Unlocking Legal Value: How Alternative Legal Service Providers (ALSPs) Cut Costs and Add Value.

With many companies in their recovery and rebound phase following the challenges that Covid has presented over the past 18 months, value innovation and legal cost reduction have become a central focal point.  In this ‘next normal’ business operating models are being transformed to adapt to changing demands, with many leaders being challenged to think and do things differently.  

Legal is being asked more and more to demonstrate their value to the business.  Many lawyers naively believe their value cannot be easily measured or demonstrated with data analytics.  But if they look around at other departments of their company - Finance, HR, IT, Sales – value is demonstrated everyday by metrics and they’re less likely to be asked to prove it.  Legal can definitely learn a thing or two from other departments within a business. 

Optimising Legal Cost Management

Effective management of legal costs is paramount for modern businesses striving to enhance efficiency and maintain competitiveness. By implementing strategic approaches such as budget forecasting, alternative fee arrangements, and technology adoption, organisations can proactively control expenditure while maximising value from their legal operations.

While there are a number of ways to demonstrate value, here are KorumLegal’s three suggested solutions.   

1. Legal Operations Enhancement– take a look at your Legal Process & Tech for optimisation and transformation 

Legal operations should be the backbone of any efficient legal department.  A coherent legal operating model gives you the structure and toolkit needed to ensure that your business operates efficiently and effectively, regardless of whether it is a 1-person or 1000-person legal team.  Building internal capabilities to build, assess and transform, for example, processes, data, costs, change and legal technology within a team can be critical for success.  It helps with your teams' output – faster, better, efficient, effective, data driven, cheaper – and it ensures that the legal department is a value driver and business-partner rather than a roadblock to business growth.  In 2019, 74% of CGs who invested in legal operations saw efficiency increase by between 15% to 50%.  See our case studies for examples of how our Process + Tech and Legal Operations consulting can help optimise or transform your value-add.  

Tip: Start the ball rolling ASAP is key.  Speak to us about your pain points and challenges and we can work with you to co-design a plan and solution.  Also, beware of going straight to technology solutions without first properly assessing your existing processes and infrastructure.  

2. Managed Legal Services (MLS) – this is your outsourced support solution 

Managed Legal Services (MLS) is the outsourcing of projects or specific work streams to a third party to manage and deliver a project or solutions.  Outsourcing specific projects or work streams to third-party providers offers a cost-effective solution for legal support. An MLS partner acts as an extension of an in-house team and works closely with them to ensure the solutions and delivery model is aligned to business needs.  Managed services have been common practice for decades in other areas of business such as technology and IT and even finance.  MLS incorporates people, process and technology in the legal space.  People resources to manage and complete required decision making in a project; optimised processes for high quality and efficient delivery; and leveraging legal technology for automation where possible.   From a budget perspective MLS can provide savings of up to 60% and significantly increase value for business stakeholders.  See our case studies for examples of how Managed Legal Services can be adopted.  

Tip: Conduct thorough research and consult multiple experts to identify the most suitable MLS provider based on your needs and budget. There are many providers all with different offerings and price points.  It’s important to do your research and speak to a range of experts to understand what you want and need and how much you should be paying.

3. Flexible People Resourcing – this is your cost effective secondment resource that can be a quick fix during spike capacity periods or to fill hiring or capability gaps 

This is not new, it’s been available in the industry for more than a decade, by law firms and Alternative Legal Service Providers alike.  However, the market use case has changed in the last few years.  It’s still used for capacity support, but more and more it’s been used more strategically.  In 2019, 71% of GCs used Alternative Legal Service Providers for specialist expertise, with risk and compliance being the biggest growth area for this resource.  In 2021, 79% of law firms said that have used ALSPs for better cost-efficiency.  It can be extremely cost effective – 33% saving per day when compared to an internal hire (when accounting for all-in costs). See examples of our case studies here. By leveraging Alternative Legal Service Providers (ALSPs), organisations can achieve significant cost savings compared to internal hires while accessing specialised skills and expertise.

Tip:  Be clear about what you want and move quickly.  Consulting moves quickly, with consultants’ availability changing depending on demand.  Having processes set up to ensure you can move quickly to decision ensures you get the best talent for the work.  

By embracing these strategic solutions, organisations can unlock the full potential of their legal departments, driving cost efficiency and adding tangible value to the business. If you want to learn more about the above, we love a chat and a coffee, so please reach out

Titus Rahiri