Law firms are increasingly turning to alternative legal services providers (ALSPs) to streamline their operations and save money in the ever-evolving legal landscape. These providers offer a range of services, from legal technology to project management to litigation support, helping firms improve efficiency and reduce costs.
One such example is Varghese Summersett, a law firm in Texas that brought in ALSPs to focus on legal tech, research, and routine tasks. The firm quickly noticed cost savings and valuable insights that helped enhance their processes. This trend is reflective of a larger shift in the legal industry, with ALSPs becoming a $20.6 billion market segment as of 2023, showing a significant growth rate.
Understanding the difference between ALSPs and captive ALSPs is crucial for firms considering these services. While ALSPs offer a variety of legal services, captive ALSPs are subsidiaries of law firms that provide specialized services like software development and consulting. Troutman Pepper, for example, created eMerge, a team that focuses on electronically stored information using AI to reduce review costs and completion time significantly.
While the potential savings from using ALSPs can be substantial, there are also challenges associated with setting up captive ALSPs. These require a significant investment of time, effort, and resources, making them a less attractive option for many firms. Strategic partnerships with noncaptive ALSPs are a more common approach, allowing firms to benefit from expertise and cost savings without the added complexity of running a separate legal business.
As the legal industry continues to embrace technology and innovation, more firms are likely to explore ALSP solutions. Larger firms, in particular, are increasingly turning to captives or a mix of direct ALSPs and captives to handle tasks like e-discovery. This shift reflects a broader trend towards efficiency and cost-effectiveness in the legal sector.
ALSPs offer firms flexibility and cost savings, allowing them to access specialized services without the need for full-time staff. While there may have been skepticism in the past about outsourcing to ALSPs, attitudes are shifting as firms recognize the value these providers can bring. For tasks that don’t require highly specialized expertise, ALSPs can be a valuable resource for firms looking to enhance their services and support their clients effectively.