As the economy rebounds from the Covid-19-induced recession, legal services face a difficult challenge. In many cases, the workflow in legal departments has reached higher levels than before the pandemic, but most legal departments are unable to hire permanently and remain under budgetary pressure which existed during the pandemic. As a result, legal departments are working harder than ever to keep pace, with burnout and attrition common consequences.
The current state of legal services is similar to that of the early years of economic recovery after the financial crisis of 2007-2008, when budgets and legal staff were squeezed while work flow increased dramatically. Meanwhile, many legal departments have turned to alternative vendors for the first time. These departments found that the internal focus and cost effectiveness of Alternative Provider Lawyers (ALSPs) made them a viable solution to the challenge of keeping pace with the business. And, once a ministry hired an ALSP for the first time, several commitments often followed. As a result, the flexible legal talent market has become one of the fastest growing segments of the ALSP industry and now exceeds $ 1.5 billion.
How does the approach taken by legal departments today to address the challenge of workflow overrun differ from 2009-2010? The earlier period was that of the emergence of the legal operations function. As the profession of legal operations has grown in size and sophistication, the business of law expertise of legal services has grown. As a result, typical use cases for alternative vendors in 2009-2010 migrated basic tasks such as negotiating NDAs to include the following:
- Renegotiate complex business relationships with customers, suppliers and strategic partners
- Writing and executing ‘back to office’ policies and procedures, while taking into account the myriad of federal, state and local regulations
- Support regulatory responses across multiple practice areas including global privacy requirements and the LIBOR Benchmark transition
- Separate legal work from traditional external advice, such as M&A assistance, including due diligence and integration planning and execution
Another factor accelerating the use of flexible legal talent by legal departments is the remote working environment resulting from the pandemic. Pre-pandemic legal departments have often insisted that lawyers from flexible talent providers be on site. While being on-site often helped a lawyer integrate quickly into the service, the on-site requirement meant that only lawyers within a reasonable distance from the client were a viable option. As legal services are now working remotely, clients are open to assistance from attorneys located anywhere in the country. The willingness of clients to engage lawyers remotely has dramatically improved the ability of ALSPs to provide a lawyer with the exact skills and industry experience needed to support the department. In this sense, hiring an ALSP is like hiring a law firm, and if this model continues, it will trigger a new wave of significant growth.