In my experience, the regulators aren't really being sold in the first place. They don't have the resources or willingness to stir up a hornet's nest if they can get away with it.
Normally the key battle is in determining if the work in question falls within the definition of the practice of law. The more rote and mindless the work is (say, bates numbering a discovery compilation), the safer it is, but most of the low hanging stuff in this area is already done and most of the new entrants aren't trying to provide new tools in that area.
The big new wave is based on using ML and other tools to search, sort and classify documents for contract management, due diligence, discovery, etc. This is an area where support services already operate. As third parties, these support organizations allow firms to launder responsibility. They can claim that the primary firm is responsible for performing the legal work, which allows them to use non-lawyers to perform the work lawyers would, while simultaneously allowing the primary firm to claim that the searches they perform are defensible and therefore even if mistakes have been made that their efforts were sufficient to discharge their responsibilities.