Thomson Reuters’ highly anticipated Alternative Legal Services Providers 2023 Report reported a transformation in the legal industry. It revealed a marked shift that many in the alternative legal service provider space already knew.
Let’s look at some of the Report’s key findings:
- The ALSP market totaled approximately $20.6 billion by the end of the 2021 financial year, an increase of 45% since Thomson Reuters’ preceding report;
- The ALSP market has grown 145% since 2015;
- Thomson Reuters divides ALSP’s into three categories: independents, law firm captives and The Big Four;
- ALSPs are moving up the complexity chain and are well-positioned to expand into new business lines such as technology consultive services; and
- The lines separating law firms, corporate legal teams, ALSP’s, tech, and software firms are blurring.
These statistics are sizable, even more so for an industry that has only seen serious growth in the past decade.
LawFlex is seeing new industries, beyond the traditional law firm or legal department, turn to ALSPs in increasing numbers. Some emerging users include:
- B2C legal services. Rather than large organisation’s B2C legal companies’ primary revenue source is derived from individuals and SME’s;
- In-house legal teams that perform ALSP-type services; and
- The growing number of pure play technology and software companies that recruit the services of an ALSP.
The rise of law’s “People Sector”
The online legal services market can be segmented on the basis of type; B2B and B2C legal services; on the basis of segments; law firms and corporate legal departments and on the basis of firm size; small, mid-size and large.
Contrary to popular belief, the lion’s share of legal innovation is not coming from large traditional firms, it is coming from B2C legal services, the “people law” segment. If you’re looking for the canaries in law’s coal mine, it’s ALSPs and the “people law” segment.
“People law” or B2C providers ensure millions of individuals and small businesses can access on demand legal services. For many individuals and SME’s, the “lawyer-lite” delivery model is more accessible and affordable than the traditional legal model. B2C tools include commoditised legal solutions that assist individuals with interpreting the law and accessing the justice system. Providers such as LegalZoom, Rocket Lawyer and DoNotPay leverage legal expertise by pairing it with a technology platform and data insight. Such providers have used technology, data and multidisciplinary expertise to transform legal service delivery as we know it.
So, what can we expect from the future?
The future of the legal market will be platform-based. With the client at the centre of legal delivery, platforms will be built and developed to create a legal environment that is far more tech-enabled, data-backed and fit-for-purpose. Platform-based legal delivery enables people and organisations to interact and work within a basic collective framework conducive to address multiple use cases and common challenges.
It goes without saying that generative artificial intelligence is changing the way lawyers ‘law’. Whether it is automating legal research or E-Discovery, questioning how AI can shape and transform the legal profession is on the tip of the legal community’s tongue. However, it is important to also recognise that the legal function will play a critical role in the regulation of AI, creating guardrails to ensure that its contribution to the legal community and beyond is by and large, positive. The development and increased sophistication of AI have created new areas of law for lawyers to shape and develop. This will present both a challenge and opportunity for the legal function.
The future of the online legal services market looks bright. We should expect to see growth due to the rising gig economy, increasing digital enablement and growing demand for transdisciplinary practice areas.
Having said that, if we have learnt anything in the converging worlds of technology and law, it is that nothing is for certain.
If you wish to review the full Thomson Reuters report, click here.