The Corporate Legal Operations Consortium’s (CLOC) 2nd Annual State of the Industry Survey shows a growing trend. More than half (53 percent) of respondents to the survey say they now use at least one alternative legal service provider. This growth is driven by more than one in three respondents who said they increased their use of alternative providers over the past year. CLOC went on to project that this growth will continue. It is also a significant component of the fact that 46 percent of all corporate legal spending goes to external firms.
It’s not hard to see why alternative providers are growing in prominence and earning client business. When asked to rank 11 law firm evaluation criteria in order of importance, respondents rated Quality of Work and Cost Effectiveness #1 and #2, respectively. Alternative providers are highly motivated to deliver on those demands, and are able to innovate through legal automation with greater focus than in-house or traditional external counsel can.
Technology Investments Growing
Respondents to the CLOC survey show that many companies have already made significant investments in some forms of legal automation. For example, 65 percent have implemented a contract management solution, and 56 percent use eSignature tools. But fewer than 30 percent of respondents have implemented legal automation in important areas like legal analytics, records management, and outside counsel compliance.
Cautious uptake in these emerging areas of legal automation also helps explain the gap between interest and adoption of artificial intelligence (AI) legal tools. Interest in AI is extremely high. Nearly half (45 percent) of respondents are at least exploring AI’s potential to enhance legal operations. But only 12 percent have actually implemented AI tools.
The Case for Automation
Legal automation solutions sometimes don’t show their true value until a firm needs them most. For example, a regulatory proceeding demanded that a large energy utility review one million complex documents in the span of just one month. The review itself had several complex stipulations and technical demands, including the protection of proprietary data.
In order to meet the stringent and high-stakes demands of this case, the utility and its outside counsel engaged Special Counsel as an alternative legal service provider. Over 100 document review attorneys were seamlessly linked with in-house and outside counsel through collaboration tools and were quickly trained on the deep technical matters at stake.
The Value Of Specialization
A specialized challenge like the detailed review of one million complex documents in a single month is a black swan event for most organizations. It may not be cost-effective or rational to staff an in-house department or even keep a traditional firm on retainer to meet such legal automation demands.
Alternative legal service providers, on the other hand, can focus their attention on solving complex puzzles and heavy processing burdens in an efficient, tech-enhanced, and cost-effective manner. Special Counsel, for example, completed the utility company’s project on time and $250,000 under budget. The streamlined process allowed the utility’s outside counsel to focus on weightier matters relating to the merits of the case.
Much of the cost savings was possible because the project manager and quality control teams conducted an extensive review after the first week and saw a persistently high error rate on a few specific types of document. They immediately called in specialized training that slashed the error rate. Project management went further by building a search filter that removed 10 percent of the document universe from review, because they were not part of the case. Having extra time and resources free to focus on the essential legal questions at hand is even more valuable.
Companies and their business relationships generate more data, more connections, and more potential points of contention than ever before. Legal automation, and the firms that emphasize efficient and accurate tailored services powered by technology, helps companies address seemingly insurmountable and unforeseeable challenges.