ANALYSIS: ALSPs Are Widely Used but Potentially Underutilized

Almost two-thirds of respondents to Bloomberg Law’s 2022 Legal Ops & Tech Survey revealed that their organizations outsource legal work to alternative legal service providers (ALSPs). But when asked how much of this work is actually being sent to ALSPs, about half of the law firm and in-house lawyer respondents reported outsourcing only 1-19% of their legal work.

While these results indicate that most respondents are using ALSPs, it’s interesting that they’re being used for a relatively small portion of an organization’s workflow, despite the specialized services and cost-saving potential ALSPs offer. And when the data is broken down further by firm versus in-house, firms are outsourcing work at an even lower rate than corporations.

This begs the following questions: Are there barriers preventing ALSPs from breaking further into the market, or are they simply not as useful to some organizations? Did Covid-19 pressure firms to perform more tasks in-house? And will ALSPs become more mainstream following the pandemic or remain a secondary service line?

As someone who previously worked at an ALSP, I observed first-hand how the benefits can outweigh any perceived disadvantages. Concerns about quality, confidentiality, costs, and control are understandable, but ALSPs often allow organizations to leverage specialized expertise, lessen attorneys’ demanding to-do lists, and utilize a more cost-efficient workflow.

While there was a drop in demand for some ALSP services at the start of the pandemic (as there was for legal services in general), there may now be a greater need for legal service providers, as many organizations are striving for more efficient legal operations and perhaps girding for an economic downturn.

As organizations and their clients continue to recover and adapt to the effects of the pandemic, ALSPs can offer certain services such as eDiscovery and legal research at a reduced cost without sacrificing longstanding workflows. ALSPs can also act as consultants in a variety of areas, including on new technologies, helping pave the way for what I predict will be the growth of ALSPs post-pandemic.

Bloomberg Law Subscribers can find related content on our Legal Operations, In Focus: Legal Technology, ABA/BLAW Legal Ethics Practice Guide, and Surveys, Reports & Data Analysis resources.

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