2021 Trends In The Legal Industry

By most accounts, 2021 will be the year of effective vaccines (fingers crossed), getting back to the office, and as judged by the feedback of corporate law departments, the year of expanded utilization of alternative legal service providers (“ALSPs”).

One of the primary conclusions of Deloitte’s recently released 2020 Legal Department COVID-19 Survey (“Deloitte Survey”) is that:

“More than half of all respondents expect to increase engagement with alternate legal service providers (ALSPs), whether ALSPs were part of their model prior to COVID-19 or not. In short, moving from response to recover, legal departments continue to be focused on technology investments and operating model changes that will help them move forward and emerge stronger from the pandemic.”

As we have discussed previously, COVID-19 is serving as an accelerator of trends in the legal marketplace. One trend that’s fairly ubiquitous among corporate legal departments is that the pandemic has added lots of work to the plates of in-house lawyers. According to the Deloitte Survey, 78% of executives said legal workloads have increased due to COVID-19, while another 71% said their legal departments were addressing pandemic-related matters.

Another trend that’s accelerating is that legal departments are turning to ALSPs to help with increased workloads. The Deloitte Survey found that, overall, utilization of ALSPs is expected to increase 54% in the next year among clients who used ALSPs pre-COVID, and 53% with those who started using them after the pandemic arose. 75% of those planning to engage ALSPs also reported that their workloads have increased during the pandemic.

Taken together, this data makes clear that most legal departments are planning to hit the accelerator on making ALSPs an integral part of their operating models in 2021. It’s another signal that, like in many sectors of the economy, actions taken to adapt during the pandemic will become standard operating procedures moving forward.

For example, The Wall Street Journal recently reported that digital-buying behaviors of consumers that took root over the spring and summer are likely to sustain. According to its reporting, “A recent survey by consulting firm McKinsey & Co. found that about three out of four people have tried a new shopping method due to the coronavirus and that more than half of all consumers intend to continue using curbside pickup and grocery-delivery services after the pandemic is over. Nearly 70% of consumers surveyed intend to continue buying online for store pickup.” Things are not going “back” to normal. We’re moving forward and finding new and improved ways to do business.

The Factors Driving Increased Utilization of ALSPs

The increased utilization of ALSPs by legal departments has been, and will continue to be, driven by a number of factors.

• In-house legal departments are, like the rest of their organizations, being impacted by reorganizations, layoffs, and furloughs, as well as more general budget cuts, they are being forced to do more with less. In many cases, this means that in-house teams are looking to outside resources, commonly ALSPs, to take on specific initiatives. This allows in-house professionals to be better utilized and focus on what they do best.
• The number of specific initiatives that ALSPs are assisting in-house teams with is expanding. From technology integration to document review to commercial contract outsourcing to contract staffing, ALSPs continue to move up the value chain by providing efficient and effective solutions.
• One of ways ALSPs like Lexitas deliver value is helping legal departments organize, analyze, and extract value from disparate data sources, such as legal spend analytics and contracting practices. According to the Deloitte Survey, 63% of legal departments are deploying contract lifecycle management (“CLM”) solutions to analyze COVID-19 impacted contracts, and 89% of these organizations anticipate enhancements in their CLM function. ALSPs help dig into contract data, make sense of the information, and implement solutions to improve the ways in which contracts are managed.

This year has undoubtedly been a year of great upheaval that has led to grand experiments in the legal industry. It’s becoming increasingly clear that 2021 will also be a year of continued change in which the best practices we, as an industry, have learned will take hold. ALSPs will be at the forefront of that transformation.