ALSPs Are About Specialized Expertise, Not Just Costs, Says New Study

Topics: Alternative Legal Service Providers, Corporate Legal, ediscovery, Efficiency, Law Firm Profitability, Law Firms, Leadership, Legal Innovation, Surveys, Thomson Reuters


NEW YORK — The emergence of alternative legal service providers (ALSPs) is having a notable — and growing — impact on the legal market. The implications for law firms and corporations, and where the ALSP market is heading, was the subject of a comprehensive new study of ALSPs done by 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.

The report was released on Tuesday at a panel at Legal Tech New York comprised of David Curle, Director of Strategic Competitive Intelligence for Thomson Reuters Legal; Alma Asay, Founder & CEO of Allegory Law; and Andrew D. Gladstein, Associate at Schulte Roth & Zabel.

The study surveyed more than 800 law firms and corporations and found that the growing use of ALSPs is largely about expertise, not low cost, as is often assumed. In addition, ALSPs are about technology and not just labor arbitrage, and for a lot of uses beyond e-discovery.

The legal services industry is seeing a growing variety of non-firm legal service suppliers, including legal process outsourcing (LPO), contract lawyers, e-discovery and document review services, legal managed service providers, contract lawyers, and even such non-traditional providers as audit and accounting firms. Together, these non-traditional providers account for roughly $8.4 billion in legal services each year, Curle estimated. While still a fraction of the $700 billion total global spend on legal services, it represents a fast-growing segment of the market, and one that is significantly influencing how legal services are being delivered.

ALSP Report

According to the report, more than half of law firms and corporations are already using ALSPs. An additional 10% to 20% are planning on using ALSPs within the next year. One of the more intriguing findings is corporations, in particular, are using ALSPs for a lot more than e-discovery and document review. Law departments are most likely to use ALSPs in specialized areas such as regulatory risk & compliance services, specialized legal advice, legal research, and IP management. Law firms, meanwhile, are more likely to use ALSPs for e-discovery, document review and litigation support and investigation.

The panel also discussed both the trajectory and potential growth in ALSPs. In many respects, ALSPs may be viewed as complementary, rather than competitive to firms, helping them be more efficient and competitive.

The ALSP Report can be downloaded here.