The new players of the legal sector: the Alternative Legal Services Providers

It is no secret to anyone that the legal sector has been reluctant to change. It has had a hard time turning away from its traditional forms, to adapt to the accelerated transformation of the market that has been brought by the so-called fourth industrial revolution. However, in recent years we have finally seen significant progress, including the arrival of new players such as the Alternative Legal Service Providers or "ALSPs".

ALSPs are legal services firms, which do not operate under the schemes that have been traditionally used over the years in the legal sector. For example: they do not necessarily have hierarchical structures with categories such as partners, associates, and paralegals; they focus on providing a highly specialized menu of services such as legal research, due diligences or drafting legal documents in a systematic and standardized manner; they offer alternative billing schemes (different from the billable hour) and rely heavily on the use of technology such as Artificial Intelligence.

According to a joint study issued by Thomson Reuters along with Georgetown University and Oxford, the Alternative Legal Service Providers have been gaining ground, to the extent of generating estimated revenues in the amount  of $10 billion in 2017 (Alternative legal service provider use by corporations and law firms exceeding projections, creating a $10 billion market | Thomson Reuters). Such is their potential, that several of the key players in the legal market including some "Big Four" like EY and traditional firms like Allen & Overy, have placed their eyes on them. The ALSPs have also been able to attract the attention of the renowned Chambers & Partners, which today has a ranking that specializes in Alternative Legal Services Providers (https://chambers.com/guide/alternative-legal-service-providers?publicationTypeId=94).

The birth of these kind of firms, which are capable of providing legal services under unconventional schemes, has brought a very positive impact to the sector. ALSPs have put in motion an ecosystem of collaboration, innovation and entrepreneurship that was rare in the legal field. 

Previously, I pointed out how traditional players of the legal sector have bet on ALSPs; but it has also seen the blooming of small ventures that decided to adhere to the concept of Alternative Legal Service Providers. There are also certain firms that, while not traditional in the legal sector, now have a global presence. Axiom (axiomlaw.com) is an example of this; which, with its slogan "talent on demand" managed to conquer the Alternative Legal Services Provider′s market. Axiom represents a very interesting case of success, given that the firm has been able to attract the attention of certain funds that decided to invest on it due to the achievement of some remarkable milestones, such as generating an estimated gross revenue of $360 million in 2018 and the firm′s ability to form a global platform of about 2,000 lawyers with flexible work schemes.

Instead of considering ALSPs as a competitors, studies show that traditional law firms and inhouse legal departments of companies are increasingly turning to Alternative Legal Service Providers to delegate specific tasks, such as support in due diligence processes. The rationale behind this resides on the fact that technology and other common practices in ALSPs, such as the use of fixed-cost billing schemes, often allow obtaining a better return ??(On the Road with Legal Talk Network: Legalweek 2020: The Big Four, ALSPs and the Law Firm Restructured en Apple Podcasts).

The Alternative Legal Services Providers represent a change of paradigms in the legal sector. They have arrived to claim a spot in the table and far from being considered a challenge to the status quo, they should be regarded as the ideal ally for traditional firms. With the support of the ALPS, traditional players will be able to make their processes more efficient in order to achieve a common goal that all legal services providers should share: to guarantee clients the best service, in the shortest time and at the lowest possible cost.