Legal Tech: The New Era For The Legal Market
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Starting in the mid-90s, not so long after the internet has evolved, it seems that technology has penetrated most markets and aspects of our lives. Since then, many services that we need as consumers became more accessible, cheaper and effective. There were even services and platforms we did not know we need, and today seems as if we cannot live without them. However, there is one traditional market that has started embracing the innovation only less than a decade ago – the legal market.
The evolution of the legal market.
The legal technology, or in short ‘legal tech’, is aiming to create tools to simplify the legal practice.
Traditionally, this sector was loyal to the written word and to complex archive filing systems which were huge time consumers, especially taking into consideration one of the ‘holy grails’ of the legal profession – billable hours.
Lawyers’ hour is very expensive, and innovation and technology aim make it more efficient and would actually spare valuable time for lawyers to practice the law during this billable hour. In a look back to the philosophy of the law, its essence is about doing the common good for the community. It is better said than done since in practice – before the lawyer even has the chance to fulfill that glorious essence – the lawyer has to research, review contracts and handle great amount of data.
The Legal Technology Trend.
The legal technology trend, especially startups based on artificial intelligence (AI) technologies which are built specifically for the legal sector purposes – is becoming a much broader phenomenon, which can eventually change many processes, and in some practice fields and jurisdictions – is already changing the way legal representation is being provided.
AI (artificial intelligence).
AI (artificial intelligence) is about creating a set of capabilities that are being demonstrated by machines – and prior to that were performed by humans. Although some technologies can truly make our lives more efficient, other could create a disruption in the market.
This far-reaching approach to legal tech is the development of new channels that according to critics, will diminish the need for lawyers and might even abolish them at all in the future for an on-growing list of practice fields and niches. Those legal technologies focus on redundant of missions as well as alternative solutions for solving disputes.
Startups like LegalZoom for example, aim to give online legal services for small businesses and families, in order to provide guidance and documents for all the legal complexities they have, without necessarily hiring a lawyer. Like in other evolving markets, in order to maintain their position in such cases, they will have to find how to give more value to their profession and re-invent themselves. Whether it is good or bad or who are the main beneficiaries, only time will tell.
Why is Legal Tech attractive?
Focusing on the aspect of making the legal market more efficient, it seems that there is willingness of law firms to adopt solutions and automation of processes in addition to the traditional methods.
According to Thomson Reuters Legal Executive Institute, the US legal services market alone is estimated in over 400 billion dollars. The numbers are a clear evidence that the market share for legal tech truly justifies the need for innovation. In addition, an article published in Forbes Magazine in January 2019 presents the investment rates in legal technology. The data presented showed that the money invested in legal tech companies raised from 224$ million in 2016, to 233$ million in 2017, and to a record of 1.6 $ billion in 2018.
The combination of a need and an environment that is striving for innovation, together with an immense market capitalization and willingness of VC’s and other investors to invest in legal tech projects, created a very attractive market for entrepreneurs.
Furthermore, today – more than ever – law firms are expected to provide higher quality services with lower costs and shorter time frames. The immense competition between law firms and its efforts to differentiate from one another is expressed by the fact that not only entrepreneurs has stepped into the legal tech market, but also large and small law firms started developing technologies which will meet their specific needs on their own.
The market already presents technologies in a wide range of fields such as smart contracts, workflow tools, knowledge management, e-billing and more. Here are a few examples for technology legal tech companies that are aiming to create a more efficient market – and change the legal sector:
- Lex Machina started as a project at Stanford University and was acquired almost 10 years later in 2015 by the research company of LexisNexis. This company developed a search engine that enabled high quality analytics and creation of insights from legal documents and court cases.
- Diligen is a machine learning based contract analysis startup which aims to make this process more efficient by reviewing many documents simultaneously and also minimizing the possible errors.
- Ross intelligence is a startup which integrates information from millions of case laws and assists a lawyer to find the relevant information they need for a specific case by organizing the information in a very accessible collection. It also has a feature that conducts analysis to this information and its relevance to the case being worked on.
These are only few examples for the new ideas and capabilities growing in the market, that has become very popular especially in the US and Europe.
What about Legal Tech in Israel?
As a startup powerhouse (or ‘Startup nation’ as sometimes referred) with global success in the high-tech industry and with companies like Waze and Mobileye – in addition to the fact that Israel is the country with the highest number of lawyers per capita – it seem only natural that legal tech will become the “next big thing” in Israel.
Even though the trend is in its initial steps, we are already witnessing a legal tech discourse and even new startups emerging. Just as a recent example, the Israeli based startup Lawgeex offers contract review automation, and is already giving services to some of the industry’s giants such as eBay.
And what about the future?
This million-dollar question will probably remain an enigma. We evidence rapid changes in every aspect of our lives. Who would have predicted only a few decades ago the massive penetration of internet and other technologies?
Many markets have transformed completely – the written news has gone online, public transportation has opened up to a variety of options and so our habits as consumers – from the way we interact with other people to the way we shop.
The legal market is no exception to other fields and as we evidence new legal technologies rise on an incline bases – one can definitely say that we witness a new era for the legal market.