How Agile Legal Tech Providers Are Reshaping the Legal Industry
Technology is set to be the greatest driving force behind legal industry developments in the coming years. What imminent changes can we expect to see?
Bridget Deiters, UK Managing Director at InCloudCounsel, breaks down the latest developments in LawTech and what they mean for the UK legal sector.
The legal sector is undergoing rapid transformation driven by technology, with agile legal tech service companies introducing better ways of practicing law and delivering legal services. In a survey by Robert Half Legal, 34 percent of responding lawyers said in 2017 that emerging technologies would have a greater impact on the practice of law during the next five years than governance regulations, globalization, and even data security concerns; and, in the Thomson Reuters 2019 Legal Tracker LDO Index, 70 percent of law department attorneys ranked the use of technology to simplify workflow and manual processes as a high priority.
With respect to transactional legal work, the services offered by alternative legal service providers (ALSPs) range from AI-driven document review apps to end-to-end tech solutions for managing routine agreements, such as NDAs and vendor contracts, and helping companies streamline high-volume legal tasks.
Given their focus on identifying and mitigating risks for demanding clients, lawyers have historically been reluctant to adopt new technologies, but as more ALSPs prove their reliability, that reluctance is gradually declining. Around 50 percent of corporate legal departments surveyed in 2018 reported they were concerned about ALSP quality, compared to 58 percent in 2016, according to research by Thomson Reuters, Georgetown Law, Oxford Saïd Business School & Acritas.
Particularly in the case of recurring transactional work, ALSPs with technology-enabled solutions have demonstrated their accuracy and utility, thereby addressing a fundamental flaw in the pricing of legal services: how to differentiate between bespoke, highly-sophisticated legal work and routine, high-volume documentation, diligence and compliance processes that are often repetitive and time-consuming.
Given their focus on identifying and mitigating risks for demanding clients, lawyers have historically been reluctant to adopt new technologies, but as more ALSPs prove their reliability, that reluctance is gradually declining.
The Benefits for Law Firms and Their Clients
In most large law firms, routine work is delegated to the least experienced people on the team. This often means that clients are being billed at premium law firm rates for low-value work done by junior lawyers.
A better option for law firms and their clients may be to outsource that high-volume, routine work to a tech-enabled ALSP that has affiliated law firms or networks of experienced lawyers who can deliver high-quality work without the premium law firm price tag.
By partnering with an ALSP or by connecting their clients with an ALSP with a proven track record of reliability, law firms can focus their resources on resolving their clients’ most challenging legal issues.
Similarly, in-house legal departments are often tasked with routine contract work that distracts them from focusing on value-generative legal work that leverages their institutional knowledge and directly supports key business goals. Outsourcing routine work to a specialist ALSP frees an in-house legal team to dedicate as much time as possible to the projects that matter most. When legal teams have time to focus their expertise on those important projects rather than routine work, the company relies less on expensive law firms and more on their in-house talent to meet their legal needs.
The Benefits for Legal Talent
The rise of legal tech has also had a positive impact on legal talent, as it breaks from the traditionally binary career options (law firms or in-house) and gives corporate lawyers a third option. Establishing a solo practice or small law firm is an exciting prospect, but it is risky. A lawyer who is offered the opportunity to join a talent network managed by a tech-enabled ALSP can combine practice and entrepreneurship, engaging with high-calibre clients and choosing the types of projects best suited to their strengths and skill sets.
Partnering with an ALSP allows lawyers to have a private practice without the burdens of business development, firm administration, billing or accounts receivable. Moreover, technology enables lawyers to practice law from anywhere, freeing lawyers who want to work with high-calibre clients to live outside of major financial centers if they choose to.
The opportunities for a more flexible working style enabled by legal tech also address the challenges of attracting and retaining talent in the legal industry. ALSPs allow more lawyers who are parents or who have other care responsibilities, side projects, or personal interests to stay in the legal workforce. Innovative technology platforms and business models created by ALSPs are bringing about changes like this.
In the UK, the leaders in the legal tech market are becoming increasingly established and recognised by law firms and their clients as reliable, low-risk options for legal work, offering innovative ways of delivering legal services that benefit all parties and provide added value. Investment in the UK’s legal tech industry is likewise growing, with startups receiving at least £62 million in 2019 and the UK government making a modest commitment to the sector of slightly more than £2 million last year.
As the legal sector adopts technology and ALSPs, law firms are liberating themselves from work that doesn’t align with their value proposition, lawyers are exploring new, adaptable career options, and clients are using their legal resources more effectively and more efficiently.