ALM Media’s Corporate Counsel digital magazine, required reading for both in-house lawyers and law firms, covers business issues, legal affairs, and reports on the latest developments in the corporate world. The June issue features an in-depth article on the challenges faced by Alternative Legal Service Providers (ALSPs) — owned and operated by law firms (so called captive ALSPs) — compared to independent service providers not associated with the law firm. One such challenge centers around pricing and if/how ALSPs run by law firms can be price-competitive with their independent counterparts. Chris Farmakis and Chuck Rile, President and CTO respectively of Pittsburgh-based Solvaire, are prominently featured in the article sharing their experience of running a successful ASLP for the past 21+ years with a keen focus on providing pricing value through something they have coined “price certainty.”
“We offer clients flat fees and other alternative fee arrangements to give them full transparency when it comes to budgets, timelines, and our services,”said Farmakis.
The Law.com article points out that, in many instances, captive ALSPs charge higher fees. According to Farmakis and Rile, fueling those higher prices is a law firm billing model that hinders a captive ALSP from reaching peak efficiency and truly slashing prices. For firms that are tied to a traditional pricing model, it’s difficult to transfer those hours to the ALSP model because under that model those hours get billed at a significantly lower rate.”
“There’s more value for the client, but less margin for the firm. Being unable to break from this conventional firm billing model and mindset can inhibit a captive ALSP’s ability to match an independent vendor’s pricing,” Farmakis said. “I think the independent ALSPs have performed better than the captive ALSPs because they’re singularly focused on that value proposition and don’t have that inherent conflict.”
Click here to read more of Solvaire’s commentary, as well as hear from other legal leaders on the captive ALSP pricing topic.