Summary List Placement
2020 has been the year for legal tech. As law firms and businesses across industries shuttered their physical offices and shifted to remote work, legal tech companies stepped in to offer digital solutions to help streamline this transition, from client relationship management to contract analysis.
Shrinking budgets and increasing client demands for efficiency further spurred lawyers’ adoption of technology.
“In a nutshell, what we saw was the most significant transformation in how lawyers work in the last century,” said Jack Newton, CEO of Clio, a legal practice management software. “10 years of legal transformation happened in 10 months.”
Investors are taking note, too. In October, Disco, a cloud-based ediscovery platform, raked in a blockbuster $60 million in its Series F, bringing total investment to $195 million and valuing the company at $785 million. Another up-and-coming contract lifecycle management startup, Contractbook, raised $9.4 million in its Series A in December from investors like Bessemer Venture Partners and Gradient Ventures.
“It’s an exciting time for the legal profession,” said Jack Rives, executive director of the American Bar Association. “Attorneys are embracing and growing more comfortable with technology.”
Insider spoke with six legal tech experts on the biggest trends of 2020, and how they shape their predictions for the year ahead.
The legal tech market will become increasingly consolidated
In December, Exterro, an e-discovery and information governance software platform used by Visa and American Express, announced that it acquired AccessData, a digital forensics firm, for an undisclosed nine-figure amount.
Bobby Balachandran, the CEO and cofounder of Exterro, previously told Insider that the fragmented legal tech market is becoming increasingly consolidated as a result. “The market is driving it,” he said.
“Legal tech is an exploding market and we’re still in the early days of new apps and new technology to explore. It’s a very frothy space for tech investments, with a lot of opportunity and growth in 2021,” said George Psiharis, COO of Clio.
Legal tech companies will seek to expand their offerings to provide clients with an end-to-end platform
Accompanying the wave of consolidation in the legal tech market is the second, related trend of “platformization” as companies expand their offerings to provide a complete suite of services to their clients.
With many law firms and businesses working remotely, they’re looking for a single end-to-end solution that’s both easy and convenient to use, said Sarvarth Misra, CEO of ContractPodAI, a contract lifecycle management platform for in-house counsel.
DocuSign, for instance, acquired both Seal Software and LiveOak Technologies in May and June this year respectively, boosting its product offerings in the contract space with contract analysis and agreement-collaboration capabilities.
Harshad Oak, general manager of the customer adoption and value department at Icertis, a contract management platform, said that he expects moves toward a broader platform that includes contract management as one part of it.
“Contract management was once seen as something in isolation, but it’s now regarded as part of the bigger enterprise solution, especially given how crucial contracts are across all businesses and industries,” said Oak.
Big Law firms are upping their tech games with investments and partnerships
The rise of legal tech has also piqued the interest of law firms, many of whom doubled down on tech investments this year due to the pandemic. Tech-savvy law firms made nearly 40% more in revenue than old-school ones, according to the 2020 Legal Trends Report by Clio.
On top of this, law firms have seen mounting competition from the Big Four accounting firms, as well as from smaller companies offering parts of the legal process, like contract review or due diligence.
To maintain their competitive edge, some Big Law firms have turned inwards to develop their own in-house technology, while others, like Baker McKenzie and Allen & Overy, have tag-teamed with legal tech companies to develop innovative solutions for contract review, litigation support, and client relationship management. By streamlining work processes, law firms are able to produce more value to their clients, many of whom faced tighter budgets this past year.
“Adoption of technology by law firms seems to have been fairly robust this year, since they have to prove their top dollars,” said Misra of ContractPodAI. “The ones that do really well as we move into the new year will be those with truly tech-led solutions.”
The role and shape of in-house legal departments will see further transformation
Nearly a third of in-house counsel expect their spending on outside counsel to decrease over the next six months, according to a survey released in December by the law firm Morrison & Foerster.
As a result, industry experts predict that in-house legal teams will be expected to take on more responsibility, and legal tech can help bolster their work. In fact, while in-house departments were historically seen as cost centers, that’s changed with the pandemic.
“The companies that have been the most successful in navigating the pandemic were those with in-house counsel that are very integrated into all manner of contingency planning and risk-based decision-making,” said David Newman, a partner at Morrison & Foerster.
Bernadette Bulacan, who identifies trends and innovations affecting corporate legal departments as lead evangelist at Icertis, said that the evolution of legal tech “100% increases” the importance of “data-driven” general counsel. By using insight that these tech solutions provide — for example, about specific clauses in contracts — in-house lawyers are able to make data-powered decisions that inform a company’s broader business strategy.
The accelerated maturity around the legal industry’s thinking about transformation and tech adoption in the past year also will lead to changes in how in-house departments look.
“The whole look and shape of in-house departments will change,” said ContractPodAI’s Misra, who explained that 2021 may see the creation of new job profiles, such as legal engineers — lawyers who can code.
Legal tech will drive more equitable business practices and increase access to justice
By offering cheaper and more accessible legal solutions, technology can also increase access to justice.
“77% of what could be legal problems go without legal service. It’s not just about free access to services for free, but about free access to information,” said Clio’s Psiharis. He explained that technology can remove friction in the process of finding and using information, which can facilitate cheaper legal services.
Companies can also use the data from legal tech to make more equitable business decisions, said Bulacan of Icertis.
“General counsel are the guardians of a company’s reputation,” she said. “Data can provide insight into who the company does business with and who its employees are.”
The summer of 2020 was a watershed moment for renewing calls for social justice and diversity across industries, and Bulacan sees these as “accelerants” for companies’ adoptions of data.
“As consumers’ desires change, general counsel can understand that, use data, and make sure the right clauses are in place to create more diverse supply chains and workplaces,” she said. “The companies that have these large data pools will be the true winners of 2021.”