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Thomson Reuters

ALSP sector sees strong revenue growth and slips into the mainstream of legal services—report

Image credit: Reuters/Toby Melville

The Alternative Legal Services Provider (ALSP) sector has generated dramatic growth in recent years, with total revenues increasing from $8.4 billion in 2015 to around $10.7 billion in 2017, according to the findings of a major report.

The report, Alternative Legal Services Providers 2019, published by Thomson Reuters Legal Executive Institute, in partnership with Georgetown University Law’s Center on Ethics and the Legal Profession, University of Oxford Saïd Business School, and research firm Acritas, assesses the impact of ALSPs across the legal services industry.

The publication of the report is the second time these institutions have partnered on a comprehensive study of ALSPs, after the first study—conducted two years ago—identified it is as young industry carving out an important niche market.

However, the latest study found that ALSPs have gained in maturity over the last two years, with corporations and law firms increasingly engaging with them, adding that “the legal industry now recognises the ALSP market as better defined, quickly growing, and broadly adopted”.

In conducting the research, the four organisations analysed the survey responses about the use of ALSPs from 517 decision-makers at law firms and in corporate legal departments from across the UK, US and Canada. To augment the research, interviews with 35 executives at ALSPs were also conducted.

According to the report, ALSPs are delivering many of the services traditionally done by law firms including: litigation and investigation support; legal research; document review; eDiscovery; and, regulatory risk and compliance. Though, different to law firms in structure, ALSP business models vary—from small startups to established organisations, including the Big Four accounting firms.

In addition to a strong uptick in revenue growth, the report states that the increase in corporations’ use of ALSPs has outstripped previous expectations. Twenty-five percent of corporations declared that they plan to increase their spending on ALSPs, compared to only five percent who expect spending to decrease.

Meanwhile, it also found that some law firms are actively experimenting with ALSP strategies. Large law firms are the most likely to work with multiple ALSPs to better provide an “umbrella of legal solutions to clients”. Conversely, the report also revealed that about one-third of law firms say they plan to establish their own ALSP affiliate within the next five years—with the affiliates predicted to take a variety of forms, the most common being an interdisciplinary practice offering a mix of services.

Further, as with corporations, law firms declared that a key benefit of using ALSPs lies in their specialised expertise—particularly litigation and investigation support, where specialised expertise is specifically cited as a benefit by 74 percent of law firms.

To download and read the report in full, click here.

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