Smart Read of the Week: A New Direction for Legal Insourcing?

Over at Law.com, Nicholas Bruch posits an interesting theory: the long term trends suggesting continued growth in corporate insourcing of legal work — that is, hiring internally versus offloading work to outside counsel — may not tell as complete a story as the trend lines suggest.

As the graph shows, and our data cited in The Wall Street Journal confirms, the cost of doing business with Big Law is going up. In fact, it’s now about 3x the cost to work with outside counsel versus hiring in-house at a legal department. But there may be more to consider for the future of corporate counsel beyond in-house or outside counsel.

Interestingly, Bruch suggests that while outside counsel ultimately will have to adjust its outlook to deal with the rise of insourcing, a viable new option has emerged for corporate legal departments, highly correlated with the rise of the advent of big data in the legal market: alternative legal service providers.

What’s driving this trend? Costs cut by efficiency.

The ALSP operational model, which tends to be less reliant on costly lawyers, will be able to deliver services more efficiently. All of this will change the way law departments approach pricing and sourcing. Notably, it will fundamentally change the math that led law departments to in-source.

As you probably know, ALSPs help give corporate legal departments a new way to manage high-demand matters like document review, electronic discovery, research, and more.

We’ll keep monitoring developments in this space so keep looking out for more. In the meantime, we’d love to talk more about how we can help continue the trend of bending the cost curve downward, while working with your inside and outside counsel, and any ALSPs you currently utilize. At Bodhala, our data scientists built our proprietary machine learning platform to help you understand, predict, and act with confidence on your legal spend.

Shoot us an email at [email protected] to learn more.

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