TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, September 10, 2018

Has The Alternative Legal Provider Market Already Peaked?

Prism Legal, Why Alternative Legal Provider Market Share May be Limited:

Numerous recent articles and blog posts cite the rise of alternative legal service providers, prompted in part by EY acquiring Riverview Law and and UnitedLex deals. ... In a nutshell, all combine multidisciplinary teams, lower cost labor, process focus, and technology investment to deliver more value to clients than do law firms. That’s the argument and I generally agree with it. Nonetheless, I think that alternative legal provider market share may be limited. Here’s why ...

I fear that many of the discussions about alternative legal providers taking share implicitly assume ceteris paribus. The alternative continues growing and nothing else changes significantly. They discount steps law firms take to respond to alternate legal provider growth.

The real world is mutatis mutandis: market players respond to competition. Specifically, I see law firms making many changes. ...

The only time-series data I have found about the alternative legal provider market share comes from the Altman Weil CLO survey. It shows flat if not shrinking share of client spend:

LPO

We see many claims about alternate legal provider but little data. And conveniently little discussion of how law firms respond to competition. Arguably law firms see the slow uptake by their buyers and so feel no urgency to take more steps than they already are. On balance, the evidence I see suggests law firms are responding sufficiently. And that response likely will limit the market share gain of alternative legal service providers.

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