Legaltech

LegalTech is becoming an industry-agnostic solution: how can it benefit your firm? 

The jury is out, and the verdict says that LegalTech can be used across sectors to improve service quality and the efficacy of workflows. The technology underpinning LegalTech products, from cloud computing and AI to big data and robotic process automation, may provide a solution for multidisciplinary firms. Aisha U-K Umaru, Analyst, Thematic Intelligence advises.

A crash and a boom

Innovation is often borne from necessity, and LegalTech is a great example of this. The 2007/08 financial crisis saw law firms explore ways to make their processes more cost-effective and efficient. The most pioneering firms turned to technology, and LegalTech boomed as a solution. 

One of the earliest LegalTech startups that emerged amid the crash was Clio, a legal technology firm that offers practice management software. Shubham Dutta, vice president of corporate development with Clio, expressed to Law.com the value that such technology can bring in uncertain times: “When Clio started in 2008, it was [amid] the global financial crisis. That’s how the company started. And I think in times like we are going through right now, technology has an important role to play to improve the efficiency and productivity of these firms.”

LegalTech venture financing doubled between 2019 and 2021

VC Funding into LegalTech reached £1.4 billion in the second half of 2021

Source: European Legal Tech and Services Insight, Raymond James, 2021.1

Since Clio, LegalTech has flourished into a multi-billion-dollar industry. According to Raymond James, venture finance funding into LegalTech more than doubled between 2019 and 2021, with £1.4 billion invested into LegalTech companies in the second half of 2021 alone. Future Market Insights revealed that the LegalTech market generated $27.6 billion in revenue in 2021 and forecasts revenue to reach $69.7 billion by 2026. This growth in investment and adoption can be attributed, very simply, to LegalTech’s usefulness. LegalTech funding has reached $1.8 billion in the first half of 2023 with a focus on debt financing, according to Legal Complex.

Two birds, one tech

Over the past decade, a wealth of LegalTech products have entered the market, ranging from software that provides legal services to task management solutions. Many of these products and their underpinning technology can be used across industries to provide value to companies.

LegalTech tools are most commonly used to improve service quality and improve workflows

Legal databases and automated document assembly assist the most with these purposes

Source: Hodgkinson, G. P., Gulati, S., Nokes, K., James, A.D., & Kununka, S. (2023). Attitudes toward lawtech adoption: Findings from a survey of solicitors in England and Wales. London: The Law Society.2

The contract management system DocuSign was first used by attorneys and judges to highlight its admissibility in court. It is now used across sectors, from employee onboarding at consulting firms to loan applications within financial institutions. 38% of firms and organisations surveyed by The Law Society in 2023 used such contract management tools to improve the efficacy of their workflows. 

Respondents also used document review and document assembly software to improve service quality, enhance their workflows, and reduce the cost-of-service delivery. An example of this software is Luminance, which uses AI to help companies assemble and review documents. While it lists notable law firms such as Dentons and Bird & Bird as users, KPMG and Delta Capital have also adopted its software.  

Another service often associated with lawyers is digital court bundles used by barristers. However, the technology used to keep these documents secure, such as Safelink, may also be used for other sensitive data, such as financial statements. This can be beneficial for multidisciplinary firms who have already integrated digital court bundles into their processes, allowing them to harness this technology for accountancy means.

A multidisciplinary future

While some legal technologies, such as cybercourts, are yet to gain widespread adoption, many LegalTech products are providing value to firms on a daily basis. Bloomberg Law found that 82% of US law firms using LegalTech in 2020 praised it for improving their efficiency and internal processes. 

Multidisciplinary firms that already possess a legal arm are well poised to benefit from the advantages of LegalTech by implementing software across firm functions cost-effectively. Industry-specific firms may still adopt LegalTech products, adapting them to their needs. There is therefore scope for LegalTech to further benefit industries outside of the legal profession. 

One proponent of LegalTech is German Dairo Florez Acero, Director of the Master’s in Digital Law at the Universidad Sergio Arboleda and President of the Colombian LegalTech Association. Speaking at Queen Mary University in London, Acero expressed optimism as to the future of LegalTech, envisioning that in the near future professionals and AI will work side by side to aid processes and provide enhanced services.

Main image: Aisha U-K Umaru, Analyst, Thematic Intelligence