Investment into the LegalTech industry pre-dates the pandemic – recording a growth of 6% in 2019. A $50m Series A investment for Kira Systems is a standout example. By the end of September this year, legal tech companies have now smashed their all-time high, recording a 2021 annual investment of more than $1bn from venture capitalists. One key example is JP Morgan, who launched in-house software ‘COIN’ which is able to extract 150 attributes from 12,000 commercial credit agreements and contracts in only a few seconds. This task would take 360,000 hours of legal work by lawyers and loan officers per year. This is just one of many examples, where legal technology breakthroughs can have a time-reducing function for lawyers and law firms.
That said, research by The Law Society suggests that many law firms are still risk-averse with slow implementation of these new technologies. Furthermore, many lawyers have reported that legal tech companies are providing point solutions for single issues but failing to tackle the whole ‘end-to-end’ dealmaking process. Critics of legal tech solutions often note vendor’s narrow focus as an explanation for LegalTech’s performance in comparison with FinTech. In 2019, it is estimated that global LawTech saw investment of $1bn; KPMG valued global FinTech investment at $137.5bn for the same period of time.
Artificial Intelligence (AI) is transforming the speed and efficacy with which lawyers are able to advise their clients. One of the main ways is through AI-powered document review platforms. These platforms are able to sift through vast volumes of paperwork to find key judgements far quicker than human capabilities. Platforms such as LawGeex and Thomson Reuters Westlaw Edge have been lauded for their ability to review documents and give predictive outcomes for disputes respectively. Through using AI-powered technology to complete due diligence, lawyers are left with more time to focus on solutions. Kira is particularly popular with UK-based law firms such as Allen & Overy, Clifford Chance and Hogan Lovells as well as with Deloitte’s in-house legal team. Another popular legal tech company is Luminance, used in over 300 law firms and organisations, in over 55 countries in more than 80 languages. Luminance argues that the software is able to understand language the way humans do but in volumes and at speeds that humans will never achieve. The technology works across a wide range of practice areas, including eDiscovery, M&A due diligence and property portfolio analysis.
Using cloud computing allows lawyers to access their practices from anywhere. The Law Society’s LawTech Adoption Research paper suggests that investing in cloud-based infrastructure gives law firms a competitive advantage and is favoured by clients. Key advantages include ‘security, accessibility for remote workers and resilience’ providing key backup and recovery services. Using cloud also allows for better collaboration across law firm practice areas and easier input from offices around the world. Currently, cloud usage amongst law firms is 58% but interestingly, smaller firms have become more reliant on it. Experts predict that the majority of law firms will rely on the cloud in the next 8-10 years.
Automated processing or RPA (robotic process automation) is arguably the most cutting-edge piece of technology currently enrolled by law firms. The ‘bot’ emulates the actions of a human for a variety of functions involved in executing a business decision. One example is automated billing with particular interest given to Clio Payments, powered by LawPay – a payment processor which has been built specifically for the legal industry. According to a 2017 Legal Trends Report, 28% of consumers surveyed look for the ability to pay via credit card when choosing a lawyer. Another RPA example is using software which automatically updates the client on any relevant developments in the law, whether that be legislation of case law. The advantages of using RPA or automated processing include cutting costs of labour and increased speed in progressing cases. A 2016 Deloitte study suggests that 114,000 jobs could be automated within 20 years.
Smart contracts have been an instrumental LegalTech breakthrough for law firms. Docusign, a digital transaction platform that lets users send, sign and manage legally binding documents securely in the cloud, won the FT Intelligent Business Legal Technology award in 2020. These smart contracts rely on blockchain technology, which has been welcomed by lawyers on account of its transparency, accessibility, data integrity and automation.
As a result of technology’s increasing importance within the legal practice, many law firms have opted to include legal tech training for their lawyers.
A number of law firms now offer a technology-based seat or training as a requirement for their Training Contract. One example is Clifford Chance’s IGNITE programme. IGNITE allows trainees to become a fully qualified lawyer after two years, but also offers unique secondment opportunities and time and space to develop technological solutions for the firm.
Other law firms have launched graduate LawTech schemes. Allen & Overy offer a two-year, four-seat structure run out of the firm’s Fuse hub. Participants will focus on AI and data extractions, before attaining a recognised qualification in project or process management. Similarly, Norton Rose Fulbright offers a Business and Legal Operations Graduate Scheme, where participants can enjoy four rotations through Legal Product Design, Legal Operations Consulting, Innovation, Business Solutions and Commercial Management. Those who are retained after the scheme are ‘expected to drive business strategy in the years to come’.
Some law firms have set-up development programmes for legal tech start-ups. Mishcon de Reya have established MDR LAB, which is open to early stage and growth technology start-ups. Applicants will have access to firm lawyers and other business experts as they improve products and pilot their ideas. Magic Circle firm Slaughter and May have also launched a legal tech programme ‘Collaborate’ which is designed to help participants ‘develop test and expand legal tech products’
Reed Smith has taken a more novel approach, establishing a Technology and Innovation-based 9-month internship for students at the University of Exeter and Queen Mary University of London. During their time on the placement, students work in the firm’s Innovation Hub working on service design, use of efficacy and data technologies as well as new and improved ways to deliver legal services.
There are certainly other LawTech schemes though so do some of your own research if these are opportunities you are particularly interested in!
For further reading, please take a look at our commercial awareness updates that cover the topic of technology:
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