Alternative legal services providers (ALSPs) now make up a $20.6 billion segment of the legal market and growth is accelerating dramatically, according to the The Alternative Legal Services Providers 2023 Report is being released today. The report is issued biennially by the Thomson Reuters Institute; the Center on Ethics and the Legal Profession at Georgetown Law; and the Saïd Business School, University of Oxford.
According to James W. Jones, a senior fellow at the Center on Ethics and the Legal Profession at Georgetown Law, “Both law firms and in-house counsel are increasingly seeing the value of alternative legal services providers…Meanwhile, ALSPs are expanding the services they offer to law firms and legal departments by providing specialized services, improving cost efficiency, and delivering greater flexibility in headcount.”
Here are some key takeaways:
- Technology Consulting One of the Fastest-Growing Use Cases For law firms,
- For corporate legal departments, regulatory risk & compliance and legal research remain the top two use cases, with about half of corporations using ALSPs for those services
- ALSPs experienced a compounded annual growth rate (CAGR) of 20% from 2019-2021, a significant jump from the 15% CAGR from 20
- ALSPs are finding new ways to serve both law firms and corporate legal departments, and the boundaries between all three are becoming increasingly blurred.
- Independent ALSPs are the largest segment, making up 87% of the ALSP market.
- Captive ALSPs owned by law firms are the smallest part of the market, they are also the fastest-growing – up nearly six-fold since 2015.
- ALSP services from the Big Four consulting firms account for $1.5 billion of the market, had the slowest growth at 5% CAGR.
- Among corporations that already use ALSPs, 21% plan to increase their ALSP spend, while a roughly equal percentage (22%) are either decreasing spend or are unsure of their spending plans.
- A growing percentage of law firms of all sizes expect to either maintain or increase their ALSP spend. Among the largest law firms, 26% plan to increase spending on ALSPs, while only 3% foresee decreased use.
Download the Alternative Legal Services Providers 2023 Report here.
