Key Stakeholders in LegalTech

Law Firms

Law firms are at the cusp of disruption, and have to decide how they intend to proceed. Using technology to automate routine and commodifiable tasks, they will be able to improve on their existing business model, so as to satisfy their customers who expect a high quality of service for a lower price. Many buyers of legal services are sophisticated lawyers themselves, especially in large corporate legal teams, and prefer to work with law firms who are able to provide a clear cost and time advantage for their own finite legal budgets.

Leading law firms clearly understand this and also have a fear of missing out (FOMO), when they see their competition adopting new technologies to service their clients better. They have used case research platforms like LexisNexis, WestLaw etc for several years. Now these firm are also beginning to adopt technology for running professional business, like Elite, iManage, etc and to enable their practice of law with software like Kira, Logickull, LexMachina, etc.

Many law firms like Linklaters, Clifford Chance, Orrick, etc. are also focused on developing in-house innovation teams. Clifford Chance has an Applied Solutions team which is working on client specific projects. CCDraft is one such work product, which helps many of their financing and other clients set up draft playbooks, saving significant time and cost.

A few law firms are setting up independent incubators which can work with early stage LegalTech startups focused on areas of practice and business that would be relevant to them. Dentons is one of the earliest players to set up NextLaw Labs. Others who have similar incubators include Mischon de Reya (MDR Labs), Allen & Overy (Fuse) and Cyril Amarchand Mangaldas (Prarambh). Some firms are also investing in the early and growth stage start-ups. It seems that Kirkland & Ellis has established a corporate venture arm, which is being handheld by Touchdown Ventures. 

Corporate Legal Teams

With increasing pressure from finance teams to set finite budgets on legal and other spends, corporate legal teams are being forced to innovate and find efficient ways of stretching their budgets. One major way that large corporates are achieving this is through in-sourcing more of the legal work rather than farming the work to outside legal counsel. They are also using technology to provide better solutions, especially when dealing with large volumes of data and routine tasks. Software like ContractExpress, Relativity, etc are popular.

Alternative law firm models are also being developed, which move away from the hourly fee model. Some like Axiom, Atrium, etc offer lawyers who are disillusioned with the regular law firm model an alternative to the practice of law. Some are working to outsource entire legal teams or departments, for example Ford Motor’s Intellectual Property work has outsourced to UnitedLex.

 Many corporates are also setting specialized Legal Operations teams, so that their lawyers can focus on getting their done in a timely fashion, without getting bogged down by the administrative issues related to the same. Several companies are also seconding some members from their technology team to the Legal department, so that they can work together and develop proprietary software. They are also hiring legal solution architects, data scientists etc to help develop machine learning and AI oriented solutions.

Major conferences like CLOC, ILTA, CODEX, ItechLaw, LegalGeek, LegalTech are providing fresh insights into how LegalTech can be more efficiently utilized.

LegalTech Firms

Several small and medium sized LegalTech firms are being set up and this has become an area for many lawyers who have given up the practice of law and technologists who are looking at disrupting new business and professional areas. They are trying to solve pain points for many of the issues that they faced either as a consumer or a provider of legal advisory services.

Many of these firms are bootstrapped and looking for high quality investors and advisors. They also need partnerships with law firms and corporates to validate their proof of concept and to generate traction for their products. Several of the software being generated are being utilized in silos and inter-operability is becoming an important factor.

Firms which are large and recognized and usually at advanced stages of the LegalTech Hype Cycle (covered above) are building out strong teams and often enjoy the incumbency benefit. But they need to scale and develop further, particularly as investors ask to see more successful exit stories and unicorn valuations in this space.

Academics

More universities who have a law school and/or a business school are developing more LegalTech focused courses and research. They are realizing the need for different skills in delivering legal services. Suffolk, Chicago-Kent and Miami School of Law are key players innovating in LegalTech and preparing their students with career options that are becoming more commonplace in the future of law. Some universities like IE Business School (Spain) are also developing MOOCs (massive open online courses) on LegalTech.

Schools like Harvard, MIT, Suffolk have helped students become LegalTech entrepreneurs. Companies like Klarity Law and Foundation Labs are good examples. Some research centres like the Berkman-Klein centre are studying the privacy, ethics and governance of AI, which has implications for commercial use as well. Some schools like UCHastings (USA) and Ryerson (Canada) also have legal innovation incubators which are helping early stage companies.

The chart below provides a perspective on the LegalTech focused courses and research being developed in top universities in the United States.

Source: Law School Innovation Index, by legal services discipline (Linna Jr., 2019)

Government

Governments are some of the largest consumers of legal services, often given the large e load filed against them annually. Getting them to adopt resourceful LegalTech solutions could improve the outcomes for litigation, including online filings, case hearings and reducing case pendency in several countries.

Access to justice is a developing part of the LegalTech ecosystem and some key players, including State Bar Councils and research teams are working to provide high quality legal advisory solutions to people in need.

Singapore is working on providing subsidized LegalTech products which will enable small and medium size managing partners to focus on the business and execution of their client work, rather than spend enormous time on the administrative aspects of the role. They have also drawn up a Long Term Vision Plan for the country and encouraging LegalTech innovation through their Future Law Innovation Program.

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