The surge of the ALSP
The rise of alternative legal services providers is changing the ways in-house teams approach a number of everyday tasks, and is shaking up the legal marketplace, according to Google’s head of legal operations.
Speaking at the Lawyers Weekly Corporate Counsel Summit last month, Mary O’Carroll said that today, in-house lawyers and corporate teams have countless options for moving work externally whereas before the only question they could ask was “which law firm should we choose?”
ALSPs are “non-law firms who deliver legal services and support to corporations and law firms”, Ms O’Carroll said. In questioning “who” the ALSPs are, she mentioned the five categories, which include: accounting and auditing firms; captive LPOs; independent LPOs, e-discovery and document review service providers; managed legal services; and contract lawyers, in-sourcing, and staffing services.
Accounting and audit firms “tend to focus on high-volume, process-oriented work that’s complementary to accounting-audit work”, Ms O’Carroll said, with the big four seen as key players in the area, taking in an estimated $900 million in revenue.
The CLOC president then moved on to captive LPOs, which she said are often located in lower-cost regions, but are also focused on high-volume process work. Some of the players in this area, where revenue is estimated at $150 million, include Clifford Chance, Allen & Overy, and Reed Smith, she noted.
For the independent LPOS, e-discovery and document review service providers segment of the market, Ms O’Carroll that explained the crux of their abilities is the performance of “outsourced legal work under the direction of corporate legal departments and law firms”.
Holding a majority share of the ALSP market, the estimated revenue of this type of service is up around $6,200 million, according to a Thomson Reuters report.
This type of ALSP is “typically engaged for matter- or project-based work”, she continued, with such work proactively managed and globally delivered, and includes service providers such as Thomson Reuters Legal Managed Services, Consilio, and LDiscovery.
Managed legal services, according to Ms O’Carroll, are “providers that contract for all or part of the function of an in-house legal team”.
Typically engaged for ongoing work within scope and proactively managed, Ms O’Carroll said this $250 million industry includes service providers such as Elevate, and Axiom.
Lastly, contract lawyers, in-sourcing, and staffing services such as LOD make up a $900 million market share and can perform a variety of different functions depending on specialised needs.
The provision of lawyers on a temporary basis can be used “from entry-level document review to highly skilled and experienced specialists”, Ms O’Carroll noted.
Lawyers Weekly has previously reported on the explosion in legal tech investment, occurring particularly within the in-house space.