Continued Growth of Alternative Legal Services – FLEX by Fenwick

In an ever-evolving landscape, reliance on alternative legal service providers (ALSPs) is transforming the legal sector as more than half (57%) of in-house legal departments now engage ALSPs for services ranging from interim legal counsel to eDiscovery and litigation support. ALSPs like FLEX by Fenwick are crucial players in providing high quality, experienced in-house legal support. Even law firms with their own alternative legal services frequently use independent ALSPs for cost efficiency and managing high volume tasks. Research shows that 45% of in-house law departments that create panels of preferred law firms include at least one law-firm affiliated ALSP.

The latest edition of the Alternative Legal Service Providers Report from the Thomson Reuters Institute highlights a divide in the market. One side actively incorporates ALSPs to optimize their work while the other side has not yet explored alternative service models and shows minimal initiative in this direction. Forward-looking firms are continually broadening their use of ALSPs as sophisticated clients are demanding efficiencies such as those provided by ALSPs.

In addition to efficiency and cost effectiveness, ALSPs provide specialized services such as legal operations consulting, day to day commercial needs, product counseling, as well as large-scale projects. This specialized expertise is often provided by interim in-house counsel like FLEX attorneys.

As is found in several industries, generative AI (GenAI) is emerging as a vital factor in this complex ecosystem. For short-term, a number of law firms and in-house legal departments believe that ALSPs with strong GenAI capabilities will reduce cost and streamline processes. The long-term impact is less clear, with law firms and legal departments anticipating an increase in their own use of GenAI tools.

Key Findings from the recent Alternative Legal Services Providers Report from the Thomson Reuters Institute:

1. The ALSP industry is thriving with an estimated market value of $28.5 billion in 2023, and a significant compound annual growth rate of 18% from 2021 to 2023.
2. Both law firms and in-house law departments acknowledge the value of ALSPs for their specialized skills, cost-efficiency, and high-volume task management capability.
3. There's an emerging split in how law firms view ALSPs: while some firms are increasing their usage of ALSPs, others stay committed to traditional models.
4. In-house law departments are set to increase investments in ALSPs, specifically in areas like legal managed services, e-discovery, and initial contract review.
5. GenAI is projected to significantly augment ALSP offerings by simplifying processes and reducing costs, thereby giving ALSPs a substantial competitive edge in the future.

The ALSP landscape continues to expand. Reach out to FLEX to discuss how it can provide flexible, cost-effective legal services to help meet evolving in-house legal demands.