Legal tech: threats and opportunities

Many law firms were resistant to using email even into the mid-2000s.

Now, lawyers are reaping the rewards of investing in:

• automation tools, which have reduced administrative costs
• cloud solutions, which have enabled agile working
• AI research tools,  which have introduced efficiencies and competitive advantages

Perhaps more importantly, many of the benefits achieved as a result of harnessing lawtech have been passed on to clients in the form of lower fees, more flexibility and increased transparency.

For example, case management systems with a degree of client access can reduce inputting time and errors, allowing clients to interact with the firm 24/7 and view progress of their case.

Legal tech trends – the new reality

AI and machine learning

The current meaning of artificial intelligence (AI) is far removed from the science fiction concepts.

Legal AI solutions are essentially sophisticated methods of teaching computers (partly using machine learning which allows a system to learn using a predictive algorithm, without being explicitly programmed) to carry out routine tasks and/or search through vast quantities of data.

One of the most significant practical implementations of AI within legal tech has been predictive coding.

This is a form of technology-assisted review used to assess the relevance of vast numbers of documents for purposes of electronic disclosure (e-disclosure).

Predictive coding – whose use has been mandated in certain cases following Brown v BCA Trading [2016] EWHC 1464 (Ch) – employs a combination of keyword search and iterative computer learning to rank the relevance of each particular document.

Cloud computing

It's no surprise that the rise of an agile working culture has come hand in hand with the availability of cloud solutions.

Cloud computing allows fee earners to work remotely, as long as they have an internet-connected device and wifi access.

As well as providing more flexible working options for lawyers (which can be a significant factor in attracting and retaining talent), moving IT infrastructure to a cloud provider can result in:

• improved cost efficiencies
• better stability
• freeing up the time of IT staff to improve systems and processes rather than spending time 'keeping the lights on'

Big Data and legal research

The digital age, in which a constant flow of information is automatically recorded and uploaded to various online databases, has introduced the concept of Big Data.

This refers both to very large sets of data, as well as the processes used for capturing, analysing and extracting value from these data sets.

An obvious way in which the legal sector can take advantage of Big Data is through advanced legal research tools.

A good example of this is the Lex Machina product, which offers a "legal analytics platform" to help lawyers decide on the best litigation strategies by looking for trends in the outcomes of previous relevant cases.

Many law firms have a goldmine of their own Big Data in the form of client databases and website user data.

Even post-GDPR, this data can be extremely useful in terms of identifying upselling opportunities and optimising marketing campaigns.

Automation

Many billing, administrative and secretarial processes have already been automated to a lesser or greater degree.

This is particularly the case in larger firms that have invested in legal tech, but also in smaller leaner boutique firms or by sole practitioners who have turned to managed outsourced services in an effort to save costs.

DIY law and chatbots

Although legal tech is often designed to help law firms, it's also increasingly being targeted towards potential clients who are willing to do some of the groundwork themselves.

The rise of alternative business structures (ABSs) and a more experimental legal culture has seen so-called "digital disruptors" making use of IT expertise to offer straightforward legal products to individuals and small businesses who would have otherwise gone to a solicitor – or not received any legal advice at all.

Examples of DIY law include:

• template legal documents (see Rocket Lawyer)
• chatbots (see DoNotPay – which gained fame through its success in automatically challenging parking tickets)

Legal tech: threats and opportunities

Legal tech developments present an opportunity for many established firms looking to make efficiency gains and adapt to an increasingly popular agile working culture.

But technology also provides a way for boutique firms and sole practitioners to compete with the larger players, giving them access to powerful research tools which help to level the playing field.

High street firms struggling to adapt their practice are already losing out to smaller, leaner outfits as well as digital disruptors.

The rise of a 24/7 consumer culture, and the coming of age of the 'Amazon generation' who have grown up with technology, means that firms need to change traditional working practices to survive and thrive.

Being available to meet clients in a single office location from 9am to 5pm, Monday to Friday is no longer good enough.

As clients are demanding a more flexible approach, with options to contact their lawyers outside regular office hours online, and access to a case management tool where they can view progress and leave comments.

Similarly, lawyers themselves are demanding flexible working opportunities, where work is judged on results rather than office attendance. New entrants to the profession are more willing to jump ship to more forward-thinking firms.

An unintended consequence of the growing emphasis on flexibility from both clients and lawyers is that it can lead to the delineation between work and home becoming blurred.

Whether increased flexibility improves or hinders the work-life balance is open to question.

Legal tech provides a huge opportunity to technology companies looking to obtain a share of the legal market – by developing products for law firms or selling services direct to consumers.

It is also arguably providing better access to legal services for a substantial section of the public who would otherwise be priced out, with DIY law options more abundant than ever.

Support for legal tech development

Although incumbent IT companies have a substantial market share of the legal technology sector, many of the truly innovative products and services are being created by startups.

Funding has been available through traditional investment channels.

Some larger legal firms have set up law tech incubators where startups can develop their products in a collaborative environment with other technology companies, lawyers and clients.

In 2015 Dentons created NextLaw Labs, "a global collaborative innovation platform focused on developing, deploying, and investing in new technologies and processes to transform the practice of law".

In 2017 Allen & Overy launched Fuse, a "tech innovation space" promoting collaboration between lawyers, technology experts and clients "to explore, develop and test legal, regulatory and deal-related solutions".

The Law Society partnered with Barclays Eagle Labs to create a major law tech incubator – designed to help legal technology businesses start up and scale up.

Partner firms and academic institutions include Clifford Chance, Norton Rose Fulbright and UCL. This lab addresses a real need to better define and solve real challenges by bringing the right groups together.

We are likely to see significant changes over the next few years in terms of legal technology and the business of law.

Although it's hard to predict the future, firms that stay informed and up to date will be the most prepared to take advantage of new developments and innovation in the sector.

Views expressed in our blogs are those of the authors and do not necessarily reflect those of the Law Society.