The Current State of the Legal Industry – Legal Ops of the horizon

by | Jul 30, 2021 | Insights

The 2021 CLOC State of the Industry Survey has revealed major key takeaways from the current reality of legal spending. The survey covered a range of respondents from 200 organizations (48 being Fortune 500 companies) across over 20 industries, in 31 states and 21 countries. You can read the report here.

The Corporate Legal Operations Consortium (CLOC) is an international network of experts who have made it their mission to focus on analyzing and redefining the legal industry. With its annual reports, CLOC aims to help shed light on new industry standards and rising trends in the profession of law. The global network consists of experienced legal operations professionals who are committed to driving innovation forward within the industry.

We are happy to bring you a summary of the main issues deriving from this fascinating CLOC report:

1. External Legal Spend Has Doubled 

It was surmised that in this new age of client-driven services, ALSPs (Alternative Legal Service Providers) have become increasingly attractive to corporate legal departments. The general number of legal departments spending on ALSPs is growing fast, positioning ALSPs as a prominent supplier within the legal market, and pointing to a possible indicator that ALSPs are being thought of differently by the market. 

Overall, ALSP spend increased in 2021 by almost 30%. Generally speaking, the median outside legal spend nearly doubled in the past year; from $7.9 million to $14.5 million. What’s more is that 21% of CLOC’s survey respondents reported shifting more work to ALSPs as opposed to law firms, signaling a change in how departments approach the delegation of tasks and projects. 

As Epiq Global has pointed out, there is a new prevailing focus on “sourcing talent where the talent resides”, as opposed to where the office is located. This then means that there is a greater accessibility afforded for flexible working models, such as contract or semi-permanent opportunities.

It opens up the possibility for budget reallocation, and eliminates the need to onboard new in-house staff which is often noted as a significant pain point for legal departments looking to expand or scale up/down their team in a relatively short period of time.

The emergence of ALSPs has essentially improved upon a process which has served as a bottleneck within the legal industry for quite some time, allowing legal departments to receive high-grade quality work from a professional with specific expertise in the given project area or jurisdiction. The hybrid makeup of an ALSP’s ability to be both flexible yet highly dependable and specific is what makes it such a competitive and attractive option to legal departments. 

2. A Maturing Market

Certainly, it seems that with the maturation of the ALSP sector, coupled with the demand for flexible legal talent, the legal world is creating the perfect storm for ALSPs to balloon in popularity. In addition, the current climate is arguably the ideal environment for ALSPs to continue to mature and grow.

The COVID-19 pandemic has removed a lot of the need for client-facing business-dealings in the legal industry, instead prioritizing the ability to insource/outsource work at a moment’s notice and for an affordable price. This is precisely what ALSPs are readily offering; a way to delegate projects that doesn’t cost an arm and a leg. 

As the CLOC report has emphasized, the very services provided by ALSPs are changing, with more and more GCs entrusting ALSPs with more than just the basic menial legal labour, and more with legal process engineering, and other highly complex legal projects. 

The ALSP sector has grown roots—ones that won’t budge. Contrary to what some predicted at the start of the ALSP boom, flexible legal staffing and services like it are not simply ‘trends’. A maturing market shows that flexibility is vital, providing the professionals of the industry a way to lead more balanced lives, and their clients a way to save on unnecessary costs associated with sourcing legal services.

As the dust settles, and as ALSPs continue to be integrated into the routine operations of legal departments across the world, it has become clear that they offer a win-win situation. 

3. Diversity and Tech

Aside from the growing trends surrounding ALSPs, a major priority uncovered in the CLOC report is the implementation of Diversity and Inclusion programs—which was actually ranked as the number one priority for 61% of survey respondents within the legal industry.

Among other legal operation trends are the continued explorations into how automation can be integrated into various legal processes, like within contract lifecycle management for instance. 

However it should be noted that diversity is also easier to achieve through the use of an ALSP, especially if that diversity is required on a number of levels, such as experience, identity, qualifications, etc.

It’s interesting to observe how the rising trend of prioritizing diversity coincides with the prioritization of flexibility through the use of ALSPs. By approaching a Flexible Legal Staffing company such as LawFlex for instance, you benefit from a plethora of candidates that might not only be perfect for your specific needs, but also come emulating a new-age attitude that includes versatility, commitment, and drive. 

It’s also worth mentioning that legal-tech is often already a functioning arm of many ALSPs, making them an attractive entity to approach if a given legal department is looking to become more tech-savvy and modernize its practices.

We suspect that the metamorphosis and maturation of ALSPs and innovative legal-tech solutions will be continually observed by these insightful reports for years to come.