Generative AI is reshaping the relationship between companies and Alternative Legal Service Providers (ALSPs), as new AI tools enable companies to handle more legal tasks in-house, leading to changes in demand for ALSPs. Case studies from Unilever and Factor Law demonstrate the significant improvements in cost efficiency, quality, and speed achieved by integrating AI into legal operations, prompting the legal services market to adapt to these transformative shifts.
Generative AI’s Impact on Alternative Legal Service Providers
Generative AI is poised to significantly alter the dynamics between companies and Alternative Legal Service Providers (ALSPs). Companies have traditionally turned to ALSPs for cost-effective, tech-based solutions for high-volume, low-value tasks. However, new AI tools now allow these companies to perform more legal tasks in-house, affecting the demand for ALSPs.
Unilever has implemented over 400 AI systems across its operations, including its legal functions. The company has established teams in Bengaluru, Mexico City, and Barcelona to manage a range of legal tasks using AI tools. This strategy has led to notable improvements in cost efficiency, quality, engagement, and speed, with contract management costs reduced by 60-80% and work completion times increased by 25%, according to Luis-Xavier Hernandez, Unilever’s Group General Counsel.
US-based law company Elevate, led by CEO Liam Brown and VP Pratik Patel, is closely observing these developments. Despite the rapid evolution of AI technology, Elevate aims to take a measured approach, ensuring they adopt the most effective tools without hastily reinventing their offerings.
Factor Law, an ALSP with over 450 employees, has initiated The Sense Collective, a collaboration with in-house legal teams from companies like Intel and Microsoft to explore the potential of generative AI. Ed Sohn, who leads Factor Law’s innovation team, believes that while AI will influence ALSP workloads, it may also create new opportunities by increasing data availability and processing speeds.
The legal services market is adjusting to these changes, highlighting the need for ALSPs to adapt and leverage AI effectively to meet evolving client demands.
