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Is a Captive ALSP a Good Fit For Your Firm?

October 14, 2020


Our recently released report on captive ALSPs in law firms, “Home Court Advantage,” demonstrated that 35 Am Law 100 firms have moved into providing alternative legal services. The surprisingly high number has many law firm leaders wondering if a captive ALSP is right for their firms. Here are a few questions worth asking:

Are your clients already using third-party providers?

There is no doubt that alternative staffing models are both more cost-effective and more efficient than traditional models. If your clients use third-party providers for certain types of legal work, they would certainly benefit from giving all of their legal work to a firm that has deep institutional knowledge about them and understands their business objectives. Providing an integrated solution is a win-win for clients and firms.

Is there a practice that consistently experiences poor realization and write-offs?

Client teams are important. Also important are associate retention and growth. Oftentimes, the assignment process doesn’t allow for experiential growth and can result in work performed at a higher billing rate than necessary resulting in write-offs. This is compounded by the cost of staff departures due to unsatisfactory work allocation and consequently, lack of growth. Streamlining a practice with process improvement through automation and technology combined with equitable resource allocation can mitigate write-offs and poor realization.

Is there a misperception that working more efficiently will generate less revenue?

The value of tech-enabled legal services delivery has little to do with tracking billable hours. However, many firms still reward partners on the basis of revenue generation associated with time, instead of focusing on an important factor in managing a strategic business – profit. Billing clients and compensating partners and associates primarily based on hours supports inefficiency and hinders internal adoption of tools that drive efficiency.

Do you have adoption concerns?

Is the concept of using technology or tech-enabled processes a challenge for most of your attorneys? Most lawyers did not go to law school to become tech geeks. The lack of clarity around the benefits of automation, artificial intelligence and legal innovation is confusing. It is important to understand how applying technology affects a practice – what technology can and cannot do, so you know when to apply it – or to ask the person with the tech know-how to do it.

Does your firm’s culture embrace the traditional practice of law? Traditional law firms remain the primary legal resource for clients. While there is great benefit to preserving the ideals of the profession of law, this should not stand in the way of adapting to clients’ changing needs. Traditional methods of providing high-quality legal services coupled with technology and the right people can provide measurable results for clients and the firm.

Are there barriers to investing in technology?

While there is no question that technology will continue to reshape the way in which legal services are delivered, leadership buy-in and an investment in technology and people is critical. Such an investment is proven to achieve measurable results for clients and internal business operations. However, any successful change to legal service delivery requires a large degree of consensus. If this is not achieved, it disrupts any opportunity to be successful at implementing or adopting new practices.

Are you concerned that creating a more profitable model will be off-putting to your clients?

Clients do not begrudge paying their lawyers. However, they are looking for lawyers that focus on their business interests and are mindful and transparent about how they work. Clients look to their lawyers for integrated business solutions. If their law firm provides solutions that save them money and achieve their business goals, and that also brings good results for the firm, that is a win-win.

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