It is clear in-house legal teams are looking to cut costs. But are they considering all their options to counter the increasing rates charged by AmLaw 100 to midsize law firms?

Two-thirds of corporate counsel plan to bring work in-house this year to reduce costs, according to an Association of Corporate Counsel (ACC) survey released last fall. And as Thomson Reuters’ 2024 Report on the State of the Legal Market reveals, in-house teams can still dole out the same amount of work to law firms and effectively pay less year-over-year, despite firms’ annual rate increases. In fact, half of the outside counsel interviewed by Thomson Reuters plan to move work to lower cost firms – and, as the report illustrates, the math checks out.

The report calculated that while the average law firm’s rate increased by 5.7% from June 2022 through June 2023, companies’ average rates paid to associates, of counsel, and partners decreased year-over-year. How? Companies are sending more work to firms with lower rates. The report outlined a scenario in which a hypothetical company could cut its legal bill by 3.3% this year even as the AmLaw 100, Second Hundred, and midsize firms it works with raise their rates by a collective 3.4%. The math: Give 20% more work to midsize firms and cut work sent to the AmLaw 200 firms.

“Essentially, even as law firm rates have gone up aggressively, clients have found ways to reduce timekeeper costs across the board through reallocation of work,” the report says.

But corporate counsel keeping a close eye on their budgets don’t need to limit themselves to moving work in-house or spreading more work to smaller, less expensive firms. Only 26% of in-house counsel interviewed by Thomson Reuters said they would move work to alternative legal service providers to cut costs. If you’re among the other three-quarters, consider what ALSPs can do for you and your budget. Here are two key areas where ALSPs can take on your work more efficiently than law firms:

Managed Review

Even if a law firm is litigating on behalf of your company, you can find more savings by engaging with an ALSP to handle routine matters like managed review.

The right provider will deliver an experienced team and recommend the right staffing model that’s most effective for your matter and budget. They can support on-premise reviews, remote reviews, or a blended model.

Ask your potential vendor about how they leverage technology, train reviewers, and put checks in place to ensure you’re receiving the best product. The right provider will also treat cybersecurity as a fundamental part of the managed review process.

Communication is also key: Establish the type of updates you want to receive and how often to receive them in advance, including progress, overturn rates, budget spend and review rates.

eDiscovery

ALSPs can also provide cost effective tools like AI and large language models to tackle the eDiscovery process in a cost effective manner. These tools are developing rapidly and a little advanced planning with an ALSP can go a long way in reducing these costs.

Look for an experienced vendor who will have an honest and transparent discussion about pricing. The best providers will listen to your needs and use their experience to create an efficient eDiscovery workflow or suggest an alternative approach to meet your needs and deliver the greatest value. The right vendor will also have the flexibility and willingness to customize their platforms and workflows to meet your case needs, and will communicate with you regarding your project’s progress, ensuring that your budget stays on track.

In addition to providing managed review and eDiscovery services, some ALSPs also provide subpoena services, court reporting, copying, printing, scanning and exhibits for depositions and trials – which could lead to even greater cost savings on your litigation matters. As legal technology evolves and develops, legal departments have greater opportunities than ever to leverage these tools and deliver cost-efficient value for their businesses. ASLPs can help identify those opportunities and implement solutions that can drive value for years to come.