INSIGHT: Fitting Contract Attorneys Into Your Long-Term Strategy

Corporate legal departments and law firms looking to save costs and increase value are using contract attorneys—a segment of the alternative legal service provider industry whose revenues are estimated to reach nearly $20 billion by 2025. Major, Lindsey & Africa’s Matthew Wheatley looks at the plus side of using contract attorneys.

The once law-firm centric model of legal service delivery now abounds with alternative legal service providers. The demand for ALSPs is staggering—in 2017, ALSPs produced over $10 billion in revenue; this figure is projected to double by 2025.

An important segment of this “New Law” marketplace is the use of contract attorneys by corporate legal departments and law firms alike, which has seen a remarkable surge in recent years.

According to a 2019 Thomson Reuters survey, more than 50% of AmLaw 200 law firms and more than 30 percent of corporate legal departments report that they have utilized contract attorneys in the past two years. The contract attorney portion of the ALSP market alone accounts for well over $1 billion in revenue.

What is driving the demand for contract attorneys? Of course, cost-control is a factor, with contract attorneys costing typically one-third the amount of outside counsel. And increased savings do not mean decreased quality. There is a robust pool of seasoned contract attorneys with blue-chip AmLaw and in-house credentials, and top talent is increasingly opting for contract work due to the flexibility and lifestyle benefits associated with these arrangements.

But beyond cost, there are deeper reasons for this sharp increase in contract attorney use. In their article Taking the “Alternative” Out of Alternative Legal Service Providers, Harvard Law professor David Wilkins and Harvard Law researcher Maria Esteban argue that corporate legal departments are still willing to pay a premium for legal services if the cost is value-based.

Flexible legal staffing will move to “the core of the market” because the service is customizable, agile, and integrated.

The Value of Contract Attorneys

1. Interim legal talent is highly customizable: A “one-size fits all” approach is not part of the new legal model. The flexible legal staffing model offers customized solutions based on a detailed understanding of a client’s business needs. A high-quality flexible legal staffing firm will conduct a unique search for the right resource and enable clients to self-select through an interview process. Once a contract attorney is selected and brought on-site, the client, whether a general counsel or partner, will be able to exercise ultimate control over the work product of the contract attorney.
2. Contract attorneys are agile: In a corporate world where speed and flexibility are more critical than ever, it is no surprise that increased agility is a crucial part of the ALSP movement. Whether responding to new and complex regulatory regimes, or the unanticipated demands of a significant transaction, flexible legal staffing should be able to bob and weave with changing needs, providing a customized, highly-skilled, and cost-effective resource quickly.
3. Interim legal talent can be part of an integrated ALSP solution: Legal issues can no longer be solved in a vacuum or through a single lens. Interim legal resources can easily be paired with other ALSPs, law firm teams, and legal technology to ensure all angles of a legal issue are examined and addressed. Additionally, the contract attorney market is packed with sophisticated lawyers from multidisciplinary backgrounds. Most contract attorneys are highly trained, business-minded, outcome-focused, and capable of being firmly embedded into any business. On the in-house side, they can gain a firsthand understanding of the issues facing the company, which has historically evaded outside counsel.

The use of contract attorneys has increased in the last few years, but there is still significant resistance to utilizing interim legal talent. Whether due to myths about contract attorneys or lack of awareness regarding the option, it is evident that firms and legal departments continue to deploy significant resources on legal functions that could be more efficiently delegated to a contract attorney.

However, the undercurrent of change continues to accelerate, as legal departments and innovative firms are recognizing the benefits of using contract attorneys and other ALSPs.

ALSPs are not only disrupting the legal industry; they’re replacing the old way of doing business. One imperative is clear: adapt or disappear.