Post Covid-19 Legal tech: The New Normal
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Post Covid-19 Legal tech: The New Normal
During the past years, many of us – lawyers, tech experts, even law students – have been discussing the forthcoming digital revolution in the legal market, but none of us could expect how rapid the transformation will be – following the Covid-19 global crisis.
To some extent, these changes are here to stay. Now, when remote work does not seem as intimidating for lawyers – it is time for legal tech companies to use this momentum and “step up their game”.
Covid-19 pandemic is followed by a global economic crisis. Closed borders, home quarantine, and the uncertainty of the spread of the pandemic led most of the companies to re-plan their budgets, business strategies and employees, and law firms around the world suffered from a decline in their budgets.
This is mainly due to clients which cannot pay (or does not want to, during these times), closed courts and pause in cross border M&A activity. For example, in the Israeli legal sector, several law firms send some of their attorneys to leave without pay in the break of the pandemic, and others cut-down salaries by up to 30% for both associates and partners.
Post covid-19 Legal Tech Startups.
This roller-coaster did not skip over legal tech startups, which found it harder to raise money (investors were not as willing to invest like in 2019) or sell their products to law firms. However, this pandemic also revealed new opportunities to the legal tech market for the near (and far) future.
Over the past decade, legal tech enthusiasts have written many articles which try to predict the direction of the tech revolution in the legal market. A key prediction was the transition from long tedious corporate hours – to efficient remote work.
Remote work became popular within tech companies which realized that workers that have a good work-family balance life are happier, more productive, and with higher retention rates. For example, IBM was a pioneer in this field and started its remote work policy already in the 80’s.
As law firms were obligated to work from home to survive, this led to an important shift in their willingness and openness to embrace certain technologies in the future. Suddenly, using Zoom, Microsoft Teams or Slack does not longer seem intimidating, and turned out to be quite convenient: lawyers can connect remotely, shorten their meetings, etc.
This new perspective following Covid-19, that law firms feel a bit more comfortable to use tech is Legal Tech’s momentum. There is a “new normal” which leads to new problems that need to be solved and old systems that need to be upgraded.
“The new normal”
Competition within the legal market is going to expand rapidly. Not that it was mild, but the Covid-19 crisis brought even more anxiety to already stressed and saturated market. The reasons for increased competition?
Among others, the current status in which law firms are struggling to win new clients. In addition, we anticipate that law firms will invest more in innovation, both by establishing in-house divisions and by hiring legal-tech services.
Another change is that post Covid-19, the business sector worldwide has less money to spend on expensive legal services. This fact- along with the digitalization that is occurring in the legal world will enhance the need for excessive efficiency in the system.
We anticipate that there will be a higher demand for lower cost alternatives and products (online legal services will most likely thrive). This trend has already begun this May when the legal tech startup ‘Brainbase’ had completed its series A funding round (amidst the pandemic). Brainbase aims to “make the intellectual property industry more open, efficient and accessible” by offering a product that helps to manage company’s IP.
Among the bigger law firms, we expect that client experience and transparency will gain focus. Clients will demand that work is done faster and at lower costs, which is something that the incorporation of AI and Machine learning based technologies (along with other unique tools) can achieve.
AI based technologies can assist in solving new problems faster.
AI based technologies can assist in solving new problems faster, for example by analyzing large data sets (Big Data). Furthermore, Automation of legal processes can channel the expensive hours of the attorneys to focus on the law instead of daily repetitive tasks that can be automized. For example, Lawgeex which aims to automate contract review using AI technology, emphasizes its assistance to “focus on the deal, not the contract”.
It is important to remember that with every step forward with innovation, there are other things that need to be considered. Cybersecurity threats are matters that should be considered in every firm nowadays, and the more the market will embrace legal technology – the higher focus will be on cybersecurity and privacy – Legal tech innovators would be requested (if not obligated) to address these issues.
We hope that investors will be back in the game soon enough to keep the potential of this industry. Covid-19 gave entrepreneurs time to work on their legal technologies and improve their products. However, the main shift was not the quality of the products – but the willingness of the existing legal market to embrace those products and be more open to innovation.
If legal tech startups use this momentum wisely, 2020 will be the tipping point of legal services.
About Article’s Author: Maya Ashkenazi
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