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Legaltech in 2021: an evolving landscape
Alex Heshmaty of Legal Words offers a big picture view of the legal sector’s current relationship with legaltech. He discusses the trends, opportunities and threats you need to be aware of.
In 2018, I wrote an article discussing some of the threats and opportunities posed by legaltech. Since then, how has the landscape changed in 2021?
The main driving force behind the adoption of legaltech by law firms has been the promise of higher profits through automation of routine tasks, and the resulting efficiency gains.
But there have been other important factors, notably pressure to offer remote working options for younger entrants to the profession, which turned into a de facto requirement following the coronavirus (COVID-19) pandemic.
Clients have also increasingly come to expect a degree of ‘tech savvy’ from their lawyers. In addition, heightened competition on certain routine legal services means that firms often have no choice but to automate certain processes.
One particularly successful legaltech company, Clio, became a unicorn in 2021, achieving a valuation of $1.6 billion.
Meanwhile, Clifford Chance launched a new R&D hub earlier this year for its legaltech unit, Applied Solutions. And the Big Four are pushing forward with their promotion of their own legaltech solutions in partnership with legaltech start-ups.
The Law Society has recently published its first report of results from its Future Worlds 2050 project, which features predictions on artificial intelligence (AI). The report notes that the UK could become a “massive exporter” of legaltech.
What legaltech are lawyers using?
Multiple lockdowns have propelled remote working into the mainstream.
The legal profession has generally been able embrace working from home swiftly and successfully.
However, some firms have had to invest time and money to ensure that their key software products (such as practice management suites) use cloud technology, so that staff can seamlessly access all the tools they need remotely.
Artificial intelligence: what it is and what it's not
AI has become a buzzword over recent years, with many relatively simplistic software tools claiming that their coding is infused with an element of AI.
It's perhaps useful to clarify what AI is not in 2021.
We are still a long way from any kind of computer which can think for itself or comes even close to any form of human intelligence.
AI has zero emotional intelligence and cannot learn brand new concepts unless they are pre-programmed by a human.
At present, AI essentially refers to sophisticated computer software which has been programmed to automate routine tasks.
It often has an element of machine learning, which enables the software to ‘learn’ to perform certain tasks within closely defined parameters and improve its performance according to direction and feedback from humans.
AI also often includes natural language processing (NLP), which further enhances the software with the ability to process written or verbal natural language queries.
In effect, NLP allows a human to interact with a computer without needing to understand any computer code.
There is some element of AI in most of the technologies I mention below.
Many lawyers are now relying more on automated transcription services rather than human legal secretaries.
AI-infused voice recognition software is constantly improving and can usually be trained to a certain extent to understand specific voice patterns.
Software-based transcription services are now fairly advanced and only require minimal corrections. But it’s the voice-activated software assistants – such as Alexa and Siri – which are perhaps taking most of the NLP glory.
One of the most significant practical implementations of AI within legaltech has been predictive coding.
This is a form of technology-assisted review (TAR) used to assess the relevance of vast numbers of documents for purposes of electronic disclosure (e-disclosure).
Predictive coding – the use of which has been mandated in certain cases following Brown v BCA Trading  EWHC 1464 (Ch) – employs a combination of keyword search and iterative computer learning to rank the relevance of each document.
Contract building and review
Document assembly has come a long way in recent years, and there are many services which can help lawyers to create contracts tailored to their clients.
Other software can check through any existing contracts and flag them for updating if necessary (for example, to reflect new legislation).
Some firms have implemented AI-infused chatbots on their websites.
These are essentially designed to streamline the process of handling online enquiries by potential clients, often taking the form of virtual receptionists.
At the moment, their main function is to direct the user to the most relevant page on the website or provide contact details of the appropriate lawyer.
Practice management automation
There is a wide selection of tools available for automating a variety of routine processes in law firms which had previously been undertaken manually.
Many of these tools are built into modern practice management suites, providing features such as automated billing and detailed audit trails.
One tool which has the dual benefit of automating certain processes and providing a degree of transparency for clients, is the client portal.
This basically allows clients to log into their own secure account and view details of their case.
This can also be used when onboarding a new client, which reduces administration time and inputting errors. It also reduces unnecessary client communication, since they can check progress on their matter via the portal.
Advanced legal research tools marry up AI with Big Data to help lawyers come up with optimal litigation strategies, in the form of case prediction.
A double-edged sword
Efficiency gains and job losses
Legaltech clearly presents an opportunity for law firms looking to make efficiency gains and increase profits by reducing support staff.
It also provides a way for boutique firms and sole practitioners to compete with larger players, giving them access to powerful research tools which can help to level the playing field.
The downside is that some traditional high street firms have struggled to adapt their practices, squeezed out of the market by more tech-savvy competition and digital disruptors such as online document providers.
Despite all the usual denials that automation tools will lead to job losses, it is clear that the livelihoods of legal secretaries, paralegals and other support staff are being threatened by the rise of legaltech.
Remote working and cybersecurity
Even before the pandemic hit, many lawyers were demanding flexible working opportunities.
There was also a rising trend in total agile working, where work is judged purely on results rather than hours worked from any particular location. Lockdown has turbo-charged this shift towards more flexible ways of working.
However, what has become apparent is that working from home has certain downsides.
Junior lawyers in particular have struggled with the lack of face-to-face mentoring and learning by osmosis which takes place in a physical law office.
They have also missed out on the social aspect of office working, which can have a mental health impact.
The blurring of home and work environments has arguably led to increased levels of stress.
Another challenge posed by home working is the increased cybersecurity threat. This is obviously critical for the legal profession due to client confidentiality obligations.
It's vital that law firms provide their staff with relevant training and IT policies specifically related to remote working.
Alex Heshmaty is a freelance copywriter and journalist, specialising in law and technology. He runs Legal Words, a copywriting agency based in the Silicon Gorge. Contact Alex at firstname.lastname@example.org.
Views expressed in our blogs are those of the authors and do not necessarily reflect those of the Law Society.
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