This four-part post’s premise:
A company’s “legal” problems are likely to be — in functional terms — business problems that have a legal aspect.
The traditional impulse to call in a licensed attorney from a law firm or in-house counsel department doesn’t always lead client companies to the most practical choice for their needs.
Hence my introduction of “Alternative Legal Services Providers”, or “ALSPs” — and Georgetown Law Center’s recent, authoritative survey, “Alternative Legal Services Providers 2019” — in this four-part post.
Here are four take-aways:
1. ALSPs have experienced a 12.9% compound annual growth rate in the last two years. Far from being an interesting side note to what attorneys in law firms and in-house departments are doing — ALSPs have begun to comprise a big-dollar sector in their own right.
“… Revenues for alternative legal services providers have grown from $8.4 billion in 2015 to about $10.7 billion in 2017.”
2. During the last 2 years corporations’ use of ALSPs have grown faster than had been predicted. Again, they’re not just an interesting side note to what’s been on offer from the traditional legal profession’s law firm and in-house attorneys.
“Two years ago, corporate users of ALSPs were asked to predict their future use of these same service providers.
“In four of the top five categories – litigation and investigation support; legal research; document review; and e-discovery – use by corporations has already exceeded or approached the usage levels earlier predicted for 2021, and expectations for future use remain high …
“This year, 25 percent of corporations say they plan to increase their spending on ALSPs, compared to only five percent who expect spending to decrease.”
3. Data from small U.S. law firms demonstrate that dramatically increased use of ALSPs is not confined to the either the largest law firms or to corporate giants.
Trends in attitudes to ALSPs among small U.S. law firms:
We are facing increased pressure from corporate clients to use alternative legal services providers
- 2016 0%
- 2018 24%
Using alternative legal services providers can help differentiate the services we provide to clients
- 2016 7%
- 2018 43%
Using alternative legal services providers can help retain client relationships
- 2016 19%
- 2018 35%
Our traditional business model is being challenged by competition from alternative legal services providers
- 2016 22%
- 2018 39%
4. ALSPs offer increasingly higher value services. Their offerings aren’t confined to lower value, simple functions.
“ALSPs are steadily moving up the legal value chain to offer more sophisticated services.
“They have gained substantial market share in litigation and investigation support, and they are even becoming players in the market for legal research, long considered a quintessential law-firm competency.
“The top three uses of ALSPs for corporations are litigation and investigation support, legal research, and regulatory risk and compliance services, with more than one-third of participating corporate legal departments saying they use ALSPs for these purposes.
“For law firms, legal research is the second-most frequent use overall: half of large firms and 37 percent of smaller firms using ALSPs in this way.
“Further, ALSPs themselves see technology as key to continued migration up the value chain. About one-quarter of the 35 ALSPs interviewed for this report say they are currently using AI [artificial intelligence] in their offerings, and another one-third say they are actively evaluating AI’s potential use for their purposes.”
The recent growth of ALSPs in both dollar value of services and adoption by businesses is tangible demonstration that:
Clients Need Legal Services But Not Necessarily Lawyers.