Close to 50% of Canadian businesses will turn to alternative legal service providers within 5 years

International survey measured adoption of services provided by accounting firms, outsourcing or staffing firms, and tech companies

Close to 50% of Canadian businesses will turn to alternative legal service providers within 5 years
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About 52 per cent of corporate Canada either already uses alternative legal service providers for litigation support — or will do so within the next five years. 

That’s according to an international survey by Thomson Reuters, which measured the adoption of legal services provided by accounting firms, outsourcing or staffing firms, and technology companies. The report, which looked at the U.S., U.K. and Canada, found that revenue for ALSPs is surging, and adoption has already surpassed 2021 projections in litigation support, legal research, document review and e-discovery. 

For example, the report said that in 2016, just 8 per cent of small law firms in the U.S. used ALSPs for litigation and investigation support, while now, 26 percent of these firms are doing so. 

The study, which was done with the University of Oxford, Georgetown Law school, Acritas, and the SAID Business school over the past year, provided the most details about Canadian ALSP adoption at the corporate level. 

“Outside the United States, corporations in the United Kingdom and Canada say they are less likely to work with ALSPs than their counterparts in the U.S., but there are important exceptions. On the corporate side, projected growth rates would bring the three countries into close alignment within the next five years,” the report said. 

The survey collected responses from 50 U.S. corporations, 100 U.K. corporations and 31 Canadian corporations. At the moment, the U.S. leads when it comes to adoption of ALSPs: 28 per cent of corporations use electronic discovery; 34 per cent use ALSPs for legal research; 26 per cent use ALSPs for non-legal or factual research; 32 per cent use ALSPs for document review; and 38 per cent use ALSPs for litigation and investigation support. 

Canada does lead the U.S. in one category: The use of ALSPs for non-legal or factual research. Thirty-seven per cent of Canadian corporations already do so, the report said. Canada also beat the UK, where just 21 per cent of corporations used ALSPs for that purpose.

“In Canada, corporations prefer to ask their outside counsel to use ALSPs for specialized legal services provided by licensed lawyers,” the report said. “When it comes to legal research, the U.S. is the fastest adopter . . . . For non-legal research, the market seems most developed in Canada.” 

Canadian companies may be lagging the U.S. in ALSP use now, but the Thomson Reuters report expects that gap to close quite a bit over the next five years. 

In five years’ time, about 54 per cent of U.S. corporations and 39 per cent of Canadian corporations are predicted to use ALSPs for e-discovery. Adoption of ALSPs is predicted to hit 52 per cent in the U.S. and 45 per cent in Canada for legal research services; 48 per cent in the U.S. and 58 per cent in Canada for non-legal or factual research; 50 per cent in the U.S. and 42 per cent in Canada for document review and coding; and 54 per cent in the U.S. and 52 per cent in Canada for litigation and investigation support.

“It seems that U.K. corporations, as well as those in Canada, are more satisfied working directly with their lawyers, but certain regulations may be a factor as well:  The U.K. Legal Services Act enabled Alternative Business Structures (ABSs), in which lawyers and non-lawyers can co-own and co-manage law firms,” the report said. “As a result, some law firms and some ALSPs have taken advantage of the benefits of the new model and became ABSs.” 

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