MINNEAPOLIS-ST. PAUL, WASHINGTON, D.C., & LONDON — The market for alternative legal service providers (ALSPs) is seeing rapid growth at a rate the is exceeding expectations as large law firms and corporate legal departments expand their use of these legal service firms, according to a new report.
Indeed, ALSPs comprise $10.7 billion of the market for legal services, a compounded annual growth rate of almost 13% percent compared to just two years ago. Further, the ALSP market is projected to grow by 25% over the next few years.
These are among the key findings in a new report, “Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity,” published today by Thomson Reuters Legal Executive Institute, The Center on Ethics and the Legal Profession at Georgetown Law, Saïd Business School at the University of Oxford and U.K. research firm, Acritas.
The report demonstrated that the two main users of ALSPs — law firms and corporate legal departments — both have increased their employment of ALSPs as well as expanded how they use them. For example, corporate use of ALSPs has grown at a faster rate than predicted in the survey two years ago, and legal services such as litigation and investigative support, document review, and legal research are among the top uses. Overall, 74% of corporations surveyed said they use ALSPs in at least one service category, a jump from 60% of corporations that reported that level of use two years ago.
You can download a copy of “Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity” here.
Among law firms, use has become even more commonplace with 87% of large law firms, 81% of midsize law firms, and 57% of small firms surveyed saying they are using ALSPs in at least one service category. Among all law firms, e-discovery, litigation and investigation support, and legal research were the most common uses of ALSPs reported.
Further, this same type of growth is being seen among law firms and corporate legal departments in the U.K. & Canada, although utilization does lag slightly behind the U.S.
The report also showed that among ALSPs themselves, the Big Four accounting and auditing firms are distinguishing themselves as a category unto themselves, and one that is increasingly going head-to-head with law firms for client business. In fact, the report notes that 23% of large law firms reported that they had lost client business that the firm had expected to win to one of the Big Four.
“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, Saïd Business School at the University of Oxford, and one of the co-authors of the report. “ALSPs are expanding the available range of services by combining talent and technology to deliver legal services in modes that best suit their clients’ needs.”