LegalTech, the digital lawyer
Technology is unstoppable, transformative, eye opener and game changer and it will be as it hits the legal sector.
The legal services are very fragment and diverse in size and talent. The attorneys at law deal with complex, sensitive cases in every aspect of business and personal life cycles. The relations between legal firms and their customers are often very personal and subtle. When a legal assistance is needed, it is most of the time unavoidable and expensive.
So, how the digital transformation would transform this industry?
The Boston Consulting Group published an insightful report in 2016 in collaboration with Bucerius Law School describing, “how legal technology will change the business of law”. According to the report the shift happens along three main categories: first as the platform infrastructures comprising the enabling technologies for do-it yourself (or without having the need of hiring a legal professional) and networking purposes, second as integrated support process solutions to ease back office activities, case management, document knowledge management, human resources, business development and CRM as well as accounting, billing and finance, and third category as substantive law solutions to support or even replace lawyers in providing legal advise and services. The report emphasizes that the legal tech is currently automating and digitizing the standard legal tasks but is expanding towards more specialized, tailored made activities which is also where the industry will be thriving in increasing competitive dynamics.
Looking to the current start-up landscape, in the first category we observe the online listings, marketplaces and auction platforms such as Avvo, one of the largest legal marketplaces founded in 2006 and received 132 million USD investments from 7 investors so far and Lexoo, founded in 2015 as a lawyer comparison marketplace where lawyers compete for a case through competitive bits and ratings, a start-up that has raised 2,3 million USD investments from 8 investors.
In the second category appear several tech-providers that offer databases, recruiting and insourcing platforms, as well as document review and assembly as well as practice management tools. To give few examples we can mention Axion in the insourcing side. The company, which is backed by 23 million USD investments in 2013 manages a talent platform, support M&A diligences & integration and legal intelligence to help businesses to catch up with the pace of fast changing regulations. Another shining star is CS Disco, an e-discovery software provider that received 30,6 million USD of investments from 3 investors and helps to find evidence in the tens of millions of documents reviewed during complex cases and investigations. In the same category, Clio supported by 26 million USD investments offers web-based tools to help law firms to manage their practices, firms and client collaborations. In the contract management side, Ironclad founded in 2015 and backed by 11 million USD investments, automates contracting processes leaving more time to legal staff to perform more sophisticated work rather than repetitive and standard ones.
In the third category, the most common activities are on online dispute resolution platforms and virtual courts. Modria built a scalable platform to perform dispute resolution online. The company handled more than a million cases in USA and globally since its foundation back in 2011. Acquired by Tyler Technologies in May 2017, the start-up mainly helps companies to resolve customer’s complaints. On the other side, the artificial intelligence is the promising space where big law firms and technology giants have started working hand in hand. The start-up called ROSS Intelligence, an AI system developed by Toronto University and the law firm Dentons uses IBM’s Watson to analyse legal issues, make connections, improve work processes and cut costs, so ultimately to provide better results at reduced time, effort and money.
According to CB Insights, the total deals in 2016 hit 155 million USD, lower than the peak value in 2016 that has reached 289 million USD. The seed / angel and Series A investments accounted for around 80% in 2015 and 2016. More than 50% of the deals happen in USA, Europe being the second largest deal pool.
Legaltech is a promising space, where the new generation tech-savvy lawyers will be able to activate rights skills to create efficiencies and value. Moreover, technology will finally allow attorneys to do what they love the most in their lives, the legal staff instead of less valuable and time consuming administrative “boring” staff.
Technology makes the access to legal services easier and more affordable, which will drive in return populations to tap in their legal rights at affordable cost and having the right legal advise will certainly boost the quality of doing business and living our lives.
