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Alternative legal service providers continue to make significant inroads in the legal industry, growing their global market share to $13.9 billion by the end of 2019, according to a new study released Wednesday.
The market share for the providers known as ALSPs was about $3.2 billion greater than at the end of 2017, according to the 2021 Alternative Legal Service Providers report from the Thomson Reuters Institute, the Center on Ethics and the Legal Profession at the Georgetown University Law Center and the Saïd Business School at the University of Oxford.
Additionally, the third biennial survey of the ALSP market found that 79% of U.S. law firms and 71% of U.S. corporations used their services in 2020. The law firm usage is seven percentage points higher than 2018; the corporation usage is up one percentage point.
“The ALSP market is rapidly maturing to the point where it is becoming a mainstream legal option and less of an ‘alternative,’ paving the way for additional growth,” said Mike Abbott, Thomson Reuters’ vice president of market insights and thought leadership.
The top three reasons U.S. law firms turn to ALSPs is for electronic discovery, legal research and litigation/investigation support, according to the report. However, the report found law firms are also increasingly turning to ALSPs for consulting on legal technologies, with 30% percent of U.S. firms saying they have done so.
Meanwhile, the fastest growth in the industry has been among ALSPs formed by law firms as captive subsidiaries. These ALSPs grew about 30% a year from 2017 to 2019, according to the report.
Independent ALSPs continue to comprise by far the largest share of the market, and their compound annual growth rate was 15% from 2017 to 2019. ALSP services provided by the Big Four accounting firms had a compound growth rate of 8% a year during that same time period, the report found.
With COVID-19 having prompted law firms to embrace technology to a greater degree and find new ways to cut costs, more growth in the ALSP market is predicted.
“If anything, we’re just at the start of a steeper growth trajectory,” the ALSP report says.