Law Firms and Legal Departments Continue to Increase Use of ALSPs, Including Specialized Attorney Staffing Companies

Recently, Thomson Reuters Institute (in partnership with The Center on Ethics and the Legal Profession at Georgetown Law and Oxford University’s Saïd Business School) released a report of findings from their fourth biennial survey of Alternative Legal Services Providers (ALSPs). According to the report, the ALSP segment of the legal market is not only experiencing accelerated growth (it is now valued at $20.6 billion and growing at a rate of 20%), but also expanding the range of service solutions available.

The term “ALSP,” as it is generally used today, encompasses a broad range of services, from traditional areas like e-discovery and project management, to highly specialized services like technology consulting and flexible legal talent. Flexible legal talent – sometimes denominated as specialized attorney staffing – usually refers to experienced contract attorneys who work on assignment with law firms or legal departments performing substantive legal work. Latitude is an ALSP as a flexible legal talent provider, and the growth detailed in this report is consistent with the accelerated national expansion we have experienced in just the last few years.

While the report addresses the entire market for ALSPs, there are a handful of trends in the report that particularly resonated with us as it relates to the type of specialized flexible legal staffing that Latitude provides to corporate legal departments, law firms, and other ALSPs.

1. Law Firm Captive ALSPs Grew 117% since 2020

It was reported that law firms, and especially midsize and large law firms, are increasingly launching their own ALSPs, known as captive ALSPs. In fact, though law firm captives currently make up the smallest section of the overall ALSP market, it is the fastest growing section (showing 117% growth since 2020). This rate of growth confirms burgeoning acceptance and adoption of alternative legal business approaches, particularly in the areas of process and technology.

2. More than Half of Global Law Firms Have a Formal ALSP Partnership for “Specialized Legal Services”

In the category of “specialized legal services” – a category within which specialized flexible legal talent is grouped – it was reported that just over half (53%) of global law firms have established formal ALSP partnerships. This is a 9% increase from 2020.

A contributing factor to the growing demand for legal talent ALSPs is the need for corporate legal departments, law firms, or captives to quickly respond to client needs in highly specialized, often niche practice areas.

While some law firms, or their captive ALSPs, have a small internal bench of specialized on-demand attorneys, this is rare. From our experience at Latitude, almost all law firms and captives that utilize on-demand specialized attorneys either solely or largely rely on independent flexible legal talent companies for their practice-specific contract attorney needs. This is because on-demand specialized flexible talent that is cost-effective is a function of scale, as this type of talent is not fungible. For example, no matter how skilled a data privacy attorney may be, he or she is unlikely to be able to seamlessly serve in an ERISA attorney role. As a result, even the largest global law firms usually do not have sufficient demand to justify maintaining bench strength across a wide range of non-interchangeable practice areas. Instead, they typically rely on flexible legal talent staffing companies.

3. Growing Confidence in the Quality of Services Available in the ALSP Market

From 2020 to 2022, the percentage of law firms who reported concerns about ALSP quality as a barrier to entering a partnership decreased by 17%. Corporate legal departments, which already reported greater confidence than law firms in the quality of services available in the ALSP market, also reported a decrease in quality concerns by 4% overall.

While this data point relates to the full range of services across the broader ALSP market, it is consistent with the increasing awareness we have seen regarding specialized flexible legal talent. In the past, most law firm attorneys and in-house counsel viewed law firms as the only source of “like-kind” or “peer-level” on demand legal talent. Contract attorneys were associated almost entirely with document review.

Today, however, it is common for large legal departments and Am Law firms to regularly utilize contract attorneys interchangeably with their permanently employed attorneys across the full range of practice and sub-practice areas. Likewise, a growing number of attorneys know highly accomplished peers who have chosen to work for a flexible talent company instead of staying in Big Law or a legal department – or who have seamlessly moved back and forth between flexible and traditional roles.

As more and more law firms and corporate legal departments experience first-hand the quality and caliber of flexible talent available in the market – and are better able to distinguish ALSP brands based on quality and specialization – ALSP usage is likely to continue to grow. Latitude’s growth as a flexible talent company that specializes in providing on-demand in-house counsel for legal departments and on-demand associate-, counsel- and partner-level attorneys for law firms and other ALSPs illustrates this trend.

4. Legal Departments and Law Firms Anticipate Increased Use of Specialized ALSP Legal Services

Looking ahead, both law firms and corporate legal departments anticipate using ALSPs for specialized legal services at an increased level compared to even two years ago. In 2020, overall law firm anticipated usage of ALSPs in either the next year or the next 5 years was a reported 19%. According to this latest report, that number has jumped to 37% overall. Corporate legal departments anticipated usage of ALSPs for specialized legal services in the next year of the next 5 years has also increased from 29% in 2020 to 34% in 2022.

If, as these survey results indicate, specialized legal services will experience continued growth in the years ahead, how might external factors, such as today’s uncertain market conditions, further accelerate that growth through increased adoption and exposure to flexible talent? Historically, Latitude has seen that uncertainty can be a catalyst for law firms or corporate legal departments to use flexible legal talent because preserving flexibility and budget efficiency is more critical. We have also seen market uncertainty spur innovative thinking as law firms and companies explore different attorney staffing approaches, including innovations already being used by others in the market.

The 2023 Thompson Reuters ALSP report highlights the rapid growth and expansion of the ALSP market and identifies several trends of note for those providing and seeking specialized flexible legal talent.

Having provided specialized contract attorneys to law firms, corporate legal departments, and other ALSPs for a decade, we at Latitude are excited to see the burgeoning adoption of, and willingness to explore, alternative legal business approaches in the industry.

Contact us if you’d like to explore legal staffing solutions for your team or hear some of the innovative ways we are working with law firms, legal departments, and other ALSPs.