Many corporate law departments are leveraging ALSPs for their expertise, rather than just their tech prowess and lower cost, according to recent research
As the market for alternative legal service providers (ALSPs) continues to grow, many providers have looked to differentiate themselves from traditional law firms by either touting their technological expertise or their lower overall costs. Yet, when corporate law departments are evaluating which ALSPs they view most favorably, the calculus remains similar to how they evaluate their outside law firms: Expertise is paramount.
In fact, the majority (51%) of surveyed corporate law department leaders say expertise is a primary driver for viewing a particular ALSP brand favorably, according to recent Thomson Reuters research. Broken down even further, 20% of those surveyed point specifically to the quality of advice and to specialist knowledge that an ALSP imparts, while more than 5% reference the breadth of an ALSP’s service and the strength of specific individuals on its team.
The portion of law departments pointing to expertise may be slightly lower for ALSPs than it is for law firms, with around three-quarters of respondents saying expertise is a primary driver of law firm branding strength. For ALSPs, expertise still far outweighs other brand favorability factors, including technology (viewed by just 11% as a primary favorability driver) and value or pricing (9%).
The majority of surveyed corporate law department leaders say expertise is a primary driver for viewing a particular ALSP brand favorably
The data, coming from Thomson Reuters Market Insights, was collected from 1,378 interviews with corporate legal leaders, conducted between July 2021 and June 2022. The answers given in some of those interviews provide insight into why expertise remains paramount. For example, one General Counsel of a financial services company explained why they viewed a Big 4 firm favorably: “The main reason being that some years ago we engaged one of their partners as an expert in a litigation claim, and it seemed to me — and obviously they’re a ‘big-hitter’ in the accounting world — that they have a very good grasp of the legal side as well. So, if I needed that I would probably go with them, and they’re our auditors so we know them well.”
Interviewees also expressed similar sentiments for smaller ALSPs. An assistant GC for a healthcare company discussed their use of an ALSP that specialized in staffing issues, saying: “I like the skill set, the consistency of project managers that they provide, the attention to recruiting standards, and the effort to promote diverse candidates when they are involved in recruiting projects. I like their technical competence and their culture.”
And an in-house counsel at a technology company noted of a different ALSP: “I think that, particularly for an in-house function, they can provide flexible resourcing. Obviously, with internal budgets always smaller than you want, they can help you cover a project and offer quality services.”
Going with the experts
Expertise as a deciding decision-making factor rings true to Gabriel Buigas, a former technology industry deputy GC and now head of the Contracts, Compliance & Commercial Services business unit at ALSP Integreon. While Buigas jokes that “anybody who says that pricing doesn’t matter is maybe a Big 4 and hopeful that that’s the case,” he also explains that providing lower costs can only enhance an ALSP’s pitch rather than make it fully. “Just because you’re the low-cost provider, if you have no referenceable clients and no proven delivery capabilities, you’re not going to win,” Buigas adds.
The focus by law departments on expertise is not a recent phenomenon, however, corporate clients are becoming increasingly sophisticated in understanding the ALSP market, resulting in shifting priorities, he explains. “I remember doing pitches where what everybody thought was, you had to have the person that dressed well, spoke well, and had beautiful slides,” Buigas says. “More and more, clients don’t want to see you. They want to see who’s going to do my delivery: ‘I want to talk to that person and I want you to include that person on the pitch.’”
All of this is a welcome development, Buigas says, adding that he expects it to only continue to increase in importance as the ALSP market grows. He points to more mature areas of the ALSP market such as discovery as an example of the wider industry’s future, where a number of providers offer ever-increasing scale and lower costs. Expertise, then, becomes the ALSP’s primary differentiator by necessity.
“The difference starts to be: ‘I’m really good at this,’ Buigas explains. When clients have the kind of case in which they need foreign language capability, or particular expertise in a particular jurisdiction or on a certain type of matter, they can go to particular ALSPs because that’s their specialization, he notes.
“So it does help in terms of how you distinguish yourself in crowded markets, particularly for areas that have become increasingly more commoditized.”
You can learn more about how to create the kind of partnerships that will drive the strategic, financial, and operational priorities of your corporate law department here.