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June 10, 2019 business of law

Alternate Legal Service Providers: A Booming Market

Once considered niche players in the legal sector, ALSPs now make up a $10 billion market

By Daniel S. Wittenberg

Alternative legal service providers (ALSPs), once considered niche players in the legal sector, now make up a $10 billion market. Greater-than-expected use by law firms and corporations has driven the rapid growth of ALSPs for the past two years, according to the recently released report Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity.

A la carte legal services

A la carte legal services

Photo illustration by Elmarie Jara | Getty Images

Of the corporations surveyed, 74 percent are now using ALSPs either directly or through outside law firms. Of the large law firms surveyed, 87 percent use ALSPs, and use among firms of all sizes is increasingly prevalent. “The pace of change in the legal industry continues to accelerate, and alternative legal service providers are playing a large role in driving that change,” said report coauthor James W. Jones, of Georgetown University Law Center, in a press release.

The Business Opportunity

While law firms continued to focus on the practice of law, the business of law expanded beyond those boundaries. The rise of ALSPs is attributed to unmet legal consumer demand for value-driven, cost-effective, and interdisciplinary solutions to customer challenges. According to Future Trends for Legal Services, a study commissioned by accounting services firm Deloitte, major purchasers of legal services changed their approach to buying services across the globe. Deloitte’s report states that “[i]n-house teams are looking for tech savvy, integrated service providers who offer more than traditional legal advice.”

Moreover, client expectations of legal service providers are evolving. The Deloitte report found that traditional legal service providers were not meeting expectations in a few key areas, including (i) integrated, cross-border, and cross-disciplinary advice; (ii) use of technology; (iii) global regulatory and compliance advice; (iv) fixed fees; (v) value pricing; and (vi) price transparency. Deloitte also found demand for ALSPs to be increasing—more than half of the responding legal service purchasers indicated a willingness to procure legal services from a nontraditional law firm that offers a range of professional services.

The rise of ALSPs is attributed to unmet legal consumer demand for value-driven, cost-effective, and interdisciplinary solutions to customer challenges.

Scope of the ALSP Market

ALSPs perform many tasks that are traditionally within the province of law firms, with the most common being litigation and investigation support, legal research, document review, e-discovery, and regulatory risk and compliance. ALSPs fall into five categories:

  1. Accounting and audit firms. The players in this arena are principally the Big Four (Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers). Estimated revenue for this market totals $1.2 billion. This is an increase of approximately 30 percent from just two years ago, according to Alternative Legal Service Providers, Understanding the Growth and Benefits of These New Legal Providers [subscription required].
  2. Captive legal process outsourcers (LPOs). Captive LPOs are law firms’ wholly owned captive legal services units that are frequently located in lower cost areas. Key players in this arena are WilmerHale, Orrick, and Reed Smith, among others. The estimated revenue for this category is approximately $300 million.
  3. Independent LPOs. Independent LPOs perform legal work on behalf of corporate legal departments and law firms, usually through discrete engagements. Key players include Consilio, Integreon, and Mindcrest. Estimated revenue in this category is $7.4 billion, reportedly an increase of approximately $1 billion from two years ago.
  4. Managed legal services. Managed service providers contract for all or part of the function of an in-house legal team, usually through ongoing work. Representative businesses in this area include Elevate, Thomson Reuters, and United Lex. Estimated revenue for this segment is approximately $700 million.
  5. Contract and staffing services. Staffing services provide lawyers on a temporary basis to companies and law firms. Significant players in this category include Special Counsel, Axiom, and LOD. Estimated revenue for these businesses is approximately $1.1 billion, an increase of almost $200 million during the past two years.

The Big Four

Law firms will continue to face competition from ALSPs as they continue to grow and cultivate clients and work previously handled by traditional firms. The biggest competition, however, comes from the Big Four, which have the scale to disrupt the legal services market and to compete globally. Twenty percent of large law firms say they have competed against one of these businesses within the past year, and 23 percent indicated a client used one of the Big Four for work it had expected to win. As certain types of legal services commoditize, such as due diligence and tax, the Big Four have quickly capitalized to secure work traditionally performed by law firms. According to 2018 Legal Industry Outlook, the three largest Big Four entities combined have global revenue exceeding the aggregate of all the Global 100 law firms. Big Four spending on technology and training each year surpasses the revenue of any law firm. Moreover, the Big Four are skilled at multi-point client relationships and offering a variety of solutions to clients’ business needs.

ALSP Use by the Numbers

Within the last two years, corporate legal department use of ALSPs doubled in service categories such as litigation and investigative support, document review, and legal research. Thirty-eight percent use ALSPs for litigation and investigation support. Thirty-two percent used ALSPs for legal research. It is expected that by 2021, the largest ALSP use by corporations will be for regulatory risk and compliance.

ALSP use by law firms also continues to grow. According to a 2019 Thomson Reuters report, 65 percent of responding large law firms use these entities for e-discovery. Interestingly, half of the responding large firms use ALSPs for legal research. More than half of the large firms also use ALSPs for non-legal research, as well as litigation and investigation support. Finally, 21 percent of large law firms reported using ALSPs for specialized legal services provided by licensed practitioners in areas, such as regulatory and risk compliance services.

Medium and small firms also use ALSPs for a variety of functions. Mid-sized firms’ greatest reported use of ALSPs is for e-discovery, followed by legal research. Twenty-five percent of mid-sized firms hired ALSPs for regulatory and risk compliance services. Small firms reported using ASLPs mainly for legal research, followed by litigation and investigation support. Small firms’ hiring of ASLPs for e-discovery more than quadrupled since 2017.

As the complexity of services and tasks required of the legal industry continues to increase, so will the outlook for the continued growth of ALSPs. “In a short period of time, ALSPs have evolved from a relatively unknown phenomenon into a fast-growing segment that is an integral part of the legal services industry,” said Mari Sako of Oxford University, coauthor of the Alternative Legal Service Providers 2019, reports in a press release. According to coauthor Jones, “ALSPs offer a variety of business models that can provide new levels of speed, efficiency, flexibility, and cost-effectiveness. Not only are ALSPs here to stay, but their reach and usage will likely continue to expand rapidly.”


Daniel S. Wittenberg is an associate editor for Litigation News.


  • James W. Jones & Mari Sako, Alternative Legal Service Providers, Understanding the Growth and Benefits of These New Legal Providers (Thomson Reuters Jan. 31, 2017).
  • James W. Jones & Mari Sako, Alternative Legal Service Providers 2019: Fast Growth, Expanding Use and Increasing Opportunity (Thomson Reuters Jan. 29, 2019).
  • Jeff McCoy, Alternative Legal Service Provider Use by Corporations and Law Firms Exceeding Projections, Creating a $10 Billion Market (Thomson Reuters Jan. 29, 2019).
  • John Corey & Kevin Iredell, 2018 Legal Industry Outlook (Greentarget Jan. 23, 2018).
  • Future Trends for Legal Services (Deloitte June 2016).

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