The COVID-19 pandemic disrupted the legal industry, just like it disrupted all other industries all over the world. This disruption notwithstanding, the legal sector has witnessed robust growth over the past few years. In 2021, its market size was valued at $901.8 billion. Between 2022 and 2030, the industry is expected to grow at a compound annual growth rate (CAGR) of 5.3%.
There are multiple factors driving unprecedented disruption and growth in the legal services market. But one of the primary factors is legal technology or LegalTech. In this article, we explore LegalTech in detail: what it means, how it is changing the legal industry, and what the future has in store.
What is LegalTech?
In recent years, technology has made huge forays into multiple industries, giving rise to an amalgamation of sectors such as FinTech (financial services + technology), InsurTech (insurance + technology), EdTech (education + technology), and AgriTech (agriculture + technology).
As one of the oldest industries of the modern world, the legal industry has traditionally relied more on face-to-face interactions and human inputs and less on technology and automation. But this old way of thinking and operating is changing rapidly with the emergence of LegalTech.
LegalTech refers to technologies that support the legal industry and enable legal professionals to practice law more efficiently and deliver better legal services to their clients and customers. The term also encompasses software solutions that allow the public to connect to lawyers, access legal services, and participate more fully in the legal system.
As with FinTech, InsurTech, EdTech, and AgriTech, the primary goal of LegalTech is to make life easier for those who provide and need legal services. Today, various categories of LegalTech solutions and technologies are available, such as:
- to digitise legal data
- for accounting, human resources, legal case management, and document management
- for litigation and case analysis
In general, LegalTech solutions encompass and simplify multiple areas of legal practice, such document management, digital signatures, case management, dispute resolution, legal research, e-discovery, compliance, and analytics.
How LegalTech is Changing the Legal Industry
LegalTech has made huge strides in the past couple of decades. The 2020 pandemic has further accelerated the digital transformation of the industry. Technology has changed many aspects of the legal profession. For example, due to social distancing and lockdowns, more lawyers interact with their clients via video conferencing. In the past, such virtual meetings were few and far between, with both customers and lawyers preferring to meet face to face.
Many legal firms are choosing to go paperless and adopting digital signatures and digital case management solutions in greater numbers. Online dispute resolution systems are revolutionising the industry, as are electronic legal marketplaces and multisided platforms connecting legal professionals with customers.
Many legal firms and corporate legal departments are adopting DIY services such as document drafting platforms to make contracts, wills, and other kinds of legal documents, to analyse cases, and even for litigation support. An increasing number are also embracing blockchain technology to execute “smart contracts” that ensure hassle-free enforcement and reduce counterparty risk.
Now, LegalTech tools are available for specific types of legal services, such as document review and e-discovery, automated document assembly, legal practice management, legal research, and intellectual property (IP) asset management. And then there are the up-and-coming AI platforms – ROSS, an AI software powered by IBM’s Watson technology is a great example – that analyse documents in milliseconds, search and extract information, and deliver research results faster.
More and more lawyers are also using LegalTech solutions and achieving great results, such as:
Cloud-based solutions, electronic payment platforms, and legal chatbots are also making their presence felt in the legal industry.
Why are so many law firms and legal professionals enthusiastically embracing these solutions? What benefits do they hope to garner from these tools? Let’s explore this aspect next.
Benefits of LegalTech
The right LegalTech solutions benefit all parties participating in the legal system including lawyers, judges, and clients. Modern software products enable lawyers to practice law more efficiently. Moreover, they can store and access documents on the go, thus ensuring that they never miss important case files or pertinent information.
Similarly, virtual proceedings conducted online without the need for the physical presence of parties removes availability barriers for witnesses and experts to appear in court. It also makes it easier for disadvantaged litigants to appear, decreasing failure-to-appear rates and increasing case closure rates.
LegalTech enables the public to easily find and hire legal services. Through dedicated lawyer directories, they can narrow down their search and find the expert they need for a particular practice area. At the same time, lawyers can collaborate better with their colleagues and serve more clients, irrespective of any party’s geographical location.
LegalTech is also revolutionising the legal sector because it:
The Future of LegalTech
According to Law360Pulse, LegalTech “smashed investment records in 2021”. During the year, LegalTech received $9.1 billion through funding or through M&As. According to Crunchbase, LegalTech companies received more than $1 billion in venture capital investments in the first nine months of 2021. This number surpassed the $510 million invested in 2020 and the previous all-time high of $989 million seen in 2019. The point is – LegalTech investments are on an upward trajectory and are likely to remain so in the foreseeable future.
The COVID-19 pandemic and its associated challenges are partially responsible for the increased investment in LegalTech. Another reason for the investment surge is that more legal firms and professionals are open to working with cloud and other technologies in the 21st century.
In the future, this traditional paper-based industry will adopt all kinds of LegalTech solutions for document drafting, contract management, legal discovery, practice management, and client collaboration. Firms with larger budgets and more tech-savvy employees will also adopt cutting-edge AI, machine learning, predictive analytics, Big Data solutions.
As of 2022, the LegalTech market is evolving and developing by leaps and bounds. Many law practitioners are open to exploring new tools and connecting with LegalTech developers and providers like Prime Infotech Solution.
Others though are facing challenges that hinder them from adopting LegalTech tools and solutions. These challenges are primarily related to a lack of understanding, organisational resistance to change, and of course, financial barriers. These firms must make a concerted effort to overcome these issues in order to enjoy all the benefits of LegalTech for their practices and careers.
Conclusion
Law firms that adopt LegalTech can expect to see huge improvements in operational efficiency, productivity, and profitability. With the right tools in place, they will be able to streamline workflows, save time, and increase billable hours. They will also attract more clients and serve them better with more personalised service and enhanced experiences.
