ALSP Legal Sector definitions for Dummies

by | Aug 17, 2023 | Insights

Legal Sector definitions

The realm of Alternative Legal Service Providers (ALSP) continues to demonstrate its dynamic nature within the broader legal ecosystem.
It is experiencing rapid growth, creating innovative paths to cater both traditional law firms and corporate law departments.

According to Thomas Reuters, the ALSP’s encompass a $20.6 billion USD legal market. There is a substantial rise in awareness in each subsequent year with a reported growth rate of 15% between 2017 to 2019. The value of ALSP’s is becoming evident to law firms and in-house legal departments as these providers continuously adjust and broaden their range of services.
ALSP’s continue to entrench the legal sector as they aid any size law firm and in-house team in retaining clients through their specialized knowledge in project management, technology, and consulting.

Within the ALSP legal sector there are ALSP’s, LPO’s, LSO’s, and flexible legal staffing share commonalities while also presenting distinct qualities. All these entities offer solutions that streamline legal operations, optimize efficiency, and provide cost-effective options. However, they differ in their specific focus and operational models.
ALSP’s encompass all of these terms, while LPO’s primarily focus on outsourcing specific legal tasks. LSO’s specialize in supporting law firms with administrative and operational functions. Flexible legal staffing entails temporary placement to address fluctuating workloads.

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Dictionary

(1) ALSP; Alternative Legal Services Providers

Overview: A legal service provider with an alternative structure to traditional law firms, operating more like a business. ALSP’s employ qualified lawyers but with no partner-structure, more aligned, and highly cost-efficient. ALSP’s rely on legal ops: business analysts, project managers and legal technology. Also, ALSP is a catch all phrase for different operating models.

When to Use: more cost effective, efficient, and usually more technologically advanced for low risk and low complexity work can be outsourced to an ALSP.

Capabilities:

  • Litigation
  • Investigation support
  • Intellectual property
  • Due diligence
  • Legal project management
  • Risk mitigation
  • External and internal audits

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(2) LPO; Legal Process Outsourcing

Overview: Legal process outsourcing is the contracting out of law-related services to a third-party provider. There are many LPO’s that provide ranging services. Some LPO’s simply carry out the work on a law firms’ behalf while others contribute additional support. Usually, the tasks do not require a high level of legal experience and training.

When to Use: frees-up time during a busy period cost-effectively, provides specialist expertise that may not be in-house, access to lawyers in various countries for quick market expansion. It is important to choose a reputable LPO that is practiced in the particular law firm task.

Capabilities:

  • Investigation support
  • project and contract management
  • document drafting and reviewing
  • patent applications
  • drafting pleading

Example Companies:

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(3) Captive ALSP’s; Captive Alternate Legal Service Providers

Overview: Captive ALSP’s function the same as regular ALSP’s but are owned by law firms. Specifically, they are law firm subsidiaries offering alternative legal services. Thus, keeping the services in-house prevents outside encroachment. However, they remain separate entities with independent leadership and financials.

When to Use: Equivalent function to external ALSP’s but preventing outside encroachment and fending off ALSP rivals providing legal services at significantly reduced expenses.

Capabilities:

  • eDiscovery
  • software development
  • product development
  • contract review
  • lease abstraction
  • M&A due diligence
  • Litigation support
  • Investigation support
  • Contract review

Example Companies:

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(4) LSO; Legal Service Outsourcing

Overview: Legal service outsourcing, like legal process outsourcing, supports more sophisticated legal practice. The work requires more legal skills, training, and experience. LSO’s are seen as the “high end” of LPO’s.

When to Use: Comparable role as legal process outsourcing (LPO) firms, maintaining cost-effectiveness while elevating quality control and capabilities

Capabilities:

  • Due diligence
  • Compliance
  • Document review
  • Specialized contract management

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(5) Flexible Legal Staffing

Overview: Flexible legal staffing is seen as the crown jewel of ALSP’s, providing a staffing model that allows businesses and firms to adjust their workforce in response to changes in demand. By adjusting the legal team according to demand, law firms avoid idle staff and extra costs of full-time employees. When deciding upon flexible legal staffing, law firms look towards independent law companies, recruitment companies, and consultancy services.

When to Use: When law firms need to access skills and bring on board interim lawyers with prior experience and legal know-how within a shorter time frame.

Capabilities:

  • Contract work
  • Manage workflow
  • Cover legal vacancies
  • Specialist knowledge
  • Support transactions
  • Regulatory projects
  • Disputes
  • Interim general counsel
  • Paralegal support

Example Companies:

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(6) ABS; Alternative Business Structure

Overview: an entity that provides legal services and has nonlawyer ownership, managers, or decision-makers in a law firm. Nonlawyers may hold economic ownership, while exclusive legal services are provided solely by lawyers. A law firm can be ABS as well as any law company a part of the ALSP sector.

When to Use: Allows firms to involve non-lawyers with outside experience and skills through investment, partner, or director.

Capabilities:

  • Expand legal services
  • Business strategy
  • Integrate technology
  • Business models and service
  • Ownership support

Example Companies:

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