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9.29.20: Council of Luminaries CLIENT-SIDE

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.

ALSPs, the Big 4 and New Business Models

Luminary 1 – I am interested in your thoughts on various ALSPs. They’ve always been part of the ecosystem. But now the conversation is becoming daily. And there seems to be more and more ALSPs every day. So with the growth in new teams plus the Big 4, is this a real trend? And if so, do we think that budgets and COVID are pushing it. Why has the ALSP conversation become more front and center?

Luminary 2 – In our organization it’s not more prominent, it was already pretty prominent and hot. But more attention is being given to it in the legal media. From a model perspective, it remains a viable option. But there might be some pressure away from them (like outside resources of any kind), as we are looking to use more internal resources.

Luminary 3 – ALSPs have always been a big part – especially the high volume work, but I agree it’s been a surge of activity in the legal press, and that’s had an effect. I know because for the first time our GC is asking. Even though we’ve been working with ALSPs for years, she’s showing an interest.

There also a confusion between the ALSP/managed services and the lawyer on demand/staffing model. We’ve had a growing interest in that staffing model too as our firms are getting harder to work with sometimes considering their economic models. But we haven’t quite identified a partner in that space yet.

Luminary 4 – I agree, I don’t see a resurgence. We’ve primarily looked at them in instances where it’s been hard to bring a team of true lawyers and traditional firms. For example, in claims work. We have not seen a big surge in usage, but probably more of a time to get more creative.

Luminary 5 – That definitional issue is a big one. It’s so common to hear “ALSP” when people are talking about something completely different

Luminary 2 – It needs rebranding. I like “extended universe,” like it’s a Star Wars franchise. I think the ALSP thing is awkward, little understood, creates jargon where none is necessary

Embracing Non-Traditional Providers

Luminary 6 – One challenge is getting people to embrace something non-traditional. I think captive ALSPs will enable clients to go to new, non-traditional models. We dip our toe in the water, but they often prefer the warm embrace of a traditional firm. Is that changing?

Luminary 3 – We’ve already moved a lot of the big work. So, the need is to bundle under some sort of managed service. Our leadership is willing to try something new. With the firm’s captives, I worry we don’t have enough to give them – we might have to move work from other people. The big question, also, is whether they can pull it off.

Luminary 5 – Has anyone used captives in discovery?

Luminary 2 – I have used captives in e-discovery. My gut is the uneasy feeling that it was like a shell game. The firm had decided they were going to make a certain amount from an engagement, and this is a way to ensure efficiencies.

I don’t like the idea of bundling work together. It’s better with a multi-part process. Otherwise, there’s too much power with the firm. Also, often it’s the e-discovery provider that reins in the projects. Often the firm wants a big scope and its’ the providers who suggest it’s not necessary.

Captive ALSPs rates may be lower than traditional law firm rates, but they are higher than the open market.

The Big 4

Luminary 5 – Has anyone used the Big 4 for any legal work yet?

Luminary 6 – And if so, has the experience been different? And if so how?

Luminary 7 – What are they doing? how can they practice law?

Luminary 3 – We’ve used two. One is in the compliance space. They are not actually practicing law, but managing compliance risk with technology and reporting. It’s been a great experience

The other time, it was for other type of work that had previously been done by legal ops. It’s global and an ongoing project. We picked one Big 4 provider. This one has become a black box. They are behaving similarly to a law firm. We are struggling to understand escalation, and involvement and with our ability to influence improvements. But perhaps the blame is on us.

Luminary 5 – To answer the “how can they practice law” They are basically providing legal services outside the US, where they are allowed to, and work similar to ALSPs in the US.

Luminary 3 - Also they do multi-jurisdiction reviews. They are also often better at fixed fee options – they’ve come to me with 3 options and I think they know which one they want me to pick.

Luminary 2 – I have used some in the past. Not now, but we are exploring a very specific use because we need augmentation of data collection resources. Question is can they give us resources on a secondee model; we are looking for resources that might be in India under their oversight.

Luminary 2 – I keep expecting them to show up at the CFOs office and suggest we pay them a flat fee to do all of legal.

Luminary 6 – There are some obvious areas they could move in and take over. Tax and compliance, for example

Luminary 1 – We have a lot of Big 4 consultants embedded in other areas. They’ve tried to have that conversation with legal, but no success yet.

Luminary 3 – The legal spend is not that big, by their standards. The Big 4 have found other pies that are more appealing.

Luminary 5 – How aggressive have they been about business development?

Luminary 3 – We get outreach; they have expanded quite broadly across the company. They are not aggressively pursuing legal. Partly because they’ve got enough to fill them in other areas of the company. Even though we have a significant amount of spend, compared to the total value of the contract legal is small potatoes. They are not moving aggressively, but we do get it to some extent.

Outsourcing Legal

Luminary 3 – I have a friend at a smaller company, and I asked if she has a legal ops function. They are thinking about it, so I suggested that maybe they should outsource. At that size, maybe you can outsource legal ops to a managed services. But if that happened at my company, my resume would have been out.

Luminary 4 – I though the same – it’s not what I’d want. But managed service providers have a long way before they can replace our subject matter experts. It’ll probably be a gradual thing before they take over.

Luminary 2 – But if you are a company in crisis mode, and the decision goes up to those who are not subject matter experts in the c-suite, it can happen. In drastic situations, big decisions have to be made and all logic can get thrown out the window.

Luminary 4 – It can also happen if you just have new leadership that wants to make their mark. But how much more risk are you putting on the company if you don’t have true SMEs?

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