There is much in LegalTech That Will See More Happening in 2021
Legaltech has become the byword for legal technology including software, which helps lawyers support the legal industry, but there will be some more big news for legaltech 2021.
The term has become synonmous with new technology developments in an industry long seen as being hidebound by tradition and conservatism.
However the reality for law firms is changing, just as new law firms using legaltech advances are beginning to steal a march on their Big Law rivals. Often referred to as alternative legal service providers (ALSPs), these entities will handle all the work done by traditional law firms with the aid of legaltech developments.
And 2021 will see further legaltech news coming along. Partners are increasingly finding themselves embracing legal technology and it’s not all about the reduction in baby boomers leaving their Big Law corner offices.
Research from Acritas Sharplegal, showed that 84 per cent of partners responding to a survey expected their firms to increase investments in technology. That’s good news for legaltech 2021 and the years ahead.
Legal futurists see an increase in ‘commoditized legal services’ and an increase in the machine-learning that is becoming so popular.
The increased competition in the law market as well as the fact that the need to reduce costs has been less than many other industries that are closer to the bottom line than white-shoe law firms with large profit margins built into their charging structures.
LegalTech News 2021
The COVID-19 pandemic has heightened the need for greater legaltech deployment. Who would have thought one of the benefits of a pandemic was higher legal efficiency and – who know? – perhaps even lower legal costs?
A Law Firm GC Survey from 2020 showed that 81 per cent of respondents to an October 2020 Law Firm GC Survey on the Impact of COVID-19 indicated that they expected substantial changes in their firms’ technology investments and strategy in the coming years. In other research, 72 per cent of respondents surveyed for the Thomson Reuters Law Firm Leaders Report indicated that increasing the use of technology to reduce costs would be a priority in 2021.
The legaltech developments has changed that paradigm in a major way. Suddenly there are firms that are able to provide sophisticated legal services using technology as well as lawyers to deliver their services.
Many of these alternative legal service providers (ALSPs) that provide ‘traditional’ legal services will not even pretend to be law firms in may cases. They are ‘legal service’ businesses that take one (or more) parts of the traditional law firm service and compete with the use of legaltech providing the required expertise, but also with flexibility and very often at a significantly lower cost.
That is where legaltech and these entities provide a radical change to how legal services are provided.
Growth of InHouse Counsel Helps Spur LegalTech
The growth and development of inhouse counsel legal departments has been one factor that has continued to spur the growth of the newlaw firms and ALSPs that can support inhouse counsel.
But there is also another, major factor at play here.
The combined developments have lead to increased expectations from clients, both corporate and private, as well as placing cost pressures upon traditional law firms.
The demand for tech-savvy law firms to deliver legal services has risen.
The recent Law Firm Business Leaders Report indicates that 59 per cent of large firms have already began to develop planning for greater co-operation with their clients, mainly larger corporates but this is something that applies equally to those working with smaller companies also.
What other trends are on the horizon for 2021?
2020 was the epitome of the famous adage from the Greek philosopher Heraclitus, “change is the only constant in life.” It was, indeed, a year of constant learning, quick adjustments, and overcoming obstacles. And those learnings promise to continue into 2021.
There are increasing incentives for lawyers to become technologically competent, with the American Bar Association voting in August 2012 to amend the Model Rules of Professional Conduct to requiring lawyers to be fully aware of “the benefits and risks associated with relevant technology”.
One thing that legal futurist Jordan Furlong recommends is to place your employees on ‘innovation file’. He recommends some key moves towards developing your legaltech for the post-pandemic world by doing these things –
- Enable electronic billing and payment
- Move all your documents and data to the cloud
- Refresh your website content in light of the pandemic
- Investigate technology for carrying out basic legal tasks
- Revise your internal processes for greater efficiency
- Assemble detailed client intelligence databases
- Run the numbers to calculate client and practice profitability
What Are Some of The Recent LegalTech Developments?
The use of legaltech is generally seen in areas like litigation support, legal research, document production and review, eDiscovery and regulatory risk and compliance.
New AI-powered and other trends will continue to increase in 2021, with increased legaltech investment in many of these areas, including by some law firms.
Legal tech investment hit a record in 2019 at $1.2 billion according to LawSites.
In 2020, the first dedicated legal tech fund investing in legal technology start ups launched, representing a growth in the importance and sheer size of the whole legaltech industry.
There is set to become a major AI-powered law firm future that will continue to transform the legal landscape. These will include not just IA-powered legal software applications but an ongoing move towards ‘robot’ lawyers and a range of major, AI-powered management tools that will continue to change the way law firms operate, how (and who) they employ and the cost structure of law firms.
Among the major legaltech projects are such developments as –
The development of new legal technology has been stimulated also by the growth of organizations and academic institutions who have assisted in the development of law technology.
Stanford Law School, first instance started CodeX, which is the Center for Legal Informatics, an interdisciplinary research center, which also incubates companies started by law students and computer scientists, among others. Among the companies that have been hatched by the development have been Lex Machina and Legal.io.
There will be much more legaltech news coming as artificial intelligence (AI) developments continue to provide high-impact legaltech tools in just about any area of legal practice, practice management and every other area of law practice.
The legaltech 2021 outlook is one that has been, if anything, stimulated further by the pandemic.
There is, without doubt, much more to come yet.