The exact percentage of business-related legal work now being done by competitors to traditional law firms is hard to estimate with precision, but a significant amount of the approximately $250 billion U.S. market for outside business-related legal services that in past years was serviced by traditional law firms is now being done by various alternatives.
Some of this legal work is commodity-level, but it also consists of routine/repetitive legal work and also parts of the litigation process in various practice areas, including business, employment, intellectual property, and many others. These types of work were — for years — the consistent, bread-and-butter work for many traditional law firms.
A significant percentage of this work is being awarded to alternative legal service providers (ALSPs) such as Mindcrest, Clutch Group, and Integreon (legal process outsourcers); other types of service providers, such as Axiom, Elevate, Cognition, and Novus Law; and/or technology-centric ALSPs such as LegalZoom, Rocket Lawyer, and MyCorporation. Other work is being taken in-house or awarded to small, niche, and/or boutique firms.
Given the growth rate of these entities to date, and the increased rate and amounts of legal start-up funding, the current percentage of ALSPs’ market share could easily reach 30 percent to 40 percent — or approximately $50 billion to $100 billion — and by most accounts continues to grow rapidly.
Other than outside seed money and investments, what is driving the growth and ability of ALSPs to capture segments of both the market and client share previously served by traditional law firms? What accounts for how they are stealing away the legal work traditionally awarded to outside law firms and lawyers? Below is a chart comparing the generalized, overall business practices of ALSPs versus traditional law firms.