The alternative legal services providers (ALSPs) market has recorded an estimated value of $28.5 billion, according to Thomson Reuters’ Alternative Legal Services Providers 2025 Report.
This figure was reached because the market reported an 18 percent compound annual growth rate from 2021 to 2023. Factors in this growth include a greater reliance on ALSPs by corporate law departments and technology.
“The ALSP industry is not only thriving but also reshaping the legal landscape through both partnership and competition with traditional law firms,” Thomson Reuters said in a press release.
Generative AI adoption
Generative AI has driven ALSP market progression, delivering unpredictability and innovation potential to the legal ecosystem.
According to the report, ALSPs that adopted GenAI were more attractive to 35 percent of law firm respondents and 40 percent of corporate law department respondents.
“The legal industry is going through significant transformation, driven by the adoption of GenAI technology. 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,” said Laura Clayton McDonnell, Thomson Reuters corporates president, in a statement.
Nonetheless, law firms’ integration of AI themselves is also expected to mitigate the need for ALSPs, which Thomson Reuters said indicated “a complex interplay between technology adoption and service outsourcing.”
Demand from corporate law departments
Corporate law departments increasingly rely on ALSPs, with 57 percent of respondents using providers for tasks like flexible resourcing, eDiscovery, and litigation support. ALSPs are also being incorporated more into the workflows of traditional law firms.
The report also highlighted a growing split in the legal market between firms and departments that use affiliate and independent ALSPs more and those sticking to traditional models; ALSP-positive corporate law departments expect to spend less than firms that are playing it safe and not adapting alternative delivery models.
The Alternative Legal Services Providers 2025 Report was published jointly by the Thomson Reuters Institute, the Center on Ethics and the Legal Profession at Georgetown Law, and the Saïd Business School, University of Oxford. It can be accessed in full here.