The LVN Council of Luminaries is comprised of veteran thought leaders and pioneers in the business of law community. The objective behind assembling this group is to establish a brain trust of recognized, experienced and progressive leaders who can help interpret developments in the market, provide advice on how to successfully approach and navigate challenges, predict future trends and changes to prepare for, and to participate in targeted special projects to benefit the legal industry as a whole.
The below meeting was conducted primarily with the Council Of Luminaries CLIENT-SIDE group.
EY released a giant survey of ALSPs last week. https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/law/law-pdf/ey-realizing-the-benefits-of-legal-managed-services-july-2020.pdf.
On this Luminaries call, we discuss some of the findings, specifically:
1. 72% are outsourcing some services, with half of those outsourcing 3-6 services. Only 28% don't outsource at all.
2. The more mature the law department (in terms of outsourcing) the higher their cost-cutting targets. Companies that start down this path are hungry for more. 3. At large law departments 32% of the time is spent on "low value" tasks. Is this a result of all the insourcing over the past 10 years.
4. The Pioneers group (aka early adopters) seems to be shifting its focus toward internal costs.
5. The Pioneers also reported being more confident in their arrangements with third‑party providers (62% compared with 34% of Explorers and 25% of Observers.)
1. More outsourcing than expected
Luminary 1– These results are very surprising. 72% seems like a very high number.
Luminary 2– This does not include eDiscovery so it is huge. But there’s a comfort level here now – ALSPs are the norm. And seeing from the eDiscovery buildout that there are other places where you can push things to ALSPs. And we’ve had a decade of gradual growth.
Luminary 1– Still it’s a lot to achieve a 72% number. Maybe the difference is perhaps a lot of international companies took this survey.
Luminary 3 – 72% also seemed high. It makes me wonder who these people are. Perhaps we should do a small Luminaries survey to see who is outsourcing. Also, is due diligence = contract management? I’d also be curious to analyze patent service. That’s often quarterbacked by outside counsel.
2. Cost cutting targets
Luminary 1– I’m surprised this number is so high too, but maybe they’ve already cut. There’s a correlation between the most mature law dept and higher savings.
Luminary 2– If Pioneers have higher targets, it says a lot about leadership of those law departments sticking with the program. A lot of time these efforts lose steam. Sometimes you have a good program and then there is a change in leadership. Kudos to the leaders of those Pioneers law departments for sticking with the program.
Luminary 4 – More advanced law departments often have already gone after low hanging fruit. They’ve gone after some of the tricks of the trade. Once they’ve been done, you can’t go back to them, so you get marginal returns. So they are more likely looking for new things/process to achieve those savings because they have to figure out how to next solve for that. That’s how you proceed along the journey to maturity,
3. Low value tasks
Luminary 4 – The underlying dynamic is that law departments are flat organizations. They tend to have people in those departments who are struggling to find their lane or what is valuable. Do you tackle a limited number of prize projects or really valuable tasks? If so, you still need to build routinized processes, but also a new way to think about their currency - Is it management? Leadership? Businesses value? For example, an NDA project that enables a contract to get finalized at the end of the quarter could be very valuable to the business, but might not seem so to the lawyer. So the number could be colored by several different factors. Universally I see that’s what ALSPs could solve for.
Luminary 2– That 32% number does seem about right. It’s left to interpretation on what low value means. I don’t know. As individuals who have all critiqued the tasks as handled by departments and firms. There are a lot of mundane tasks, depending on which you are looking at any given time. But the number does feel right to me. This is why we are seeing more project managers, more analysis. We are seeing a broader than traditional universe compared to the historical partner associate paralegal model.
Luminary 3 - As tech evolves, people’s positions go away, especially at a large corporation, such as in HR or people management systems, there might be something self-service that a person used to do.
4. Shifting focus toward internal costs
Luminary 4 – These are shifting sands. It’s never done linearly. Internal costs can become the next step. As leadership changes, often the work we do transcends current leadership.
Luminary 2– ALSPs are not cheaper than insourcing. They are often brought in to fill a gap. They so often create the breeding ground for a new permanent position. You might have created that anyway - I don't have enough of an HR background to know how beneficial it is to bring in-house vs. outside. The ALSPs are often brought in to fill gaps that then get bigger and lead to in-house hiring.
Luminary 1– Often we use ALSPs when we want to reduce head count. And the ALSP solves that problem. Our headcount trends are going down.
5. More confidence in third-party providers
Luminary 5 - It seems that traditional ALSPs have picked off some early adopters, what about the rest?
Luminary 4 – What’s misunderstood is that you can’t outsource innovation or productivity without a clear direction on how they can help. We need to meet the demand with a roadmap of the journey. But it takes a level of sophistication and understanding on the underlying problems. It is the difference between putting paints in the hands of Michelangelo vs. my kindergartner. They both paint, but it’s not the same thing.