In Part I of this series, I examined how the pace of change in legal tech is ever-accelerating. In this post, I discuss the direction of travel, and the forces propelling change in the field. Where are we going, and what is taking us there?
Direction of travel
If we agree that the speed of change is accelerating, it seems prudent to figure out where it’s taking us! Rather than predicting specific destinations, let’s think about the general direction of travel.
Digital – if not today, tomorrow
Businesses are becoming increasingly digital, from how they interact with customers and suppliers to how they function internally (what we call ‘Digital Work’). A 2018 survey by Gartner of over 450 CEOs and senior business executives found that 62% have a management initiative or transformation plan to make their business more digital. (Gartner, Inc., “CEO Views on Digital Business: Takeaways for Finance Leaders,” 2018.) Digital tools are rapidly replacing paper and manual processes (what we call “Digital Working”). In a post-COVID world, we don’t expect the recently-developed remote working, management, and collaboration skills of our people (which we call “Digital Workers”) will be forgotten.
The law department must keep pace with this tsunami of digitization, which leads to three challenges: 1) selecting, implementing, and integrating legal technology to better support the business; 2) getting legal and business professionals to actually use the legal tech to achieve incredible outcomes, and 3) managing risk in an increasingly digital world with emerging legal issues involving social media, machine intelligence, cryptocurrency, cybersecurity, and privacy.
Change in the business changes the business of law
Demand for legal services will continue to grow for the foreseeable future, fuelled by many factors. The worldwide regulatory environment is becoming more complex, requiring greater legal awareness, guidance, and oversight. Advances in science, from genomics to drones to driverless vehicles, not to mention a more connected, always-on fabric of people and devices, will generate new legal issues that we have yet to imagine.
Despite this growing demand for legal services, law departments and law firms will continue to experience increased pressure to spend less. That dynamic will drive demand for new ways of getting legal work done, including using legal technology as a force multiplier instead of paying more lawyers to work harder.
The most progressive general counsel already run their law departments with business discipline, increasingly relying on technology. More will follow their lead. They use tech to measure their activity, cost, and outcomes to predict and manage more effectively. They will continue to do more with less, turning increasingly to legal automation and self-service legal tools to support the rest of the business. Legal operations as a discipline will flourish, driving ongoing improvement in efficiency and quality by reimagining how people, processes, and technology are used. Law departments will work more closely with procurement or deploy procurement methods to systematically ensure greater value in exchange for outside legal spend. A few law departments will shift from being a cost center to being seen as a strategic asset of the business.
Follow the money
Building technology requires funding and resources, so we must consider access to capital to anticipate where and how legal tech will develop. As previously mentioned, investment in legal tech surged in 2018 to over 700% of the prior year and broke the billion-dollar mark in 2019. Investors have developed a keen awareness and become believers in the opportunity for legal tech.
These investments took various forms, ranging from substantial late-stage raises by mature legal tech companies to modest venture investments in start-ups. In other words, some institutional investors are betting big on established players while others are betting on the promise of new entrants or “the next big thing.” While law firms are restricted in their ability to take outside investment, pure-play legal tech companies and law companies (like Elevate) have many sources of capital available to secure funding for growth. Investments like these will likely continue, fuelling development and innovation at all stages.
In the first installment, I covered the accelerating pace of legal tech; in this one, I covered the direction of legal tech, and in the third and final installment, I will predict where this will take us.
The most progressive general counsel already run their law departments with business discipline…They use tech to measure their activity, cost, and outcomes to predict and manage more effectively. They will continue to do more with less…reimagining how people, processes, and technology are used.