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