legal departments
legal departments

legal departments

LEGAL

Clients Look to ALSPs, Flexible Lawyering: ‘Traditional Service From Law Firms Doesn’t Cut It Anymore’

In the 16 years since he founded Lawyers on Demand, Simon Harper has seen several waves of change across the legal industry as general counsel have grown more comfortable working with alternative legal service providers. The past six months have represented the latest significant shift. 

On the heels of the pandemic, Harper said, “We’re seeing demand driven by something different. Legal teams are thinking more strategically about how they source what they’re doing, less about pure growth in head count and more about how to efficiently get their legal work done.”

In-House Insights Law.com International LogoCoupled with the vanishing of secondments, a rise in the quality of attorneys available through services such as Lawyers on Demand and a need for increased adaptability inside legal departments, the result is more work shifting from law firms to alternative providers, according to general counsel and industry observers.

For William Bowes, general counsel of Condé Nast, the rise in flexible lawyering has been driven in recent years by the growing need for flexibility elsewhere within a legal department. In-house attorneys are being asked to quickly learn and apply new skills, respond to rapidly changing regulations and adapt to flexible working conditions.

“Because we need to operate in a quicker way—a different way—the demands on us are evolving rapidly and the traditional service you’d get from a law firm just doesn’t cut it anymore,” Bowes said. “The traditional service providers are thinking in traditional ways, and they’re always inevitably behind the way that people in-house are being asked to work.”

That makes it all the more valuable to have access to people thinking in new ways about legal service delivery, automation and cost models, he said. When he began working with Lawyers on Demand about a decade ago, Bowes wanted an ALSP to allow him to escape from

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LEGAL

Growth of alternative legal service providers accelerating

Sako: The market will continue to grow robustly

The use of alternative legal services providers (ALSPs) has accelerated in the last two years, with the global market for their services topping $20bn (£16bn), new research has revealed.

It also found that UK law firms have faced less competition from the Big Four accountants than their counterparts elsewhere.

The biennial report on the ALSP market is produced by the Thomson Reuters Institute, the Center on Ethics and the Legal Profession at Georgetown Law in the US, and the Saïd Business School at Oxford University.

The sample of 407 law firms and 242 in-house teams was skewed towards a US demographic, but decision-makers in the UK, EU, Canada and Australia also took part.

At $20.6bn, the estimated size of the market is 45% larger than two years previously, when the 2021 report put it at $13.9bn, which itself was a 30% increase on the $10.7bn figure of 2019.

This was “clear evidence of the acceleration in adoption of these services”, particularly in the US, said the latest report, with ALSPs finding new ways to serve both law firms and in-house legal departments and the boundaries between all three “becoming increasingly blurred”.

But it was also partly due to the entrance of new players into the market, as well as the reclassification and inclusion of software companies that now offer a more comprehensive legal service.

Independent ALSPs make up 87% of the ALSP market and, while captive ALSPs owned by law firms were the smallest part of the market ($1bn), they were also the fastest growing. ALSP services from the Big Four accounted for $1.5bn, growing at 5% a year.

A quarter of the largest law firms said they planned to increase their spending on ALSPs, while only 3% saw it going in

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LEGAL

Alternative legal services providers growth is dramatically accelerating, making up $20 billion of the legal market

  • Technology consulting is one of the fastest-growing use cases
  • Law firm captives are the fastest-growing segment, Big Four are the slowest-growing

Thomson Reuters, January 31, 2023, TORONTO – 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 Alternative Legal Services Providers 2023 Report. 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.

ALSPs experienced a compounded annual growth rate (CAGR) of 20% from 2019-2021, a significant jump from the 15% CAGR from 2017-2019.

The report states that 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. While 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, growing at 5 %CAGR.

“Both law firms and in-house counsel are increasingly seeing the value of alternative legal service providers,” said James W. Jones, a senior fellow at the Center on Ethics and the Legal Profession at Georgetown Law. “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.”

More Growth Ahead

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% forees decrease use.

For corporate legal departments,

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LEGAL

Alternative legal services market hits $20.6 billion – report

(Reuters) – As the market for alternative legal services continues to grow, providers owned by traditional law firms remain the fastest-growing segment, according to a new report released Tuesday.

The total market reached $20.6 billion by the end of the 2021 fiscal year, up 45% from two years prior, according to the biennial report by the Thomson Reuters Institute, the Center of Ethics and the Legal Profession at Georgetown Law and the Saïd Business School of the University of Oxford.

The report on alternative legal services providers (ALSPs) includes independent companies, the Big Four professional services firms and ventures created within law firms — so-called “captive” providers.

Law firm captives make up the smallest part of the ALSP market with about $1 billion in revenues, compared to independent providers which generate about $18 billion and the Big Four which have reached $1.5 billion, the report said.

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But as the fastest-growing segment, the captives, which include firm business units, technology incubators and firm-owned independent providers, have grown 117% since 2019 and 589% since 2015.

Large law firms including Cleary Gottlieb Steen & Hamilton and Norton Rose Fulbright have recently created new alternative legal ventures.

The report said the ALSP market has hit new heights as law firms and corporate legal departments continue to expand their use.

“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,” James Jones, a senior fellow at the Center on Ethics and the Legal Profession at Georgetown Law, said in a statement.

The report is based on a survey of about 650 respondents from law firms and corporate legal departments based in the US, UK, Canada, EU and Australia. The Thomson Reuters Institute

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