Thomson Reuters today (28 January) released the Alternative Legal Services Providers 2025 Report, which finds that the market has grown to an estimated size of $28.5bn, after seeing an 18% compound annual growth rate from 2021 to 2023. The report analyses the the growth, increasing adoption, and market bifurcation of the alternative legal services providers (ALSP) industry.
The ALSP industry is not only thriving but also reshaping the legal landscape through both partnership and competition with traditional law firms. The report highlights a growing reliance on ALSPs by corporate law departments, with more than half (57%) utilising ALSPs for a variety of tasks, ranging from flexible resourcing to eDiscovery and litigation support. However, traditional law firms are also increasingly integrating ALSPs into their workflows, signifying the value ALSPs bring in terms of specialised expertise and cost efficiency.
As generative AI solutions are more widely adopted, this is expected to put pressure on the traditional law firm model and drive transformation. Laura Clayton McDonnell, president, corporates, Thomson Reuters, is already seeing that impact. “The legal industry is going through significant transformation, driven by the adoption of GenAI technology,” said Clayton McDonnell. “As legal departments become more sophisticated in their use of technology, they will increasingly expect their law firms and alternative legal service providers to deliver tech-enabled services that meet their evolving needs, driving a wave of innovation and efficiency across the entire legal industry.”
However, the report identifies an emerging bifurcation within the legal market: forward-looking law firms and law departments are expanding their use of ALSPs – both firms’ own affiliate ALSPs as well as independent ALSPs – while other law firms and law departments remain committed to traditional models. This split is significant, as corporate law departments anticipate reducing their spend with firms that do not adapt to alternative delivery models.
The Alternative Legal Services Providers 2025 Report can be downloaded here and is issued biennially by the Thomson Reuters Institute; the Center on Ethics and the Legal Profession at Georgetown Law; and the Saïd Business School, University of Oxford.