Much as we have seen the rise of fintech, medtech and edtech, the legal industry is no different. The digital revolution is bringing new technologies to enhance, renew and streamline legal services. This emerging subsegment of the industry coined ‘legaltech’ (or ‘lawtech’) is disrupting a long-standing resilient industry which has seen little change to its business model – until now.
Although the legal industry is said to be a late adopter of the digital revolution, there are clear signs the industry is now making headway. In 2019, investment in legaltech start-ups increased to over £62 million, from £22.2m in 2017, showing heightened demand for the disruptive technologies. With this in mind, it's important to look at the factors driving this industry-wide transformation as well as the benefits of applying the new technologies to legal services.
Responding to increased market competition
Intensified market competition is fueling the rapid growth of legaltech. Through high-profile acquisitions of smaller legal businesses and start-ups, the Big Four are directly competing with law firms and fast gaining market penetration. With their new and expanding global legal arms, accountancy firms can offer a multidisciplinary approach to their international client bases.
Investment in new technologies, however, has also come from within the legal industry. Law firms have started to take control of the disruption to run tech start-up incubators. There is a vested interest for some firms as they can influence the developing legaltech companies to be shaped around the needs of the firm – giving the start-up a direct buyer and the law firm a new legaltech solution for their most pressing challenges.
The increased market competition has made the option to outsource ancillary services to third party specialist technology providers critical. With more internal capacity and peace of mind the delegated work is being executed by a highly efficient digital solution, a law firm can be a robust, high performing and sustainable engine with the opportunity to grow and scale.
Facilitating remote and agile working
The Covid-19 pandemic has undoubtedly accelerated the digital revolution of the law industry. We have seen how technology has enabled the industry to continue its services in spite of untold disruption.
To ensure a seamless transition to remote working, law firms have invested in the necessary hardware for home offices but also have moved systems and documents to the cloud. These data centres work in real-time, allowing teams to work collaboratively at any time and, critically, anywhere. To support this team working and facilitate internal conversation, we have also seen firms integrate new communications platforms.
Improving efficiency and accuracy
As the legaltech industry grows, almost every element of the tasks performed by lawyers have better and faster alternatives, from document assembly and contract revision to the way client monies and transactions are handled.
Automation, in particular Artificial Intelligence (AI), has been at the centre of many legaltech innovations and has been one of the more favoured technologies among law firms – in 2018 a report found that 89% of London law firms were already utilising AI or had imminent plans to do so.
The primary reason for automation is to reduce the number of time-intensive repetitive tasks undertaken by lawyers and paralegals. Replacing manual power with automated technologies not only allows valuable legal staff to focus on more cognitive pieces of work requiring their critical thinking legal minds, but it can deliver the work faster and with fewer errors.
Enhancing client services
The new technologies available not only change legal firms' internal ways of working but ultimately improve the quality of service and work delivered to clients. With the routine work carried out by technology, lawyers are able to focus their time and energy on providing better value and gaining rapport with their clients. For some law firms, this is supported by platforms such as a CRM or a case management system which can manage the firm’s relationship with a client.
Technology has also changed client expectations; they demand services to be carried out more quickly and at a lower cost – something firms will need to consider more as the economic recession causes further stress on the finances of clients both large and small. With this, there are now meaningful discussions about the demise of the billable hour.
In a strongly regulated industry with high value confidential deals and a steadfast business model, it is clear why there has been a more hesitant approach to adopting new technologies. However, we have seen a turning point. The legal industry is accelerating its digital transformation, embracing the revolutionary powers of enhanced digital infrastructure to enable remote working, increase efficiencies and deliver higher value to the client.
If you want to learn more about the power of legaltech, have a read of our recent article Rise of the Legal Technologist featured in The Wize and check out these companies that are breaking ground in the legal industry:
- Juro – A contract automation platform that enables a legal team to create, execute and monitor routine contracts at scale.
- Legatics – A transaction management platform that simplifies and automates traditional legal processes.
- Nasstar – A leading provider of managed IT services and tailor-made cloud hosted solutions.
- StructureFlow - An intelligent visual structuring tool for lawyers & finance professionals.
- Legal Connection - A case and practice management system for lawyers, law firms and in-house legal teams.
- Define - A technology platform optimising contract drafting and reviewing for lawyers.
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