LegalTech: Capabilities, Trends and How to Stay on Top

LegalTech, or LawTech, refers to the application of technology to provide or support the provision of any type of legal service. With the ability to not only speed up but also take over routine and bespoke tasks to an extent, the prominence of LegalTech in this day and age cannot be ignored.

What can the current Legal Tech achieve?

Currently, for many law firms, LegalTech plays a crucial part in document review in litigation, due diligence, legal research, contract drafting, and more. Due to the constraints of expertise and funding, these tools often exist as a result of a collaboration between large law firms and third-party software experts. Examples of law firms joining consortiums and forming LegalTech incubators can be seen across many major law firms: Freshfields Bruckhaus Deringer has its own Freshfields Hub[1]and Lab[2], whereas Allen & Overy has its Fuse project[3], Legal Technology Group[4]and Market Innovation Group[5].

Some LegalTech tools such as HighQ focus on enhancing the management of work as well as the interconnectivity among lawyers themselves and between their clients. It offers portals for lawyers to interact with their clients, a platform for online products and services, as well as a system which allows for easier management of transactions, legal projects and litigation[6].

Other types of LegalTech focus on improving the quality and speed of legal services. In many of those tools, artificial intelligence, or more specifically machine learning, is utilised to find patterns by processing large amounts of documents. With the guidance of lawyers in helping the AI understand and categorise different types of documents and risks, the AI is able to learn, review and categorise documents at a rate no lawyer is capable of. The categorisation of data can be in terms of the types of documents, the likelihood of risks from clauses, the similarity of wording, and many others. In systems such as Kira and Luminance, they do not exclude the human factor from the process, allowing the lawyer to have an overview of the output before making any final decisions.

In addition, certain LegalTech tools such as ROSS Intelligence, function like an AI-powered Westlaw. Research by the advisory company Blue Hill Research has found that ROSS Intelligence outperforms Westlaw and LexisNexis in terms of the quality of information retrieved, user satisfaction, as well as overall research efficiency. It does so by being able to understand searches which are worded as questions, automatically bring criticised or overturned cases to the user’s attention, summarise cases in accordance with the question asked, and allow any text to be highlighted so that other cases which possess similar language can be cross-referenced[7].

Finally, there are legal chatbots and document automation tools which interact directly with the clients, allowing human lawyers to be excluded from the transaction unless necessary. Clients can ask relevant legal advice by conversing with chatbots which are pre-programmed to follow the line of thinking of legal experts. An example of a legal chatbot is DoNotPay, an app famous for helping people dispute their parking tickets, but has now expanded to include many other services as well[8]. The application obtains information about the client’s claim and fills out the relevant legal forms using bots. As for document automation, a LegalTech company called Farewills allows clients to write a legal will themselves in just 15 minutes[9]. The will itself is compiled automatically based on the client’s responses to an online questionnaire[10].

What direction is LegalTech heading?

The Law Society’s Lawtech Adoption Research Report of 2019 has found that LegalTech is still “nascent and less disruptive than other types of technology”[11]. Change is imminent.

While there are many LegalTech options available for companies, and many more to come, most LegalTech tools focus on increasing the efficiency of legal processes. While they do reduce the number of hours lawyers need to spend on these specific areas of work, they do not remove the need of lawyers altogether.

The first potential change to emphasise is therefore a shift from back-office systems to front-end systems[12]. While front-end legal systems which directly interact with the clients already exist in the market, the numbers will undoubtedly rise further. Similarly to the aforementioned chatbots and document automation systems, future tools will only involve lawyers where needed. This will cut down on both the time and monetary costs. As LegalTech evolves, it will gradually exclude lawyers from an increasing number of transactions.

The second change is that of virtual law practice development[13]. Many LegalTech startups already practice virtually, and the trend has only been accelerated by the impact of Covid-19. By no longer needing to rent an office in the city, costs can be brought down significantly for both companies and clients. While working from home still possesses limitations and presents sustainability issues, companies such as Riverbed have played a part in addressing the problem. These companies offer services and products which can help lawyers remain seamlessly connected to their colleagues and clients by increasing network and application performance[14].

Thirdly, there will be a movement from a black box AI to a white box/explainable AI[15]. Currently, the black box problem is one of the biggest obstacles faced by machine learning. In financial sectors, people are refused loans, offered lower or higher premiums in insurance, all as a result of a conclusion reached by an AI which offers no explanation[16]. With the prevalent use of machine learning in LegalTech, it suffers from the same fate. Human lawyers will be at a significant risk of being held accountable for the decisions made by their robot counterparts if they are unable to understand the rationale behind the decisions made.

How can incoming lawyers stay on top?

In light of these developments, future lawyers must equip themselves with the necessary skillset to stay in front of the curve. Because the timeline for these changes is uncertain, one must be capable of tackling the legal issues of today while simultaneously being ready to adapt to the incoming storm.

In an interview, Tony Ensinger from Kira Systems stated that the biggest hurdle for firms in relations to LegalTech is “a lack of understanding of what the software does across the entire firm”[17]. Unfamiliarity with how LegalTech can be applied to different legal issues limit it from being used to its full potential, thereby limiting efficiency as well. Future lawyers must therefore learn and accustom themselves to the new technologies, and the quickest way to learn is through exposure. Future lawyers can intern in firms which already adopt LegalTech, attend conferences and demo days, talk to developers as well as do online research to familiarise themselves with the subject.

In addition to that, future lawyers must also better understand their client’s industry. This goes in line with the fact that the legal market has begun transitioning more and more into a buyer’s market[18]. This means lawyers need to improve on their soft skills and learn to be more involved in their client’s business cycles. Being involved means knowing the business jargon they use, listening and understanding what they are hoping to achieve when they contact lawyers, empathising with their situation, and informing them about deals or trends that may be relevant to them.

Lawyers must also be ready to work from home. This means setting up a proper place at home which is capable of sustaining the work of an online lawyer, as well as learning how to be disciplined when working from home.

As for the risk that LegalTech might replace all lawyers further down the line, future lawyers must nonetheless be wary of the possibility. Perhaps in the future, commercial lawyers will merely act as guarantors to the legal aspect of transactions, interpreting and verifying the output of LegalTech, similarly to how a solicitor verifies the already written wills in Farewills, but on a larger and more complex scale.

At the end of the day, lawyers are paid to deliver legal security, whether it be in commercial transactions, divorces or criminal cases. With LegalTech becoming increasingly prominent, the method through which lawyers offer legal security may have become faster and easier, but what lawyers offer remains the same. By embracing that fact, future lawyers can be more optimistic of change and in a better position to lend a hand to the development of LegalTech, seeking solace in the fact that, fundamentally, not much has changed.

Author: Brian Chua

Edited: Panteleimon Athanasiou

Further Reading:

https://www.lawsitesblog.com/2020/01/the-decade-in-legal-tech-the-10-most-significant-developments.html?fbclid=IwAR2bwGAV4bMpvwN0CFDsMhDYLpiumXi1sK9J8k5wxSWd_I5_nc3vO9sJFXM

https://legal.apacciooutlook.com/cxoinsights/the-5-questions-you-should-be-asking-about-legal-tech-nwid-6957.html?fbclid=IwAR3yJEtJPGAp5bEmz7ZNQuEKmnWpZ7Ef_WXBeB6sQHYkDhx2cE5fuEaoMAY

https://www.stikeman.com/en-ca/kh/legal-operations-exchange/Seven-Legal-Technologies-Every-Lawyer-Should-Know-About?fbclid=IwAR1ER4EuaqKOejIaGotD-vksB_6Egum8WAyiIK-_ONJk3n6fkZx7XiEGOVs

References:

[1]<https://www.freshfields.com/en-gb/about-us/connected-innovation/freshfields-hub/> accessed 4 June 2020

[2]<https://www.freshfields.com/en-gb/about-us/connected-innovation/freshfields-lab/> accessed 4 June 2020

[3]<https://www.allenovery.com/en-gb/global/expertise/advanced_delivery/fuse> accessed 4 June 2020

[4]<https://www.allenovery.com/en-gb/global/expertise/advanced_delivery/markets_innovation_group> accessed 4 June 2020

[5]<https://www.allenovery.com/en-gb/global/expertise/advanced_delivery/legal_technology_group> accessed 4 June 2020