Results of the Thomson Reuters ALSP study.
(Sitting in a session right now, so, please see the verbatim info. Will do more on this and the ALM data later.)
(Note: Elevate does not accept the term ALSP and prefers the term Law Company, because it does not see itself as an ‘alternative’ to law firms.)
Use of alternative legal service providers (ALSPs) is growing faster than projected and is now more than a $10 billion market as ALSPs rapidly expand their footprint. Large law firms are now more likely to be users of ALSPs than corporate legal departments for many key uses.
Those are among the findings in “Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity,” a new comprehensive report from 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 Acritas.
Key findings of the study:
ALSP Market Has Grown to More Than $10B
ALSPs make up a $10.7 billion market for legal services, compared with $8.4 billion as found in the previous survey two years ago, representing a compounded annual growth rate of 12.9 percent. Looking ahead, ALSPs are projecting a growth rate of 25 percent over the next few years.
Corporate Use Growing Faster Than Predicted
Corporate use of ALSPs is growing at a faster rate than predicted in the survey two years ago, particularly for services such as litigation and investigative support, document review, and even specialized and high-value services such as legal research. In some cases, growth has already met or eclipsed five-year projected growth rates in only two years.
In all, 74 percent of corporations surveyed are now using ALSPs in at least one service category, compared with 60 percent in the survey two years ago. Corporations are using ALSPs both directly and indirectly through outside law firms, with an increasing number of corporations reporting internal pressures to use ALSPs to reduce legal expenditures.
Nine in Ten Large Law Firms Now Using ALSPs
Use of ALSPs is now commonplace among law firms at all levels, which are both partnering with ALSPs and developing in-house ALSP affiliates. Eighty-seven percent of large law firms surveyed say they are using ALSPs in at least one service category. Eighty-one percent of midsize firms and 57 percent of small firms are doing the same.
The most common uses of ALSPs for law firms are e-discovery, litigation and investigation support, and legal research.
More than half of law firms surveyed say that ALSPs can help them expand and scale their business, differentiate their services, and retain client relationships.
Big Four Increasingly Competing With Law Firms
As use of ALSPs grows, law firms are increasingly finding themselves competing with the Big Four consulting firms. Nearly a quarter (23 percent) of large law firms say they have had a client use one of the Big Four for work that the law firm had expected to win.
“Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity” can be downloaded here.