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 that was discussed at a panel today at Legal Tech New York.

David Curle, Director, Market Intelligence for the legal business of Thomson Reuters; Alma Asay, Founder & CEO, Allegory Law; David Holmes, Executive Director, Assistant General Counsel, JP Morgan Chase & Co.; and Andrew D. Gladstein, Associate, Schulte Roth & Zabel LLP, discussed  the findings of the report in light of their own experiences working with ALSPs.  The study was conducted by Thomson Reuters Legal Executive Institute, The Center for the Study of the Legal Profession at Georgetown University Law Center and Saïd Business School at the University of Oxford.

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-enabled services that add tremendous value and not just labor arbitrage. And ALSPs are being engaged 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.   This does not include administrative services such as HR, general accounting, etc.

Together, Curle estimated, these non-traditional providers account for roughly $8.4 billion in legal services each year.  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.

According to the report, more than half of law firms and corporations are already using ALSPs.  An additional 10-20 percent 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.

For firms and corporations that are not currently using ALSPs, quality of service and security are the primary concerns expressed.  However, the panel suggested that may be more of an issue of educating the market and getting potential customers more familiar with and gaining experience using ALSPs, rather than necessarily reflecting insurmountable barriers.

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

The report on ALSPs can be downloaded here:  http://legalsolutions.thomsonreuters.com/law-products/solutions/legal-outsourcing-services/outsourcing-insights/alternative-legal-service-provider-study-2017?cid=70113000000w4IC&chl=pr