Law Practice Management

Alternative legal services providers come into their own as major players, says new report

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The alternative legal services provider market grew approximately 25 percent from $8.4 billion in 2015 to $10.7 billion in 2017 amid growing demand from both corporations and law firms.

Released Tuesday, the Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity report from Thomson Reuters found that 87 percent of law firm respondents said they were using ALSPs, up from 56 percent in 2015. At corporations, 74 percent said they used an ALSP, up from 60 percent over the same time period.

“The 2019 report captures the expanding influence of ALSPs on the global legal ecosystem,” said Eric Laughlin, managing director of Thomson Reuters Legal Managed Services, in a press release. “It’s not surprising to see adoption of ALSPs by both legal departments and law firms growing at a pace that has exceeded expectations. Their combination of specialized expertise, unique delivery models and use of cutting-edge technologies is rapidly disrupting the space.”

ALSPs come in a variety of forms. The report found that the five most common types are litigation and investigation support, legal research, document review, e-discovery, and regulatory risk and compliance.

The pressure for increased adoption is coming from multiple places, according to the report. The first are clients, where 39 percent of large law firms said clients wanted firms to use ALSPs to drive down costs, up from 18 percent two years ago. Twenty-three percent of corporations report telling their lawyers to use these alternatives. Notably, small firms saw client demand jump from zero percent in 2015 to 24 percent in 2017.

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The study was conducted as an online survey of law firms and corporations in Australia, Canada, the U.K. and the U.S.; 335 law firms and 182 corporations responded.

Another point of pressure is coming from the Big Four accounting firms, which are increasingly competing with big firms. While the Big Four—Deloitte, EY, KPMG and PricewaterhouseCoopers—are unable to provide legal services in the U.S., they are able to provide legal services adjacent assistance, like e-discovery. In places like the U.K., the accounting behemoths can provide legal services. According to the report, 23 percent of large firms and 21 percent of medium firms say they lost business to the Big Four in the previous year.

The report was undertaken by Thomson Reuters, the Center on Ethics and the Legal Profession at Georgetown Law, the Saïd Business School at Oxford University and Acritas, a market analysis company. The first report of its kind was released two years ago and found alternative legal services providers as a niche business area carving out its place. The new report finds that the same industry has gone mainstream.

“In a short period of time, ALSPs have evolved from a relatively unknown phenomenon into a fast-growing segment that is an integral part of the legal services industry,” said Mari Sako, professor of management studies at Saïd Business School and one of the cauthors of the report, in a press release. “ALSPs come in many different shapes and sizes, from independent LPOs to well-backed parts of industry behemoths. They are expanding the available range of services by combining talent and technology to deliver legal services in modes that best suit their clients’ needs.”

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