Legal technology, or legaltech (less often lawtech), is software and technologies that help law firms streamline core processes, like practice and document management, billing and accounting, and e-discovery.
Legaltech emerged as a response to the challenges the industry faced following the financial crisis of 2008. They included in-house lawyers’ greater demands on firms, pressure to cut costs, lack of standardization in client procurement across departments, attracting and charging clients in the competitive market after the recession, as well as competition from new companies that rejected the traditional law model. On top of that, law firms needed to plow through vast amounts of data since email communication has started becoming the new normal in the industry.
Over the years, legaltech has grown to encompass, on the one hand, the software and technology tools that simplify and streamline law practice for lawyers, and on the other, digital tools that simplify the acquisition and management of law services for clients by reducing or eliminating the need to consult a lawyer (or making it easier to find the right one quickly).
Technologies & Application Areas
On a higher level, legaltech is the industry’s way of performing digital transformation, that is, using software and technologies to simplify operations, become leaner, cater to modern customers, etc.
Legaltech encompasses the following software solutions and technologies:
- Workflow software tools
- Artificial Intelligence/Machine Learning (AI/ML) algorithms
- Analytics & big data software tools
- Customer experience (CX) solutions
- Cloud technology
- Distributed ledger technology (DLT)
Legaltech Areas
- AI/ML document review – data-trained algorithms that analyze legal documents across many areas, from risk management to M&A to compliance cases.
- Document and contract management platforms — tools that streamline or automate creating templates, negotiating clauses, and analyzing content.
- Workflow tools – systems that allow lawyers to digitalise and automate their workflows.
- Smart contracts – self-executing clauses in legal contracts enabled by DLT, Internet of Things (IoT), and other.
- E-discovery tools — solutions that simplify and automate e-discovery stages, for example machine learning algorithms that collect and process documents and prepare it for a lawyer to review.
- Legal chatbots – automated rule-based tools enabled by AI/ML that allow users to get answers to basic legal inquiries in a chat or messenger.
- Online marketplaces — digital platforms that help clients find the right lawyer faster.
- Cloud-based databases — data is gathered in a single data warehouse, where it can be accessed by employees across departments.
- Data security — ensuring the highest level of security for legal records with DLT.
Legaltech vs Lawtech — What Is the Difference?
Some experts reckon legaltech and lawtech serve different purposes, with the first referring to software and technologies lawyers use to streamline their work (e-discovery, AI/ML document review), and the second encompassing products for their clients (legal chabots, online marketplaces). Other lawyers reckon lawtech is not a fitting name for the field, as it implies the subject of law in general rather than an industry. In different publications, lawtech and legaltech are used interchangeably, but legaltech more often still. As of now, using both makes equal sense; time will tell which of terms will stick.
Use Cases: What Legaltech Benefits Firms Can Expect
While legal tech is a nascent field, law firms are already leveraging what it has to offer, digititalizing their workflows, improving customer experiences, helping clients to return virtual money, and more.
Big Data & Cloud — M&A & Portfolio Management
Looking for a way to review large patent portfolios, lawyers from Bird & Bird have teamed up with their client Nokia (the technology company) and a range of experts from different fields for a solution. Their joint effort resulted in Pattern — a cloud-based big data tool that simplifies M&As and client portfolio management and includes details of every patent ever published. The tool proved efficient and was rolled out to Bird & Bird’s clients in 2017.
Mobile — Workflow & Document Management
One of our clients, a long-established U.S. law firm, needed to transfer their workflows and document management as well as minimize the heavy paperwork common to a law firm.
A comprehensive and handy mobile app proved to be the fitting solution. It empowered the firm’s lawyers with the following features:
- Immediate access to сritical legal documents; files and documents can be securely shared between the firm’s lawyers
- Attorneys can send bills and receive payments easily
- HR center with powerful employee management tools
- Notification center: clients and lawyers are always notified about changes and updates
- White Label solution
Artificial Intelligence Document Analysis
Artificial intelligence (AI) is poised to free the legal industry from the massive amounts of paperwork. A good example comes from Luminance — an AI platform for due diligence, insurance, contract, and compliance management. The platform uses computer vision, machine learning (ML) algorithms, and probability statistics to analyze documents much quicker than a human. Since it launch in 2015, the AI platform gained wide recognition among law firms.
Customer Experience Management
CX platforms can make a big difference in a legal firm’s operations. In one of our projects, we helped a U.S. law firm fully digitalize their legal consulting with such a platform. It consists of two parts. Customers use a mobile app to request legal help by creating tickets with basic information and attached documents. On the other side, the firm’s representatives and employees are assigned with tickets in a web-based interface with a simple workflow (in style of JIRA) to manage those requests. If the representative cannot address the issue, it is automatically passed further to the firm’s in-house experts. The platform also gathers data, accumulating a knowledge base to simplify the process of solving similar issues in the future for every representative and in-house lawyer.
Illegal Transactions Tracking with DLT
While the legal industry heavily relies on tradition, it already started leveraging what distributed ledger technology (DLT) has to offer. Josias Dewey, a partner at Holland & Knight and a software engineer, helps the firm’s clients create DLT proof-of-concepts applications. For example, he helped develop a DLT tool that helps track and freeze illegal virtual currency transactions, helping a client to return $500,000 lost as the result of a hack.
Find out how legaltech can help your firm become more effective. Schedule a consultation with our experts.
