As its first topic of focus, the Council of Luminaries has decided to have regular meetings to discuss the effects of the COVID-19 pandemic on the legal industry as they materialize. The objective is to identify developments in the market, at both clients and firms and to explore potential solutions and make predictions on where things go from here. Key takeaways from each meeting will be published for the public following each discussion.
The below meeting was conducted primarily with the client-side group.
This Week's Temperatures
Each week we ask the Luminaries to answer these four questions, on a scale of 1-10 with 5 being what would have been their pre-COVID response.
Captive ALSPs
The group is still surprised by the number of firms with Captive ALSPs and that many of the partners even at these firms don’t seem to know they exist or want to talk about them.
For purposes of the discussion, we defined Captive ALSPs as providing services broader than just document review. More like:
Including units that are spun off as separate entities and those that are technically their own practice groups.
Use dedicated staff as well as technology and process.
Examples include delivering legal services through dedicated review or transaction service centers, deploying teams of staff attorneys, working with the assistance of AI- or technology-enabled document review tools, and more.
Even at large firms with well-intentioned and set-up Captive ALSPs, the people within those units often have to do just as much marketing internally as they do to clients. They have to work their own internal culture as hard internally as they do externally.
There’s also a threshold question about whether the law department itself should “insource” the kinds of activities that can be done by Captive and traditional ALSPs. One group member reported that they have a team of contractors—supervised by internal staff—that do a lot of the work that would otherwise be done by associates or junior partners. Most, but not all, of this work is in litigation and they make sure their firms keep their staffing pretty tight. At first firms resisted, but now it’s a seamless partnership. There’s little doubt that the firms don’t love it, but the company does often get emails from them praising these people.
However, that same Luminary mentioned that if they were to dip into more practice areas, they’d consider a captive, especially if supervision and/or certification is required.
Another company takes a similar approach to its M&A due diligence, conventional IP filings and review of low volume high risk contracts, even sending some work to its own shared services center in India. For these types of work, they’d only go with a captive if they need some sort of certification.
A third company used a law firm Captive ALSP for CCPA and the related survey and compliance work. This company does use traditional ALSPs for discovery work, but this was the first experience with a captive. They responded to a pitch from a firm they already have a great relationship with and the project was combined with more traditional strategic advisory work around CCPA. It was a great success and even expanded into corporate records management, as some of the information they were able to glean from the CCPA survey has helped the company manage its third party vendors. “It was very well done and very quickly done and supervised by in-house attorneys.”
There are some definitive advantages to managing a Captive ALSP compared to a traditional one:
One less vendor to manage
Privacy/data
One source of work and have the law firm manage that
The group is hoping to hear more from firms about their considerations. Are Captives considered less profitable? Is there tension between partners? How does it affect realization rates?
For firms, the big issue may be whether they are playing a short game or a long game. Some firms may simply not be interested in this type of work. Some of the top name-brand firms may not feel the need to offer these types of services, especially those that handle big M&A, where there may not be much price sensitivity.
While no group members said they begrudge firms that don’t want to go down this path, they do have options. And it would be nice if firms brought their offerings to us so we can be more knowledgeable buyers.
It can be a battle in the law department, too. Many in-house counsel still feel like everything has to be bespoke.
No Interest in Live Conferences
Group members were vehement that they are not interested in any kind of live event anytime this year, at least. Comments included: “Hell no!”, “We’re not even going back to the office, why would we go to a conference?” and “I’m not willing to die for a trade show.”
CLE is easily available; there have always been tons of opportunities online, so that’s not a reason to go.
Need a Plan for Internal/Company Events
A few group members reported that they are having a difficult time figuring out what to do about some internal events that have been put off, such as annual legal leadership meetings and design conferences. They are looking for a way to not cancel but do something more interesting and interactive than just looking at a computer screen for hours on end.
Potential solutions included Zoom but with fuller use of breakout sessions, or perhaps using some of the virtual platforms that some of the conference providers are starting to use.