Litigation Technology and Its Disruption of the Legal Profession
The way legal services are provided has been transformed by the emergence of litigation technology or LegalTech. New technology designed to improve overall efficiency of law firms is fast-becoming mandatory as a way of adapting to consumer needs in a climate of rapidly rising demand.
LegalTech also allows smaller firms and sole practitioners to compete with leading names in the field, giving them access to powerful research tools. High street firms struggling to acclimatise their practice are already falling behind, and so the rise of legal tech has substantially influenced the contemporary legal market.
The Rise of the LegalTech Incubator
In response to the need for change in the legal sector, many established firms are already introducing new technology by launching startups as incubators for new innovation. The legal startup market in the UK has increased rapidly as a result, boosted by investment from some of the country’s legal giants.
These include the likes of magic circle firms Allen & Overy (with their legal tech incubator ‘Fuse’) and Clifford Chance (with their legal tech incubator ‘Create+65’), alongside Mishcon de Reya with their programme ‘MDR LAB’ and Barclays bank that also launched a new incubator in partnership with the Law Society.
Incubators are designed to attract the best talents and biggest tech successes to their corresponding firms. However, incubators require more than just space and positive intentions. While that is important, a successful incubator must also be focused on specific challenges faced by firms.
This can be through providing human and technical resources and mentorship. Successful incubators require meticulous planning with a combination of expertise with technical focus, organisational skills, and access to consumer opinion to solve problems faced.
How the Emergence of LegalTech Affects the Legal Profession
Undoubtedly, developments in the LegalTech industry are bound to bolster not only departments within major law firms, but also their overall reputation in the sector. However, as LegalTech becomes more accessible to smaller practices, they will also be able to attract the benefits of greater working efficiencies and improved cost-effectiveness that legal tech brings.
A 2018 PwC ‘Law Firms Survey’ report shows that the top three priorities for British law firms are currently ‘use of technology’, ‘improvements in legal service offering’ and ‘standardising and centralising of processes’, all of which LegalTech can efficiently address. These are firm signs that LegalTech is currently disrupting the legal profession and pushing hard for change.
LegalTech as an Investment Market
As with any kind of investment, it’s always best to enter the market when it is cheap. That said, emerging markets are generally in sectors that have no track record or past performance to allow for a considered decision about where to invest.
LegalTech is definitely at the base of a steep growth curve but that also means there are going to be winners and losers on the way up. You only have to recall the ‘dot com’ bust and boom to know that!
The art of picking a winner in a new investment sector is to find out what is driving demand.
In the legal profession, there has been a significant increase in the number of consumer compensation claims. We only need mention the three letters PPI to know that millions of people are owed money after being charged unnecessarily for income protection on loan products and that is just the tip of the iceberg.
Look for Added Value in LegalTech Solutions
Perhaps the most important aspect of a LegalTech solution is that it must clearly demonstrate it solves a problem. Ideally that solution should be something that is easily scaled within the legal sector that has been designed specifically for the automation of legal processes.
Taking Lawthority as an example, the firm offers a LegalTech solution that not only automates the initial processes when taking on a new client; it also helps firms source that client in the first place. Lawthority’s USP of providing end-to-end legal tech solutions is something that sets it apart in this rapidly emerging sector, which presents a robust opportunity for investment.
It is beyond doubt that LegalTech will continue to emerge at high-speed over the next few years. This is mainly because law firms are faced with the option of implementing new tech or drowning under the weight of consumer demand.