An Introduction to Alternative Legal Service Providers

Overview

• Alternative legal service providers (ALSPs) provide flexible legal support to in-house corporate teams — typically at a lower cost than traditional law firms.
• Companies outsource various tasks to ALSPs, including: e-discovery, contract management, legal research and document review.
• Many types of ALSPs offer different kinds of support. For example, legal services provided by accounting and consulting firms, and legal process outsourcing firms (LPOs)
• Combined with smart use of key legal tech tools, strategic engagement of ALSPs is an excellent way for in-house teams to save time, cut costs, and improve legal service provision.

Introduction

Traditional law firms remain a cornerstone of any in-house team’s legal ecosystem. They excel at handling high stakes and complex legal matters and offer specialized expertise that your in-house legal team may lack.

But with tighter legal budgets, every hour of outsourced work deserves scrutiny. Cost-conscious legal departments are increasingly asking: Does this need to go to a high-cost firm? Or could it be done — for a fraction of the cost — by another provider?

The answer often leads teams to alternative legal service providers, or ALSPs. These organizations are built to deliver defined legal tasks, like contract management, more affordably than bona fide firms. So it’s no surprise that, according to Ernst and Young, as many as 60% of legal departments plan to make ALSPs a core part of their strategy going forward.

Used strategically, ALSPs open the door to faster turnarounds, a leaner budget, and a more agile legal function. Here’s what you need to know before adding one to your team.

What are Alternative Legal Service Providers?

ALSPs, also called paralegal service providers, are organizations that in-house legal teams contract to work on high-volume, low complexity, or specialized legal tasks.

They typically operate at a lower price than traditional law firms and offer a narrower scope of services. In-house teams often outsource time-intensive tasks like e-discovery or legal research to ALSPs

What Services Do Alternative Legal Service Providers Offer?

ALSPs provide a wide range of legal service offerings, but their core competency is completing high-volume or time-consuming tasks efficiently, often using legal technology like matter management software. In-house teams, therefore, typically use ALSPs for the following functions:

E-discovery

E-discovery services from ALSPs involve identifying, collecting and analyzing electronic data, particularly for litigation and regulatory investigations. Many providers use a legal tech stack that includes e-discovery platforms, data analytics tools, and even AI to ingest information quickly, index it, and classify it. These services often include data preservation, forensic analysis, data processing, document review, and production of electronic documents.

Contract Management

Several in-house teams use paralegal service providers to manage the full lifecycle of their contracts — from drafting and review to contract negotiation, renewal and termination. Many ALSPs use AI and machine learning to automate routine tasks in this process, making it easier to flag potential risks and ensure compliance.

Legal Research

Legal research services involve investigating case law, statutes and other sources to support sound legal decision-making. Some ALSPs also offer specialized research services in particular areas of law, and can provide in-house teams with additional insight into complex legal scenarios. For example, conducting multi-jurisdictional research for a global compliance rollout.

Document Review

Document review services are essential in due diligence and compliance audits, where large volumes of documents must be reviewed to determine their relevance and importance. ALSPs use trained legal professionals and sophisticated software to review, categorize, and analyze documents quickly and accurately, reducing the time and cost of in-house manual review.

Compliance

Compliance services help organizations stay aligned with legal and regulatory requirements. ALSPs can be contracted to monitor regulatory changes, maintain compliance registers, prepare filings and support audits. These factors reduce the burden on in-house teams and lower the risk of accidental non-compliance.

Litigation Support

Litigation support services assist legal teams throughout the dispute resolution process, from case preparation to trial. In-house teams may outsource litigation support services like evidence organization or discovery management — leaving internal counsel free to focus on strategy.

What are the Benefits of Alternative Legal Service Providers?

ALSPs offer in-house teams uniquely flexible legal services that can be slotted into existing workflows. This adaptability makes them an increasingly popular choice for companies aiming to streamline operations, control costs, and tap into advantages like:

Predictable Billing

ALSPs tend to have fixed fees for tasks and upfront pricing, instead of charging hourly rates. This makes it easier for in-house teams to budget accurately around outsourced legal costs and strategically decide which tasks are worth handling internally versus externally.

Flexible Service Model

Unlike traditional law firms with rigid engagement structures, ALSPs can often be slotted wherever they add the most value—for example, taking ownership of a specific process, or a phase of it. They can also work alongside your team and outside counsel to provide flexible legal support.

Scalable Services

In-house teams can scale their engagements with ALSPs up or down as needed. For example, an ALSP could be contracted to complete a one-off project or engaged long-term to handle specific ongoing legal tasks. This adaptability allows in-house teams to scale their capacity when workloads surge without adding headcount.

Specialized Expertise

ALSPs may not match law firms in the breadth of experience and strategic input they offer. Still, they often have specializations that innovative in-house teams can leverage to benefit them. For example, e-discovery or compliance monitoring. Their processes for handling those tasks are also frequently highly refined and supported by legal tech tools, allowing them to deliver that work quickly and cost-effectively.

How do Alternative Legal Service Providers Compare to Traditional Law Firms?

Law firms excel at delivering legal counsel on complex matters. This includes strategic advice on big-ticket litigation, mergers and acquisitions, and corporate and regulatory issues. Their staff of highly experienced attorneys help in-house teams reduce risk related to these matters and provides in-depth legal advice tailored to the business’s needs.

ALSPs, on the other hand, are generally not suited for delivering advice on highly complex legal issues and are more efficient at providing support with routine work. Also, ALSPs usually have a narrower scope of services compared to full-service law firms, so they won’t typically be able to handle all aspects of a legal issue.

For example, an in-house team might rely on an ALSP to keep them informed of changes in regulations in all jurisdictions in which the company operates. However, the same in-house team may turn to a law firm for specific advice on how the regulatory change impacts a product or service the company sells.

What Are the Different Types Of ALSPs?

Alternative legal service providers come in many forms and offer different legal support. Common types of ALSPS you might see include:

Legal Process Outsourcing (LPO) Firms

These are the firms that in-house counsel typically uses to handle repetitive work cost-effectively. Some of these firms are “captive” LPOs, which means they are wholly owned by a law firm which has created the LPO to offer more affordable services while still retaining their clients’ business.

Accounting and Consulting Firms

Many accounting and consulting outfits are diversifying into legal services by creating ALSPs. This allows them to extend their expertise to a new domain and gain market share in the legal industry.

Contract Staffing Providers

Contract staffing providers recruit both temporary and permanent legal staff for in-house teams. As such, they’re another alternative to traditional law firms that can help corporate legal departments work more cost-effectively. These providers are usually most useful when the in-house team gets a spike in a particular type of work, like contract renewal, that requires extra, temporary capacity to handle.

Will AI Replace Alternative Legal Service Providers?

As with many other sectors, new AI tools significantly impact legal workflows. AI features like machine learning and natural language processing make it much easier for teams to perform standard tasks, like legal document review, quickly and efficiently.

Those efficiency gains aren’t going unnoticed either, with around 44% of Chief Legal Officers (CLOs) saying they plan to deploy new legal tech tools for their department shortly.

There’s also a lot of overlap in legal AI tools and ALSPs’ tasks, like e-discovery and contract review. So, naturally, many legal professionals are wondering whether AI will replace ALSPs.

The short answer? No.

While AI tools can do many of the manual tasks ALSPs take, they don’t have the judgment and context awareness that human legal professionals do, so they still require human oversight. Instead of a replacement, AI tools serve as an ALSP efficiency booster, allowing these companies to tackle bulk legal tasks faster and more cost-effectively than ever. And that translates into even bigger savings for in-house teams.

Maximize Your Use of Alternative Legal Service Providers With Brightflag

In summary: Using ALSPs can revolutionize your legal service outsourcing strategy — helping you balance the value you get from high-cost outside counsel with more efficient, bulk legal service provision. But to truly harness the power of ALSPs, it’s crucial to have a deep understanding of where and how they can best support your legal operations.

That’s where tools like Brightflag’s legal spend management system become indispensable. Brightflag’s AI-powered analytics provide a comprehensive overview of your legal spend, helping you pinpoint the areas where ALSPs can deliver the most value — which means your team can make the best, most cost-effective provisioning choices, every single time.

Interested in learning more? Book a demo with Brightflag today.