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The future of the legal profession: ALSPs on the rise in Ireland

Ruth Green, IBA Multimedia JournalistThursday 5 August 2021

Covid-19 has changed the world of work as we know it. Like many other jurisdictions, Irish businesses were using business process outsourcing long before the pandemic hit. Now as the country adjusts to new ways of working, the legal market is doing the same.

The global alternative legal services providers (ALSPs) market grew from around $8.4bn in 2015 to $14bn in 2019, according to the latest data from Thomson Reuters. There has already been an influx of new market entrants worldwide. Globally, 79 per cent of law firms and 71 per cent of corporates use ALSPs.

The picture has been a little different to date in Ireland, says Dan Fox, CEO and Founder of Johnson Hana, which remains the country’s only ALSP since it established operations in Dublin in 2015. ‘More law firms are using ALSPs internationally, whereas currently in the Irish context it’s the inverse,’ says Fox. The company has clients across Europe and the US. In Ireland, it’s corporates and government agencies – not law firms – that form the bulk of its client portfolio.

The country is behind the curve on ALSPs, acknowledges Myra Garrett, corporate partner and former managing partner at William Fry. However, Garrett, who is also Vice-Chair and Treasurer of the IBA Section on Public and Professional Interest, says Covid-19 has led to dramatically different ways of working in Ireland that could create more opportunities for ALSPs ahead. ‘I think that the pandemic has caused a seismic shift in how we do business, and this is causing businesses, including law firms, to look at how they can improve efficiencies which may open the door for more ALSPs.’

Research by think tank Eurofound indicates that Ireland still has one of the highest rates of employees working from home since the onset of the Covid-19 crisis. Fox has always championed the concept of remote working and says 85 per cent of his employees were working flexibly even before the pandemic.

The increasing need for alternative ways of working and reliance on virtual technology could increase market appetite to work outside the traditional corporate model, says Derya Durlu Gürzumar, Chair of the IBA Alternative and New Law Business Structures Committee. ‘While the impact may not yet be the projected uptick on a global scale, the need to lower costs coupled with the forced embracing of technology and the desire and need to seek alternative and flexible ways of practising law have certainly influenced corporate counsels’ and private practice law firms’ outlook towards working,’ she says.

The pandemic is causing businesses, including law firms, to look at how they can improve efficiencies which may open the door for more ALSPs

Myra Garrett
Corporate Partner and former Managing Partner at William Fry

Experts predict an upsurge in demand for low-value, process-driven legal work in the next few years as businesses push to recover growth and streamline operations in the wake of the pandemic. However, Durlu Gürzumar says the success of ALSPs will hinge firstly on each jurisdiction’s regulatory framework and secondly on its ‘receptiveness towards welcoming – or deterring – change.’

Herbert Smith Freehills has already proved there’s appetite north of the Irish border. It was the first law firm in the UK to establish its own near-shore Alternative Legal Services Centre in Belfast a decade ago. Fox also has his eye on establishing a base in the city, but, like many businesses, says he’s waiting ‘patiently’ for some of the uncertainty surrounding Brexit to recede.

In the Republic, Fox says private practitioners still view ALSPs as both ‘a friend and a foe’. It’s a daunting challenge to convince a traditional legal market that alternative ways of working can make the most of modern technology and reap high-quality and reliable results. However, Fox, himself a former barrister, believes there’s a gap in the market that ALSPs are ready to fill. ‘There’s an education piece that still needs to be done here,’ he says. ‘I believe we should let law firms focus on bespoke advisory work and that will allow us to focus on processes and project management.’

Garrett agrees. ‘Traditionally ALSPs were very much seen as competition and they were an unknown factor,’ she says, ‘but we have seen how they can, with proper selection, complement law firms in delivering certain types of projects.’

What Fox terms as ‘rightsourcing’ – ensuring the right level of resources and the right number of people are allocated to any given project – will also be key to both private practice and in-house legal teams as they look increasingly for cost-conscious and flexible working solutions. This approach has already helped secure Johnson Hana work with many of Dublin’s Big Tech players, including AirBnb, LinkedIn, Slack and Twitter.

Johnson Hana handles a variety of European and US work for Twitter. Philip Merrills Dearns, the former head of Legal EMEA & Associate General Counsel at the social media platform, says the company has been ‘a breath of fresh air in the alternative legal space,’ in Ireland. ‘They have educated the marketplace that legal work can and should be carved up between advice and processes,’ he says. ‘Efficient processes, delivering and implementing them are essentials for legal organisations.’

Fox says Johnson Hana’s revenues grew 150 per cent in 2020 and are on course to double this year. After raising a further €3.5m in funding in September 2020, the company has been making several strategic hires, including the recent appointment of Sinead Garnett as director of legal operations and solutions. Garnett previously led the legal and compliance operations at Brightflag, an Irish artificial intelligence (AI) analytics start-up. Using AI to boost efficiencies is another growing trend in the Irish legal market, covering areas such as eDiscovery and contract-analysis.