As more in-house legal teams plan to use generative artificial intelligence in the name of cost-cutting efficiency, suppliers of relatively routine work are updating their services.
These so-called alternative legal services providers (ALSPs) have evolved since they started out as disrupters to the legal market two decades ago. Now the transformative potential of the new technology has led to a push to offer new services, relying heavily on technology and offering software tools, often via a subscription-based arrangement.
“The ambition is not only a transition from being ‘legal support providers’ to being ‘legal advice providers’, but also to incorporate tech in a big way,” says Mari Sako, professor of management studies at Oxford university’s Saïd Business School. She also contributed to Thomson Reuters’ Alternative Legal Services Providers 2025 report.
When the alternative providers emerged, their innovation was to take on lower-cost, routine work that companies’ in-house legal departments otherwise sent to law firms. They offered to get the work — such as managing contracts or storing documents — done more efficiently and affordably. This was welcome for corporate legal teams under pressure from the rest of the business to achieve more and cost less.
Today, their services have expanded to range, for example, from boosting clients’ tech skills to helping find qualified lawyers for specialist projects or putting together legal tech packages. The work they undertake directly and indirectly with law firms has grown, too.
Broadly, Thomson Reuters estimates the alternative legal services market was worth $28.5bn in 2023.
For now, legal departments’ need for assistance in incorporating generative AI could keep alternative legal service providers busy — for a few years, at least. In the Thomson Reuters report, law firms and in-house legal teams said use of generative AI will help such providers win business over the next three years because they will have more to offer.
The support they offer varies between providers, but all have an ability to fill in gaps for clients that are either not yet investing in generative AI themselves or are not yet equipped to use the technology fully.
For now, the gaps are big, says Steven Baker, who helps clients at Lawyers On Demand (LOD) find the right legal support for projects, from tech-enabled teams to manage contracts to securing lawyers for short-term schemes.
Many clients remain unsure how to deploy and build their own generative AI tools, says Baker, or they are cautious when it comes to adopting them — which “gives us the opportunity to be frontrunners”.
Wariness among clients also creates opportunities for alternative legal service providers to develop subscription-based tech packages. For example, legal service provider Integreon’s partnership with ContractPodAi allows it to use the legal AI company’s tool, Leah, to automate contract management tasks such as review, drafting, negotiation and storage.
Integreon clients can also use Leah without needing to lease it themselves or build their own systems. They can create AI agents, build contract workflows and generally plan how to use it, says Gabriel Buigas, who leads Integreon’s legal and compliance business unit.
Providing access to such tools is taking alternative providers into new territory. “The boundary between ALSPs and legal-tech providers has become a lot more blurred,” says Sako.
Meanwhile, when they show clients how to make the best use of generative AI, the services look more like training schemes or supply of extra skills than traditional legal support. “You get rewarded by being a good partner,” comments Buigas.
In May, New York-based Factor launched the Sensemaker Academy to help legal professionals apply AI to their work. The training programme uses a curriculum developed with Sense Collective, a community of general counsel from global businesses including Microsoft, GSK and Ford that want to accelerate adoption of generative AI in legal services.
Factor’s GenAI in Legal Benchmarking Report 2025 found that while more than 60 per cent of corporate legal teams had access to AI tools for their work, about a third said they wanted more support before they would feel confident in using them. “Law departments need to uplift their people,” comments Varun Mehta, Factor’s chief executive.
At the same time, alternative legal service providers may be asked to tailor their work for specific challenges, argues Manuel Deo, co-chief executive of Ambar Partners, which assembles external legal teams for clients.
He notes that clients are more selective about what they outsource and the types of legal teams they want to assign work to. “I’m seeing clients ask for specific parts of a project to be delivered from an external provider. Before, it was the whole project,” he says.
And as in-house legal teams gain confidence in using generative AI, the alternative legal services providers may have to adapt further. In the Thomson Reuters survey, one-fifth of respondents from corporate legal departments said generative AI would diminish their need for such outside providers, after the current, initial boost.
But Sako argues this would require companies to be able to integrate generative AI technologies across many business areas, from beyond legal to finance and marketing. “It’s a lot more difficult than people think to have that seamless cross-functional digital transition,” she says. “And in-house teams have always been under pressure in terms of doing more for less.”
At Factor, Mehta believes that those alternative legal services providers that can adapt will not run short of clients because the next big thing will always be supplanted by another next big thing. “For the industry as a whole, there will constantly be a need for new and different legal work — things we don’t know and can’t imagine today,” he says.
