Some of my lawyer friends out there may not want to hear this, but alternative legal service providers (ALSPs) have been quietly gaining traction within the legal industry. In fact, as of 2023, they held a $20.6 billion share of the legal market.
In case you’re not yet familiar with them, ALSPs offer a broad range of services, including legal advice, contract management, electronic discovery, document preparation, and other legal assistance, often at a fraction of the cost of conventional law firms.
The rapid growth of ALSPs is not a fluke. Indeed, their systematic rise has been driven by a combination of factors, including the democratization of technology, a demand for more affordable legal services, and a shift in how legal professionals work.
In reality, there are as many different types of ASLPs there are lawyers — from solo document review professionals offering services through freelance sites like Upwork to monoliths like PriceWaterhouseCooper.
In this post, we’ll keep our focus on two very different but equally important types of ASLPs: (1) online and tech-based ASLPs intended for use by individuals and small businesses (“techASLPs” we’ll call them); and (2) human-driven ASLPs (“peopleASLPs”) that offer non-lawyer legal services within underserved practice areas.
The reason for this focus is simple — these two types of ASLPs are bringing significant competition to small-to-midsize law firms. So, let’s get to know them, shall we?
What are alternative legal service providers (ALSPs)?
ALSPs are organizations that provide legal services outside the traditional law firm model.
The techASLPs we’re talking about today include online platforms like LegalZoom and Rocket Lawyer, where clients can create legal documents, seek legal advice, or access other legal resources.
PeopleASLPs, on the other hand, are non-attorneys who are allowed by their state legislatures to practice substantive law in certain defined areas. Generally speaking, their practice areas are limited to things like landlord-tenant law, family law, and probate.
The aim of both types of ASLP is to increase access to justice, streamline processes, and reduce costs to clients. For instance, online platforms often automate routine legal tasks like drafting contracts or wills, which alleviates the need for pricey in-person consultations with a lawyer. PeopleASLPs still provide that human touch, but without the high costs associated with traditional legal services.
Factors contributing to the growth of all ALSPs
Several factors have contributed to the growth of ALSPs:
- Cost-effectiveness: As mentioned above, ALSPs generally offer services at lower costs compared to old-school, brick-and-mortar law firms. This is due in part to their reliance on technology, more flexible business models, and comparatively low overhead.
- Accessibility: Most techALSPs operate online, providing clients with 24/7 access to legal services. This accessibility appeals to individuals and small businesses seeking quick legal solutions without the need for lengthy appointments or endless phone calls.
- Demand for alternative services: In the states that have allowed peopleASLPs, the demand for certain types of legal services was greater than lawyer availability. Moreover, many of the clients seeking out these particular services simply couldn’t afford to hire a traditional law firm.
- Technology and innovation: Advances in legal technology have paved the way for ALSPs to offer innovative services. Tools like artificial intelligence (AI) and automation enable these providers to handle routine legal tasks efficiently. These technologies not only broaden the availability of legal services, they often provide faster and more inherently reliable services.
Comparison with traditional legal services
Alternative legal service providers (ALSPs) and traditional law firms both offer legal services, but they differ in several key ways. Understanding these differences is crucial for those of you who want to understand the competition and assess how ALSPs might impact your practice.
Let’s take a quick look at the main similarities and differences.
Similarities
While ALSPs and traditional law firms operate in different ways, they share some commonalities. Both provide legal advice and assistance, often handling similar types of matters. For example, both ALSPs and traditional law firms might help clients with contracts, wills, and business formation.
And, of course, it’s always everyone’s goal to offer reliable legal services that meet client needs.
That might be where the similarities end, however.
Differences
Despite some similarities, significant differences distinguish ALSPs from traditional law firms:
- Business models: ALSPs often operate with a more flexible business model, allowing them to offer services at a lower cost. Traditional law firms, in contrast, have higher overhead due to office space, salaries, and other expenses, leading to higher client fees.
- Service delivery: TechALSPs typically use technology to deliver services online, while traditional law firms rely more on in-person consultations and manual processes. And while peopleASLPs can offer in-person services, they may be more willing to do so through consumer-friendly means, such as mobile services. These differences in delivery can affect the speed and accessibility of services, as well as the client experience.
- Scope of services: Traditional law firms usually offer a broader range of services, often offering specialized services in complex practice areas. ALSPs, on the other hand, tend to focus on legal tasks, such as document preparation or business formation.
- Pricing structures: ALSPs often have fixed pricing or subscription-based models, providing clients with clear cost expectations. Traditional law firms typically charge hourly rates or retainers, which can lead to more unpredictable costs.
Regulatory issues for ASLPs
While ASLPs continue to gain market share, some in the industry are clamoring for greater regulation. TechASLPs, in particular, can give the impression that they’re providing traditional legal services — yet they seemingly operate without traditional oversight. How do they get away with that?
Well, if you read the terms of service of some of these companies, they claim they are “not a law firm or an attorney, may not provide services performed by an attorney, and [their] forms or templates are not a substitute for the advice or services of an attorney.”
That would take them outside of the watchful regulatory eye of most State Bars — and that’s concerning.
In the U.S., legal services are subject to state-specific regulations. Traditional law firms operate under strict rules governing attorney conduct, licensing, and the unauthorized practice of law. TechALSPs, however, often exist in a regulatory gray area, which has led to varying interpretations of what they can and cannot do.
PeopleASLPs, on the other hand, are regulated by the Bar in the states where they exist. This at least gives consumers some method for processing grievances and reporting unethical conduct — something that is critical for the integrity of the profession.
Ethical considerations for ASLPs
Ethics play a significant role in the legal industry, and alternative legal service providers (ALSPs) cannot be the exception. As ALSPs continue to gain traction, ethical considerations will undoubtedly receive greater attention. Here are just a few of the ethical areas that raise concern:
Client confidentiality
One of the most important ethical considerations is client confidentiality. Traditional law firms are, of course, bound by strict confidentiality rules to protect client information.
Yet, given that many techASLPs are operating in “we’re not a lawyer” mode, can their clients be certain their information is kept sacrosanct?
And while paralegals have traditionally been bound by extension to the traditional attorney-client privilege, consumers will want to ensure that their state imposes similar ethical rules on the peopleASLPs operating there.
Unauthorized practice of law
The unauthorized practice of law is another ethical concern for ALSPs. Since many of these providers are not traditional lawyers or law firms, there’s a risk of crossing legal boundaries.
ALSPs must clearly define the scope of their services and avoid providing legal advice that requires a licensed attorney. This includes peopleASLPs who may be tempted to offer services outside of the narrow practice areas allowed by their state.
Conflict of interest
Conflict of interest is a common ethical issue in the legal industry. ALSPs, like traditional law firms, must avoid conflicts that could compromise their ability to provide impartial legal services.
Again, this seems especially important with techASLPs where clients with conflicting interests could ostensibly access conflicting services online without knowledge that their adversary is operating within the same system.
Implications for traditional law firms
Despite the concerns over regulatory oversight and ethics, the emergence of ALSPs has significant implications for traditional law firms. As these providers gain market share and recognition, traditional firms have no choice but to adapt in order to stay competitive.
New business models
To adapt to the rise of ALSPs, traditional law firms are exploring new business models. This may include incorporating technology to streamline operations, offering unbundled legal services, or focusing in highly-specialized practice areas that ASLPs simply don’t cover.
Collaboration opportunities
While ALSPs and traditional law firms are often seen as competitors, there are opportunities for collaboration.
Traditional firms can partner with ALSPs to expand their service offerings, leveraging the strengths of each to provide more comprehensive and efficient solutions for clients. This approach can create a mutually beneficial relationship that allows for cost-efficient task completion with oversight from attorneys who clients know and trust.
Future trends
As ALSPs continue to grow, traditional law firms must anticipate future trends to remain relevant. This includes advocating for regulatory changes, embracing technology, and exploring innovative approaches to legal service delivery.
By doing so, traditional firms can continue to thrive in a market increasingly influenced by ALSPs.
Ultimately, peopleASLPs — with their strict oversight from State Bar organizations — seem to be a safe and effective option for consumers who need quality, cost-efficient legal services within underserved practice areas.
And while techASLPs undoubtedly offer quality services for completing certain tasks, your clients should be aware of the inherent dangers of the “we’re not your attorney” business model.
Conclusion
The rise of alternative legal service providers (ALSPs)reflects a significant shift in the legal industry, driven by technological advancements, the demand for affordable services, and innovative business models.
ALSPs offer a range of services that enhance accessibility and efficiency, posing both challenges and opportunities for traditional law firms.
By understanding and adapting to these changes, law firms can stay competitive, explore collaborative opportunities, and continue to meet client needs effectively.
