Legaltech news recently published a piece entitled 5 Challenges That Await ALSPs on the Path to Growth. Since we are a growing ALSP, this naturally caught my eye.

Below are my quick reactions to each of the challenges mentioned.

Challenge 1: Bigger Is More Expensive

Excerpt: "Corporate clients want their friendly neighborhood ALSP to broaden the number of services they offer, but providers may find that the expense involved (technology, personnel, etc.) outweighs the reward."  

Initial thoughts: Thomas Sowell said "there are no solutions, only trade-offs." This is particularly manifest as businesses grow beyond their original founding mission. Young, small companies are laser-focused on addressing their founding mission. Their limited resources (financial, intellectual, operational, cultural) are concentrated because there are minimal internal distractions. Ask your eDiscovery vendor for candor in areas where they excel or lag, and have a transparent conversation about subcontracting.

Challenge 2: Sensitivity Around IP Work

Excerpt: "Some law firms have begun turning in the direction of ALSPs to help manage increasingly complex portfolios of global client intellectual property...'In law firms you see more outsourcing of the [IP management] services, but with [law firm] control over the software.'"  

Initial thoughts: Many people continue to mentally equate "ALSP" with "eDiscovery hosting" or "document review." Those are certainly two of the more mature functions of ALSPs, but those practices have allowed them to develop transferrable skill sets applicable to other areas (e.g. assisting incident response providers with data breach notification programs or IP management). Don't be afraid to "see the forest through the trees" and explore jointly developing applications that differentiate both the ALSP and law firm in the marketplace by creating forensically-sound, operationally-driven programs to legal services at a competitive rate.   

Challenge 3: Stiff Competition for eDiscovery Talent

Excerpt: "In a highly competitive eDiscovery market, ALSPs are often willing to outspend law firms and corporate legal departments on top talent...Still, those lucrative salaries may be attached to short-term, contract assignments - whereas a corporate legal department can potentially offer candidates more long-term security."  

Initial thoughts: Surveys conducted over the past 12 months have consistently shown salaries and hourly rates rising among ALSPs. Every provider, big and small, faces this reality. Wise ALSPs will focus on upskilling project managers and creating a culture that encourages them to look for opportunities to improve process, apply relevant technology, and differentiate the client experience.  

Challenge 4: Moving Firms from Competitor to Client

Excerpt: "[QuisLex CEO Ram Vasudevan] noted that ALSPs have not pursued law firm business 'as aggressively as we should be' and are instead limiting their focus to the legal ops community."  

Initial thoughts: Bad blood between law firms and ALSPs is incredibly short-sighted. Finding lit support teams, paralegals, and attorneys that are receptive to a partnership should be a massive priority for any ALSP serious about growth. Law Firms have the work ALSPs want, and ALSPs have operationalized efficiencies at lower price points that in-house counsel wants. Proteus co-founder (and practicing litigator) Jon Mattingly once noted "we're not trying to replace anybody. We're coming in and being a part of the discovery team. Ultimately, although our part is handling and understanding very complex issues....we're a tool for the clients and the law firm that's managing the case."  

Challenge 5: Not Enough Familiar Faces

Excerpt: "Using contract workers can help ALSPs fill critical talent gaps on special projects - but corporate legal departments may prefer to see more familiar faces instead."  

Initial thoughts: Candidly, I'm skeptical about this as a legitimate barrier, on the conditions that the ALSP has a well-designed client-facing team and high-quality process control measures in place. Our project managers own the entire EDRM - we don't have collections specialist that hand off to hosting specialist that hands off to a review specialist - so that clients can build a relationship with us and more strategic conversations can take place. Plus, we developed DiscoveryMaster to monitor quality, budgets, and key findings. We aren't the only ALSP that has developed proprietary processes and software to serve clients. Ask eDiscovery vendors you are considering what they've tangibly done to improve the client experience and defensibility of the work product, and don't settle for vague answers like "we apply technology" or "we've won XYZ industry awards."

At the end of the day...

The market will always be big enough to support providers ranging from very small to very large. ALSPs that offer multiple services under one roof can be convenient in some areas, but are probably lacking in others. Point solutions can complement them nicely, and many large and small shops compete for work, refer work to each other, and utilize each other as subcontractors.

Don't get caught up in the headcount or revenue size of a potential partner. Define your expectations, have candid conversations about capabilities, and move forward with the option you believe combines competence, integrity, and a fair price. 

And as always, let me know if you'd like to discuss any of this or a project on your plate. We can help.