February 27, 2025

 Pratik Patel

 Jonathan Gross

general counsel legal spend ALSPs trends events law department innovation

Great chefs – and, it turns out, great GCs – have a knack for finding and using ingredients in new and clever ways. For gourmands, that involves foods, equipment, and techniques (sous vide, anyone?), while with GCs, it means specialised legal expertise, new technology, and more efficient and innovative approaches.

Some chefs work to invent dishes simply to stay ahead of the curve and explore new possibilities. Others do so in response to outside forces, such as culinary trends, dietary restrictions, or the evolving tastes of the dining public. Whatever the case, some new dishes prove so popular and delicious that they become standard fare near and far. At that point, the creation stops being innovative and becomes something diners come to expect. This never happens overnight; there’s always a tipping point at which something new becomes familiar and widely demanded.

The analogy is apt in thinking about the role alternative legal service providers (‘ALSPs’) play in the legal industry. Prior to the mid- or late Nineties, no such entities existed. But over the past three decades, in terms of both the percentage of law departments’ outside spend and the range of legal matters ALSPs handle, ALSPs are no longer novelties. Increasing numbers of GCs rely on ALSPs day in and day out. According to a recent 2025 Thomson Reuters ALSP Report, 57% of law departments polled now leverage an ALSP as part of their legal strategy, and 44% say they have purchased directly from an ALSP (vs. via a law firm) during the last 12 months. The reasons vary – sometimes because of a drive to innovate, but mainly because of a forced change in ‘diet’ (e.g., budget pressures or shifting priorities) – whichever the case, ALSPs are now on the ‘menu’ more often than not.

One key recent driver in the use of ALSPs has been AI. In recent years, AI has emerged as the next seismic shift in how legal departments deliver services to their teams. By automating routine tasks such as document review and legal research, AI is driving unprecedented efficiency and cost savings for customers. However, law firms have traditionally struggled to proactively incorporate AI into legal services and are also turning to ALSPs to rapidly enhance capabilities. According to the same survey, 57% of law firms polled mentioned using an ALSP for specialised expertise (e.g., process or management), and 38% polled specifically mentioned leveraging an ALSP for their AI and tech.

During a recent roundtable discussion of nearly four dozen in-house GCs and senior law department decision-makers, we asked, ‘What is driving your use of ALSPs?’ Their answers revolved around three themes, which we are describing based on their words):

• Skills and Scale. T-shaped legal challenges require T-shaped legal teams, and our law firms don’t always have (nor are they expected to have) the scale, processing, or technology skillsets necessary to solve large or fast-moving data challenges.
• ‘Bandwidth.’ Our in-house teams are buried in ever-growing routine commercial work that often requires fast turnaround and response times; ALSPs provide professionals who can better handle and field those items using a blended and global approach, which is more sustainable for our teams and our internal clients.
• ‘Holistic’ Tech Capabilities: ALSPs have access to multiple technologies, not just one. Depending on the nature of the challenge, they are able to quickly deploy tech and services in a turnkey manner that would take our organisation, at best, far longer to independently procure, figure out, and begin using.

Recent studies suggest we may have passed an inflection point when it comes to GCs incorporating ALSPs into their strategy. Data from the survey (and previous versions of it) show an average compounding year-over-year growth rate of ALSP usage of just above 20% since 2019 (22% between 2019 and 2021 and 18% between 2021 and 2023), with 2023 (the most recent year of Thomson Reuters’ data) spend on ALSPs across the whole market totalling $28.5B.

The post-COVID, sustained growth rate of 18% suggests GCs’ growing acceptance of this ‘alternative’ capability, likely driven by some of the abovementioned factors. Still, given that past results do not guarantee future outcomes, how can we tell if that five-year growth is an anomaly or reflects a more widespread need or theme in the market?   Put another way – should you, as a GC, add ALSPs (or increase your use of them) in your legal strategy?

The answer depends on your priorities. Most law departments still operate on a traditional ‘first things first – protect the business’ approach, and understandably so. If that remains the top priority, then ALSPs don’t exactly scream ‘protect the business’ (although, upon closer examination, they directly align in several ways).

On the other hand, recent GC studies have shown that the law department’s priorities and expectations are shifting towards efficiency in ‘running the business’ (e.g., managing increasing legal demand with minimal increase in headcount) and speed in ‘growing the business’ (e.g., reducing cycle times, the overall cost of transactions, and customer satisfaction).

A separate and recent 2024 Thomson Reuters State of the Law Department survey reported the top three priorities for most CLOs being (in order) controlling outside legal costs, using technology to simplify workflows, and increasing their focus on legal operations. To some, this is unsurprising – the idea of ‘Running Legal Like a Business‘ has gained acceptance and, in some cases, even become the most important topic in the relationship between the GC and CEO. This shift could mean (and demonstrate) that ‘protecting the business’ is now table stakes for the GC rather than a differentiator.

So where and how do ALSPs directly play into the above? Well, they specifically do a few things to ‘bend the legal cost curve’:

• Operate and deliver ‘run the company services’ more efficiently and with scalable costs, which results in…
• Freeing up money to be repurposed and spent on higher value in-house or outside counsel who can focus on ‘core’ activities that…
• Drive company growth and proactively reduce liabilities.

We’d love more GC perspectives on this. Elevate is attending the Consero GC conference in Irving, Texas, March 2^nd through 4^th and hosting a roundtable on this topic to garner further discussion, thoughts, and opinions from general counsel and other senior legal leaders. Mainly, we’d love to understand:

• Where is your department in experimenting with ALSPs as a key component of your legal strategy?
• What business needs are most responsible for driving interest in ‘partaking of’ this ‘menu item’?
• What challenges do you believe must be addressed before doing so?

We hope to see and talk with you about these topics in Irving. And if you haven’t done so already, we encourage you to ‘taste’ ALSPs. The odds are that you will be glad you did!