The Growing Market of Newlaw Services

alternative legal service thomson reuters report

Thomson Reuters recently issued their report, ‘Alternative Legal Services Providers 2019’ (the 2019 ALSP Report), which assesses the impact of newlaw players across the legal services industry. The study’s sample of 550+ decision makers was drawn from the US, Canada and UK, but the key findings are relevant and insightful for the legal industry at large and likely to set the trend for legal evolution in other parts of the world, too.

The 2019 ALSP Report found that alternative legal service providers are no longer an alternative. Newlaw services are going mainstream.

In a short period of time, alternative legal service providers (ALSPs) have evolved from a relatively unknown phenomenon into a fast-growing segment that is an integral part of the legal services industry – said Mari Sako, professor of management studies at Saïd Business School, University of Oxford (co-author of 2019 ALSP Report). ALSPs are leveraging different business models to law firms, and they come in different shapes and sizes. From small startups to massive disrupters (like the Big Four accounting firms), newlaw services are here to stay and make a difference in the legal sector. 

Here’s our list of five key ideas to note from the report, a full version of which is available for download HERE

 

#1 Corporate clients increasingly turn to newlaw service providers for cost saving and consulting. 

ALSPs have generally targeted areas such as managed legal services (i.e., outsourced legal work), corporate legal operations, legal advisory, legal project management, and process mapping. With a more client-driven approach, ALSPs aim to offer a better outcome for corporate legal departments. The end goal is to work more closely with lawyers, provide more value-add, and rely on technology to deliver legal services more efficiently and effectively.

 

#2 Tech-enabled and process focused service is an important attribute of newlaw players.

Technology adoption is often emphasized more strongly in ALSPs than at traditional law firms. In 2018, ALSPs cited contract management and process-mapping tools as the most commonly used technologies. The technology adopted is often state-of-the-art and may also involve some sort of artificial intelligence (AI) to support core services rather than just the back office. LegalTech solutions are used to provide added-value services and to increasingly take on different and more complex legal tasks.

 

#3 Independent ALSPs offer solutions to both corporations and law firms.

While some newlaw service delivery may be “captive” to larger law firms (for example, eDiscovery or document review), there are significant new service providers that remain independent on the market. Some of these independent ALSPs are building attractive brands and collaborate with in-house legal departments and law firms. For corporations, a key benefit of using ALSPs lies in their specialized expertise. For law firms, it is easier to take advantage of innovative legal service delivery by establishing a partnership with an existing newlaw provider. ALSPs recognize that their clients – corporations and law firms – regard low pricing and value-for-money as a key component of their competitive advantage. However, according to the report, the unique selling proposition is the combination of quality talent and technology to offer holistic solutions to both corporates and law firms.

 

#4 Change management and resistance to innovation are significant challenges for newlaw players.

The 2019 ALSP Report clearly conveys a sense of optimism and a forward-looking perspective for newlaw providers. Still, both independent ALSPs and law firms with ALSP affiliates report a level of resistance to change – internally and among clients. Despite concerns about security and quality over the use of ALSPs, about half of law firms from the study reported that ALSPs can help them expand and scale their business, differentiate their services and, in some cases, retain client relationships. The top three uses of ALSPs for corporations are litigation and investigation support, legal research, and regulatory risk and compliance services, with more than one-third of participating corporate legal departments saying they use ALSPs for these purposes. According to the report, a big part of market acceptance is the mainstreaming of the idea of alternative models for legal service delivery.

 

#5 The newlaw business model and culture is more entrepreneurial and inclusive.

This last point was actually covered in the webinar hosted by Thomson Reuters on March 20, 2019 discussing the key findings of the 2019 ALSP Report. The panel of industry experts (Mark A. Cohen, Mari Sako and James Jones) noted that clients of commercial legal services typically face business problems with a legal component and so they are looking for integrated business and legal solutions. However, the traditional partnership model in law firms often comes together with a mindset focused on legal risks only and a culture that does not equally value input from “non-legal” professionals. Instead, ALSPs generally offer a hybrid talent pool that brings diversity into the decision-making process and enable a more entrepreneurial approach to problem-solving.

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