here are five reasons why:

1. They are under pressure to reduce costs.

It’s no surprise that corporations are under immense pressure to reduce costs, and their legal functions are no exception. General counsel can no longer justify paying traditional law firm rates for everyday work. Captive ALSPs typically provide legal service at much lower—and more flexible—rates than law firm partners and partner-track associates.

2. They appreciate process and technology enablement.

Like traditional ALSPs, captive ALSPs leverage technology and process, creating efficiency and speed and reducing costs. While that may be relatively new in legal, these types of strategies have been essential to the operations of corporations in every industry. For that reason, clients are looking for law firms that not only understand their business goals but align with their business practices, and that requires using technology and process, just like they do.

3. They trust their law firms.

Law firms have earned their place as their clients’ trusted advisors. The client-firm relationship is tried and true; many clients do not feel comfortable with upstart legal service providers, but with continued pressure to reduce legal spend they increasingly have difficulty passing up potential savings. Firms will win if they can build a competitive offering, because all things being equal, clients prefer to do business with their law firms.

4. They see the value in the same provider for both strategic and everyday work.

Working with a law firm on strategic legal issues and with outside alternative legal service providers on the everyday elements of the same matter can cause tension and friction. Firms can bristle at having to work with what they might perceive as a lower-quality operation, and providers can be frustrated by having to serve both the firm and the client. A tripartite relationship can also lead to communication problems and inefficient workflows. There is great value for clients to have their legal work provided by the firm that has institutional knowledge about all aspects of the matter, the client and its goals.

5. They are wary of the Big 4.

Many C-suite executives are being served by Big 4 accounting firms, and they often try to push these relationships on the law department for legal and legal-related services. General counsel are typically more comfortable with their law firms rather than these outsiders who have the ear of other company executives. Firms that can provide a competitive option have a better opportunity to retain work they might otherwise be pressured to send to these accounting firms.

Clients have one concern above all else about captive ALSPs: They question whether firms can be successful. Law firms previously have lacked the skills or inclination to leverage technology and process, to build efficiencies in order to reduce costs or to develop non-hourly billing models to align incentives. They will need to proceed wisely in order to convince their clients that they can succeed now. And we can help.

At B+B NewLaw, we believe that law firms can succeed in constructing captive ALSPs to handle everyday work. We can help you understand the marketplace, identify potential opportunities, build a captive ALSP and take it to market.

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For more information, please contact:

Partner and Co-head, NewLaw Practice

Partner and Co-head, NewLaw Practice