ALSP Survey: How the Industry is Changing Buyers’ Perceptions

Topics: Alternative Legal Service Providers, Business Development & Marketing Blog Posts, Law Firm Profitability, Law Firms, Legal Innovation, Midsize Law Firms Blog Posts, Peer Monitor, Thomson Reuters

law firms

It’s clear that today’s legal services industry is an unshakable buyers’ market, and no longer are law firms the only option for clients to go to for their legal work. Buyers of legal services literally have a slate of options that is bigger, more tech-savvy and less expensive than ever before.

But what about that market of alternative legal service providers (ALSPs) itself? How are clients using these providers? How are law firms enlisting them to meet client needs? What is driving usage and exactly what services are in demand?

Late last month, Thomson Reuters’ Legal Executive Institute, The Center for the Study of the Legal Profession at Georgetown University Law Center and the Saïd Business School at the University of Oxford released the 2017 Global Alternative Legal Service Providers Survey to seek to answer some of these questions. The research was conducted in two phases, an extensive online survey of more than 800 law firms and corporations and a set of 38 in-depth interviews.

Three Important Findings

While the final research report is full of insights on the legal industry’s use of ALSPs, we discovered three big findings that show how these companies have firmly taken root in the legal ecosystem:

  1. The decision to use an ALSP is no longer only about cost, it’s about access to specialized expertise. Because a large segment of this market involves the use of offshore labor that has a lower cost, cost savings has always been assumed to be the primary driver for buyers. If that was once the case, it’s no longer true. Certainly, in more routine services such as document review, cost is still a big driver — 85% of our respondents cited costs as the main driver when hiring document review firms. But corporate buyers are looking for expertise rather than strict cost savings — of the top four services for which corporations engage ALSPs, access to expertise is the primary driver, not cost.
  2. There is increasing recognition that ALSPs represent opportunity for law firms, not competition. Law firms are under pressure to cut costs, to be sure. And ALSPs give them a path to do just that in many cases — more than 55% of our respondents said that ALSPs can help them mitigate price pressure from clients. In addition, however, 41% said that ALSPs can help them scale and expand businesses. For law firms, the ALSP services most often used are ediscovery (with 34% using) and document review (31%). In our interviews, many firm leaders told us that they see partnerships with ALSPs as a way to disaggregate services and build out their own array of offerings under a “general contractor” model, leveraging ALSPs to help provide various service components.
  3. Future growth is likely to come from the application of increasingly sophisticated Artificial Intelligence technology. Many ALSPs work with large data sets and large-scale, repeatable processes. They are already incorporating technology into those workflows, particularly in ediscovery, but also in growing areas such as contract management and risk & compliance. In our interviews, when we asked what the future of ALSPs might entail, many respondents mentioned AI as a likely future direction. They see ALSPs providing the resources, process improvements and technological muscle that they might not have in their own organizations.

Download a copy of the 2017 Global Alternative Legal Service Providers Survey here.