Alternative Legal Services Providers 2025 Report Shows Segment Comprises $28 Billion of the Legal Market

• GenAI is poised to enhance ALSP offerings, streamlining processes and reducing costs as law departments plan to increase spending on ALSPs
• A bifurcation is emerging between law firms and law departments that embrace alternative delivery models and those adhering to traditional practices

 Thomson Reuters (TSX/NYSE: TRI), a global content and technology company, released the Alternative Legal Services Providers 2025 Report noting the market has grown to an estimated size of $28.5 billion. Stemming from 18% compound annual growth rate from 2021 to 2023, the report analyzes the strong 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. Generative AI (GenAI) is becoming a catalyst for advancements within the ALSP market, adding an element of unpredictability in the legal ecosystem but also the potential for further innovation and growth. Thirty-five percent of law firm respondents and 40% of corporate law department respondents said they view those ALSPs that are leading in GenAI as more attractive. However, some law firms anticipate that their own expertise with GenAI within the firm might eventually reduce the need for use of ALSPs, suggesting a complex interplay between technology adoption and service outsourcing.

This view aligns with the most recent Future of Professionals report, which noted that 77% of professionals believe AI will have a high or transformational impact on their work over the next five years. 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"

The report highlights a growing reliance on ALSPs by corporate law departments, with more than half (57%) utilizing ALSPs for a variety of tasks, ranging from flexible resourcing to eDiscovery and litigation support. Traditional law firms are also increasingly integrating ALSPs into their workflows signifying the value ALSPs bring in terms of specialized expertise and cost efficiency.

Additionally, 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 ALSP market is positioned for continued growth, with new services and innovative delivery models on the horizon. However, the report also notes that some traditionalist law firms remain hesitant to adopt these models, opting to invest more heavily in tried-and-true methods but potentially risking their competitive position as more tech-savvy organizations deliver superior client experiences.

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.

Thomson Reuters (TSX / NYSE: TRI) (“TR”) informs the way forward by bringing together the trusted content and technology that people and organizations need to make the right decisions. The company serves professionals across legal, tax, accounting, compliance, government, and media. Its products combine highly specialized software and insights to empower professionals with the data, intelligence, and solutions needed to make informed decisions, and to help institutions in their pursuit of justice, truth, and transparency. Reuters, part of Thomson Reuters, is a world leading provider of trusted journalism and news. For more information, visit tr.com.

The Center on Ethics and the Legal Profession at Georgetown Law is devoted to promoting interdisciplinary research on the profession informed by an awareness of the dynamics of modern practice; providing students with a sophisticated understanding of the opportunities and challenges of a modern legal career; and furnishing members of the bar, particularly those in organizational decision-making positions, broad perspectives on trends and developments in practice.

The Professional Services Firms (PSF) Group at Saïd Business School, University of Oxford, engages in teaching and research about key challenges confronting the professional services sector, including law. The Group conducts inter-disciplinary research on issues faced by professionals, their clients and regulators, such as the development and management of professional expertise and ethics, the internal and external dynamics of professional services firms, and the impact of new technology on professional work and careers. For more information, go to https://www.sbs.ox.ac.uk/research/research-areas/professional-service-firms.