What’s On the Horizon for ALSPs: Emerging Sector Continues to Boom

by | Jul 28, 2022 | Insights


Alternative Legal Service Providers, or ALSPs, are a burgeoning sector in legal operations, streamlining processes that typically consume both time and financial resources through advanced technology, expert professionals, and creative solutions to common obstacles in law.

Services provided by ALSPs can be utilized by law firms, in-house counsels, or any other organization seeking assistance within the legal field. Whether searching for temporary support in a niche subject, striving to streamline standard legal processes, or looking to minimize in-house workload, clients will notice improved efficiency, as well as reduced spending due to the contract-based, short-term model of most ALSP structures.

As much as ALSPs are becoming a respected resource, there is still a transition into being accepted as a commonplace practice rather than a sporadically used solution. Certain inhibitions due to the relative unfamiliarity of the industry pose as an obstacle in this conceptual reformation. However, over the past two years, two major concerns inhibiting companies from hiring ALSP have subsided, these being security of data and quality of work.

While these reservations are understandable, the expert ability, reduced price, and increased efficiency of ALSPs greatly outweighs potential doubts. By lessening workload for attorneys, ALSPs contribute to a more smoothly functioning workplace and- by extension-improve their client’s success rate. As these benefits become more widely recognized, the ALSP industry continues to expand.

As of July 2022, almost two-thirds of the respondents to the Bloomberg Law 2022 Legal Ops & Tech Survey outsource legal work to ALSPs. Despite the high percentage represented in this static, Bloomberg also discovered that of those hiring ALSPs, only send 1-19% of their workload is being outsourced. What causes this stark difference?

This discrepancy can be explained by the period of adjustment currently being faced by a large majority of firms and business. Following Covid-19, a fundamental shift in operations swept across the legal sector as there was a newly emerging need to consolidate processes and delegate work inwards.
While some counsels had already been utilizing ALSP, this global shift led to a significant reduction of spending and less outsourcing.

Now, as the economy recuperates and adjusts, there is a burgeoning demand for alternative legal service providers (ALSPs) in order to maximize the efficiency of legal processes. With attributes such as eDiscovery services and legal research assistance, ALSPs are productive at reducing cost – without sacrificing the regular operations of their clients.

Due to the specialized skill sets of many outsourced professionals, alternative legal service providers can be hired to provide expert insight and be utilized as consultants, rather than forcing companies to add an external general counsel to their payroll. ALSPs merge seamlessly into their workplaces, assisting in the most crucial areas, freeing up in-house lawyers to redirect their time more efficiently.
Surges in ALSP implementation can be observed globally. UK-based firm TLT has recently hired the past head of legal services at Eversheds Sutherland’s Konexo (a Chambers & Partners tier one ranked firm). Jonathan Townend is entering Konexo to lead their managed legal services department.

Over the past year, the Konexo ALSP unit has grown by 30% – a direct reflection of the rapid growth across legal outsourcing field. Hiring Townend was a highly strategic move for TLT. Having been named the Law Firm of the Year at the Lawyer Awards 2021, TLT is leading innovation in legal processes, and by bringing in someone with Townend’s ALSP expertise, they are equipping themselves to thrive even in an unpredictable marketplace. Being a LegalTech expert, Townend is particularly familiar with the vitality of automating legal processes and knows how to properly utilize intelligent technology and data to supplement traditional legal operations. Following in suit to TLT, many other firms are moving in the same direction- legal ops outsourcing is booming.

In the past, white-shoe law firms were steadfast in their practices, traditions are rarely reformed. Now, with the indisputable advantages and notable growth of ALSP, things are beginning to shift.

Cleary Gottlieb Steen & Hamilton – a historically prestigious Wall Street law firm, launched their own legal outsourcing division. As of June 2022, ClearyX aims to deliver “tech-driven legal services to clients”. Tech-business units remain scarce across Wall Street, but Cleary Gottlieb will surely lead to a domino effect within their legal community.
Industry experts predict that this innovation will introduce a new age of law firms which heavily incorporate ALSP methods and tech-based legal operations.

Additions of this nature are mutually beneficial to both the firm and their clients. Through the creation of streamlined legal processes via tech-focused services, operations are automized and more user-friendly which reduces cost and time-wasted on both sides.

The growth of ALSP usage across all industries has motivated Cleary Gottlieb to pursue their own solutions. Firms who themselves might be utilizing them, are now in competition with ALSPs, causing this emergence of in-house ALSP departments. ClearyX is an amenity- a tool which separates Cleary Gottlieb from their competition by offering resources aimed at improving efficiency.

The brick-and-mortar firms which once ruled all legal services are undergoing a massive structural revolution. ALSP is continuously proving that its qualities are ideal for anyone seeking efficiency, reduced costs, and streamlined processes.
Its comparative advantages are sending shocks through the legal sector, causing even the most traditional establishments to re-evaluate their legal operations. Combining technological productivity with specially honed legal expertise, ALSP solutions are among the most prevalent in the legal world. (Adipex)

As the industry continues to evolve, expect to see others adopting these methods. Change in such a traditionally grounded field can be difficult to facilitate – ALSPs are overcoming this hurdle and leading a new age of legal innovation.