2021 Predictions: The Market View

What a year it has been! Even beyond the impacts of the pandemic there have been plenty of significant changes in the legal tech sector and across the legal world as a whole. But what of next year? What will 2021 bring? Artificial Lawyer asked a range of experts what they think will happen next.

Here, in no particular order, are their thoughts. After reading this you’ll have plenty to consider over the Christmas holidays as you make your own plans for 2021. Enjoy!

2021 Predictions

Electra Japonas, CEO, The Law Boutique

I think the biggest change we’ll see next year is a shift to a more human way of delivering legal services, more companies implementing design thinking principles in their legal documents and ways of working and generally, a more straightforward, simpler approach to law. I think we’re moving into a world where law becomes much more embedded as part of a business brand – law doesn’t need to be boring and people are becoming more and more aware of that. 

John Knox, Global LMS Head, EY / EY Law

– We will see further market consolidation (not just of ALSPs but also of technology platforms)
– The war for talent will intensify
– There will be increased competition for the ALSPs from the Big 4 and major law firms who start to use their platforms effectively
– Clients will continue to become more strategic and sophisticated in how they buy these services and procurement will play an increased role
– Operations consulting and technology transformation services will become more important as clients move at greater speed
– Contracting and regulatory compliance are likely to be the two fastest growth areas.

Noah Waisberg, CEO and Co-Founder, Kira Systems

The use of AI to manage and review contract data will become ubiquitous. Law firms, and the enterprises that they serve, will begin to see the insights contained in contract data as essential to legal and business processes, and will make AI-based solutions the industry standard for accessing and leveraging that insight.

Haley Altman, Global Director of Business Development and Strategy, Litera

I think you will see continued acceleration of consolidation and integration in the legal tech vendor space. With the rise in usage of Microsoft Teams and other collaborative solutions, it will be important to understand how technology integrates into core firm systems. This will lead to an even greater emphasis on data, particularly how to surface and deliver the right data to the right people at the right time.

Dan Sinclair, Head of MDR LAB and Nick West, CSO, Mishcon de Reya

We expect the flow of money into Legal Tech to continue in 2021. The number of seed/early-stage investors interested in the sector is increasing, and the buy side continues to mature, driven in part by COVID related challenges and economic considerations.

Towards the larger end of the market, there are quite a few companies approaching or closing Series A rounds, and there are now a handful of credible roll up acquirers (Bighand, HG/Litera, Advanced, iManage, IntApp). MDR LAB believe there will be plenty of deal and funding activity to come.

Nick Thomson, GM, iManage RAVN

I’m really excited about what’s ahead in 2021 for legal tech and AI, I think we can look forward to a year of tremendous creativity and innovation from the market as they continue their adoption & application of AI and specifically cloud-based AI services. Transforming all the mundane and traditional processes that got in the way of productive remote work will continue especially as organisations adapt to take advantage of buoyant levels of legal activity as the markets correct & navigate Brexit.

I’m also especially excited about the expanding ecosystem of vendors working together and centring around the end to end user challenges and solving the issues that arise ‘between the margins’ of their respective products – doing this work can only be good for shared customers so I think this will be the year of some very interesting partnership and acquisitions as everything heats up.

Catherine Krow, CEO, Digitory Legal

In 2021, legal departments will be doubling down on data analytics for costs savings and diversity metrics. They will be asking their legal service providers for increased data quality and transparency to ensure excellence in budgeting, project management and diversity. During a turbulent 2020, legal departments reinforced their commitment to diversity and inclusion. In 2021, these D&I initiatives will gain ‘teeth’ as corporations scrutinize data to ensure the promises made in RFPs are being met and work is allocated fairly. 

Varun Mehta, CEO, Factor

Our hope is that 2021 will bring more emphasis on organizational health. 

Oversold, poorly implemented technology and hype surrounding legal innovation has led to exhaustion and seeds of pessimism in our market.

This can be the year our market focuses on outcomes and not ingredients. This is where solving for the intersection between people, legal substance and technology gets the attention it warrants. Winners will be those organisations focused on the user (read: ‘people’) experience, and that can understand business objectives & navigate worlds of tech, legal expertise, and process efficiency.

Jules Miller, Partner, Mindset Ventures

2021 will see record-breaking VC investment, including in legal tech. With the successful IPOs of Airbnb and DoorDash at the end of the year, along with increasing SPAC and M&A activity, VC optimism on exit potential will translate to an increased volume of investments and a return to pre-COVID valuations. 

This will include a lot more investment into legal tech startups, bolstered by the increased adoption of tech by the legal industry.  In a post-COVID world, the commitment to digital transformation and automation in legal is here to stay. 

Gordon Vala-Webb, Senior Advisor, Technology and Innovation, LexMundi

‘It is said that the present is pregnant with the future.’ Taking Voltaire’s famous quote as our guide, what do we see ‘now’ that holds in it our tomorrow? First, the move to the Cloud (and SaaS) – which was well on the way already – will become a full-on stampede. For lawyers themselves, this working by the ping-pong of emails will continue to be slowly supplanted by working within the documents as part of digital collaborative workspaces (it is just so much more efficient).

Microsoft 365 will be everywhere. The importance of interconnectivity through APIs, maintaining security, and the ability to log / track who-did-what will be even more critical. Video conferencing will remain a daily work tool for both internal and external meetings. Firms will develop approaches so their people will have a range of options for ‘working-from-‘: home? anywhere? in the office? at the client’s office? E-signatures, and E-AGMs, will become increasingly commonplace as legislative frameworks catchup to permit these obviously beneficial approaches.

The slow creep of document – and process – automation will accelerate. One genie – that is out of the bottle now – will have consequences which are hard to predict: all lawyers, everywhere experienced in 2020 that they can work with anyone else, anywhere, at anytime, efficiently and effectively using asynchronous digital tools. Who knows what will ultimately come from that profound present?

Bas Boris Visser, Global Head of Innovation and Business Change, Clifford Chance

In 2020 we have seen all the evidence required that when the circumstances so require even the most sceptical and cynical lawyers are very capable of changing the way they work and from one day to the other do everything digitally. As a result, in 2021 we will continue to see an increased pace in the adoption of existing technology solutions and the ongoing willingness to onboard new technology based solutions.

The most important change I expect to see is that we increasingly move from point solutions (solutions focused on improving a specific part of a transaction) to end-to-end solutions (so having a variety of integrated tech solutions relevant to the overall transaction type available on one platform). This will mean consolidation in the market of legal tech companies where we will see a number of bigger players buying up the providers of point solutions to be able to offer the integrated platform and other tech companies making themselves available through platforms like Reynen Court.

Eric Laughlin, CEO, Agiloft

Legal tech buyers, vendors, and associations will collectively wake up to realize that they are talking about enterprise software, not legal tech. Contract Lifecycle Management is the showcase for this realization, with users across the enterprise and connections to the rest of the enterprise tech infrastructure. This acknowledgement should put more power into the hands of legal buyers and connect them more strongly to their internal clients. It will have a major impact on the way legal departments select, purchase, and implement technology, and how they describe the value achievements they derive from that software.

Christophe Frerebeau, CEO, Della 

The English language dominance of AI will slow down, with multilingual solutions giving other countries’ lawyers the same opportunities as their English counterparts.

More broadly, the opportunities and ways in which we interact with legal documents will expand, with Word plug-ins, chatbots and better dashboarding improving the way people interact with their contracts.   

Ann Bjork and Helena Hallgarn, VQ

This year has brought fundamental changes to legal workspaces. Looking into the future, post-COVID, we see that this trend will continue with employees working remotely and with only a few work spaces available at the headquarters office. This means that we will expect all tools and platforms necessary for the legal work to be accessible from any location and that we no longer will differentiate between digital solutions and other work or support tools. They will all simply be solutions.

Consequently, we will also see a change from professional roles as ‘Head of digital (solutions)’ to ‘Head of business development’ with a focus on what the business as a whole will deliver, not on the technical aspects as such. The key question of 2021 will be what kind of services and solutions your company or law firm will deliver in the future.

Pieter van der Made, Executive Chairman at Imprima

Now there is light at the end of the COVID tunnel, a surge in M&A as a result of pent up demand is widely expected. Pressure on law firms to perform a large amount of legal due diligences in a short period of time is therefore likely. Maximally automating this process will become even more important. Artificial Intelligence technology, such as Imprima’s AI-driven DD solutions suite, will be the key enabler of that. We expect to be very busy in 2021. 

Richard Mabey, CEO, Juro

In 2021, we will see increased take-up of structured formats for agreeing legal documents. Whether in browser-native editors or self-executing formats like smart contracts, 2021 will herald the beginning of the end of a world in which all contracts are agreed in static files. The early adopters of new documentation formats will be in-house legal teams in high-growth businesses and the initial contracts to be processed will be high volume, low complexity documents like NDAs and MSAs.

Sacha Kirk, Co-Founder, LawCadia

2021 will be the year that transformation comes into focus. Legal departments and law firms alike have experienced extraordinary change processes and technology adoption in 2020 and for many this will embolden their teams to continue to iterate, prioritise digitisation and embrace new ways of solving problems.

Many in the legal industry have discovered a new level of comfort with change and technology and with this comes a greater level of discernment and expectation which in turn will push technology vendors to respond with more agile, flexible and accessible solutions. We have certainly witnessed this tangible shift in the past two months (in the APAC region) and I predict that we are on the cusp of significant transformation in the industry that will only accelerate in the coming years.

Adrian Camara, CEO of Athennian

GPT-3 powered legal tech products will gain market traction and make conversational AI legal experiences a reality. GPT-3, the new AI engine released by OpenAI, can understand text, and respond to questions based on the text it consumes. It has already been used to automatically respond to emails, answer questions about legal documents, such as NDAs, and summarise case law.

Mark Medice, Legal Sector Consultant, LawVision

Legal service delivery convergence will pick up steam, meaning the differences between traditional law firm business models and new competitors/providers will narrow, and the exploration of new law firm models will accelerate. 

From the law firm perspective, look for exploration of business model change, the requirement for stronger partner financial acumen generally (profitability specifically), more advanced uses of intelligence systems (like client/profit signals) as the practice and business merge.

These trends will be driven, in part, by client demands for efficient, innovative legal services and their ability to select from a greater variety of providers. Law firms are learning quickly, however, and 2020 may well serve as a template for change and cost-cutting, so long as firms distinguish waste from required investment for long-term success. I am bullish on industry innovation and change for the betterment of clients and firms in 2021. 

Kaisa Kromhof, CEO, Contract Mill

After some years of being a not so ‘cool’ area of legal tech compared to some others like blockchain and AI, document automation will experience a new Spring as it is delivered in an easy and accessible way to benefit the clients of law firms and in-house legal departments.

Christian Lang, Head of Strategy, Reynen Court

I’m predicting a significant rise in the adoption of basic technological utilities by law firms in 2021.  The rapid and unexpected transition to remote work broke important ice insulating traditional legal practice from technology and shattered misconceptions about how quickly and successfully law firm IT teams can support their lawyers with new solutions.  Additionally, the work-from-home experience threw into stark relief some unmet fundamental tooling needs that had long been papered over by immediate access to legions of admin resources sitting just outside the door.

As those lawyers (including partners) are thrust to the operational front lines of their own home offices (equipped with a newfound confidence in their tech team’s ability to quickly deliver solutions), these obvious gaps in the tech stack won’t persist.  

While many of the largest tech projects with the biggest budgets may be slow to recover their momentum as firms evaluate the extent of COVID fallout, I expect to see—and I think we can already see—firms moving quickly to provide their distributed workforce with access to a range of matter-agnostic basic utilities (e.g., eSignatures, machine translation, automated redaction)—particularly those that can be consumed on a flexible, pay-as-you-go basis.

Sarvarth Misra, CEO of ContractPodAi

William Gibson’s words that ‘The future is already here – but it is unevenly distributed’ are very apt for the current state of digital adoption for lawyers. With Gartner recently forecasting that 50% of legal transactional work will be automated by 2024, legal technology budgets increasing 3X in the next 5 years, and the world hopefully coming out of COVID-19 (second half of 2021), it will truly be the time to lead for lawyers in embracing technology-led legal transformation programs. 

We expect to see further acceleration on transformation programs. Smarter alternative legal delivery models, consolidation and legal tech platformisation will become even more rampant than in 2020.

Finally, a ‘here is hoping’ prediction for 2021: A genuine focus and desire on inclusion. The legal profession’s statistics on minority inclusion and diversity continue to shock and disappoint. Talk is cheap, the time has come to really ‘walk the talk’ when it comes to inclusion and diversity.

Olga Mack, CEO, Parley Pro

2021 will be the year of digital negotiation. This technology provides automated efficiencies in negotiation and enhances the user experience. It empowers people to contribute their knowledge and experience to real-time negotiation and decision-making processes. Negotiators are freed to collaborate simultaneously to discuss and edit documents. As a result, they reach consensus and approve contracts faster and more collaboratively. Legal teams can collect and analyze business data.

Lawyers can evaluate the effects of the decisions made during contract negotiations to improve overall business strategies. Digital negotiation enables true cross-functional collaboration and an inclusive, data-driven approach to decision-making. With a cloud-based digital negotiation platform, democratised access to information promotes diversity of thought.

Peter Richards, SVP Business Development, Ayfie

There will be continued acquisitions and partnerships to automate larger portions of legal workflows, either to expand platforms or to aggregate point solutions.

I think firms will begin to extract data from back office systems like time, billing and CRM systems to apply legal tech to business development activities (e.g. customer acquisition and retention) and also to measure the sentiment of their clients.

Another area for growth is using AI to mine industry and competitor data, so that firms can better advise clients on trends and potential acquisitions.

Julian Uebergang, MD APAC, Neota Logic

2021 will see an even bigger emphasis on data as corporate legal departments realise they’re now able to deliver richer, more personalised experiences to their customers and key stakeholders.  Given the recent trend of legal tech investment towards technology that enables execution of data driven strategies, I expect the legal and compliance space generally to pick up pace in this area, thereby accelerating solution creation that delivers real ROI.

Isabel Parker, Co-Executive Director, Digital Legal Exchange

A growing recognition that there are no purely ‘legal’ processes, and that digital transformation of the corporate legal team must be aligned to the transformation of the wider business.  This essential change in perspective will mean the end of the legal function as an island or a silo.  

It will also mean the end of the road for legal technology point solutions that purport to cater for processes and problems that are unique to the legal function.  Legal teams will make more use of enterprise technologies to solve problems in a cross-functional way.  This will deliver significantly more business value.

Laura van Wyngaarden, COO, Diligen

Using AI for legal tasks is no longer as mysterious as it once was. In 2021 the focus will be on finding new, practical applications for machine learning with an emphasis on demonstrating a compelling ROI. Many firms will be considering whether they have the ‘right amount’ of AI for their actual, practical needs. This year, AI capabilities will continue to advance to take on new cognitive tasks in law. 

Kevin Miller, CEO, LegalSifter

2021 will see an acceleration of the adoption of legal tech like we have no other year.

The pandemic has accelerated all things digital by several years. With the vaccines in sight and an economic recovery on its way, all the catalysts are in place.

Jenifer Swallow, Director of LawTechUK

In 2021 as we face economic recovery, live out Brexit, and the ESG movement gains traction, pressure will increase on the legal sector to further respond and adapt. We will see the gap closing between tech development and customer need, digital/paperless trade become an imperative, and greater attention turn to SMEs, as a target market and in respect of how technology can support in the resolution of disputes.

Regulators will take a more active role in sector innovation, and strides will be taken towards unlocking legal data, perhaps paving the way for the establishment of a legal sharing economy.

Tim Pullan, CEO and Founder, ThoughtRiver

2021 will be as volatile, unpredictable and exhausting as 2020. 2021 is all about the macro. Near vertical recoveries in some sectors, mirrored by final collapse in others.  For some lawyers this will mean an urgent need to radically scale, in others a fight for survival and relevance.  I believe these conditions will particularly favour tech-enabled managed service providers like many of our partners, able to deliver high efficiencies on flexible arrangements.

Rick Merrill, CEO, Gavelytics

My prediction for 2020 that I made at the end of 2019 was something along the lines of expecting to see a consolidation wave in legal technology and the failure of some number of legal technology companies as the bigger fish kill the smaller ones.  This was of course delayed by the bizarro world that 2020 ended up being, so I’ll make the same prediction for 2021, particularly the second half thereof.  Increased consolidation and the failure of several other legal tech companies that aren’t part of the M&A deals to come.

Namita Shah, CEO, PreSolv360

The contours of AI are still being explored on a daily basis in India. Its utility for various sectors is impressive. The legal sector, in particular, can be a major beneficiary if the potential of AI is tapped to its fullest extent. In fact, it is worth noting that Cyril Amarchand & Mangaldas, one of the leading tier-1 law firms operating in India, has already collaborated with an AI company. The use of AI especially in online dispute resolution is also sure to be a game-changer in the coming year.

Ned Gannon, President, eBrevia

In 2021, we’ll see an acceleration in the continued diversification of contract analytics use cases beyond the core law firm use case of M&A due diligence. We’ve observed this for some time across eBrevia’s client base of Fortune 500 companies, financial institutions, law firms, audit/consulting firms and ALSPs. This trend will only grow.

There will also be more successful ventures built on top of contract analytics platforms. Aumni’s investment intelligence solution which leverages eBrevia is a great example. These innovative companies will use their own domain expertise to augment contract analytics in specific verticals and move the technology in new and interesting directions.

Michael Grupp, CEO, BRYTER

With enterprises integrating more service units into digital processes, we will also see regulatory and compliance service functions going digital. What started with the IT helpdesks in the 2000s will become the digital front door for many corporate legal & compliance teams. 

Law firms will more and more discover digital products and more diverse service offerings. We will see more client cockpits, app stores and digital service offerings. Maybe law firms will even discover asset-based consulting? While digital adoption grew in 2018 and 2019 and received an additional boost in 2020, it is only now that we will see the results of this.

(NB….and what is a client cockpit? Mike explains it this way: A website that law firms make accessible to their clients (e.g. via login) to access information. It can be just information on specific subjects; documents; or case-related stuff, but it has increasingly been about offering digital apps and solutions. Allen & Overy’s AOsphere is the most prominent one, but Hogan Lovells also has Engage.’)

Dan Broderick, co-founder and CEO, BlackBoiler

The practice of law will continue to become increasingly multi-disciplinary. The delivery of high-quality legal services at scale and with a firm budget requires more than just attorneys. It will involve a team of attorneys, project managers, paralegals, technologists, data scientists, and other important players who work together efficiently and creatively to deliver legal services. 

Legal tech and AI won’t replace attorneys, but attorneys who leverage these tools will replace attorneys that don’t. Legal tech will facilitate growth and productivity in organizations by increasing accuracy and driving efficiencies. New lawyers should embrace good tech tools, and they should advocate for them within their organizations. Those organizations that adopt quality AI and other legal tech innovations will be well-positioned to deliver real-time insights, enhanced decision-making, and improved efficiency while also having a competitive advantage over those who do not.

Leigh Vickery, Chief of Strategy and Innovation, Level Legal

2021 will be the year that the legal services industry learns the difference between shareholders and supply chains. The deliverable will replace the service, and cost by unit will replace cost based on time (the billable hour).

Think about it in terms of a SKU on the shelf at the store: the fixed and variable costs of the product – along its entire supply chain – have been built in before it hits the shelf. The majority of legal services can work within this model, and those players that recognise the legal buyer is also a consumer will be able to disrupt the sector, and win. Who are those players? The ones who already have the consumer as their product: Amazon, Costco, Zappos. They know more about your clients than you do.

Jeff Reihl, Executive Vice President and Chief Technology Officer for the global legal business, LexisNexis

If 2020 has shown us anything, it’s that the legal industry’s reliance on AI and analytics will continue to accelerate, and that acceptance of the cloud will fuel AI R&D efforts that deliver new approaches to traditional tasks. This means more decisions will be made using data and analytics vs. traditional legal research of case law, and AI will continue to make legal technology products better, both visibly (analytics and data visualization) and in the background (improved search results, delivering answers, not just finding data). 

Peter Buck, VP, Product Strategy, NetDocuments

This decade is the ‘decade of the builder’. The number of new business applications is at an all-time high; the idea of destroying the old and building something new is alive because the pandemic recovery is not a V or a W, but a roller-coaster.

TJ Johnson – Strategy Director – Professional Services – Olenick

l see a significant rise in automated testing, TaaS (Testing as a Service), automated load and performance testing of legal systems, and maturation of RPA (Robotic Process Automation) in law firms. Automated Testing will increase significantly, particularly automating the monthly desktop patch testing process. TaaS is beginning to take hold. Law firms are looking to outsource testing of new applications, migration of applications to the cloud and integrations of applications into their already rich legal desktop.

James Quinn, CEO, Clarilis

In 2020 law firms, as is usually the case in a downturn, were too quick to furlough, make redundancies and reduce salaries (2020 20:20 hindsight!).  Now it is clear, on the whole, that law firms have fared far better than expected during the pandemic, confidence has been restored.  The arrival of vaccines, even before substantial rollout, adds to this confidence immeasurably. 

All conversations with Clarilis clients are now directed towards post-COVID preparedness, rather than weathering the storm.  In the drafting automation space projects to assist with COVID related demand have given way to a more traditional mix of use cases in Q3 and Q4 2020.  Conversations around drafting automation in 2019 were almost always focused on drafting time saved, but 2020 has highlighted that this category of tech (Clarilis in particular of course) reduces risk, facilitates remote working and promotes effective delegation. 

This powerful combination of benefits will drive further adoption in 2021.  Q3 and Q4 in 2020 are markedly different for drafting automation platforms than Q2 2020 and this upward path will no doubt continue.  Pre-COVID levels of activity won’t return on 1st January 2021 but I anticipate that by the end of Q2 levels of investment in and adoption of Legal Tech which will easily surpass pre-COVID levels. In short, I anticipate a sustained post-COVID acceleration through 2021 and beyond.

Samuel Smolkin, CEO, Office & Dragons

Maybe a boring prediction, but the most important shift for our customers and users will likely be the move to Office 365, allowing co-authoring, Teams, etc. on the user-facing end, and integration with Microsoft data tools and services on the back end. Lawyers and firms will finally have ‘Google Docs-like’ co-authoring features available by default, and will quickly discover what does and doesn’t work about that. This will be as informative for them as for us legal tech startups. It will also put more pressure on the value propositions of products whose key features are co-authoring, threaded comments, etc.

Philip Schoch, co-founder and Head of Product and Strategy, Apiax

In the legal space, AI has not yet played much more than a marginal role. This will change. Natural Language Processing has the capability to help understand and classify large amounts of legal text and content. The technology is there, but the missing element has been the level of trust. Can we trust a machine’s answers?

Trust can only be built if people understand what the machine is doing. There are too few people who really understand technology in the context of legal and regulatory issues. But this is changing. Several solution providers now have legal tech use cases that have been proven to work and add value. Those same providers also have teams who understand the technology and can explain its decisions and processes. Trust will improve next year. Dependable answers to complex legal questions are being provided to those who need them on a daily basis. Legal advisory practice will never be the same. 

David Carns, Chief Revenue Officer, Casepoint

The eDiscovery marketplace will continue to see consolidation in the year to come. Part of this is driven by the arrival of COVID and the advent of widespread remote work. The pandemic has highlighted weaknesses in the way enterprises are managing data and addressing increasingly complex compliance challenges like privacy and data security.

And to round off this terrific collection of predictions from a range of experts in the market, here are a few extra ones from Artificial Lawyer, all produced in a very festive spirit:

  • A platform-building private equity fund, Borg Partners LLP, will buy up every remaining point solution on the planet, but then collapse from extreme indigestion as it tries to assimilate them into one mega-platform to rule over all others.
  • Donald Trump – now looking for a new role – will launch a legal tech company focused on using AI to generate alternative facts for use in court cases, (especially his own). It will, naturally, be the best AI in the world, and it will have the best words.
  • Oxford University’s finest law professors will gather together to find a solution to the ‘Legal Tech’ vs ‘Law Tech’ dilemma. After many months of deliberation they will conclude that the way ahead is……’Lawgl Tech’.
  • Satoshi Nakamoto will finally reveal himself and then announce the creation of Chainblock, a radical new non-distributed data system.
  • And finally, Artificial Lawyer will launch a sister title called Organic Lawyer. It will focus on the return to nature in search of spiritual legal tech enlightenment. It will have sections on gluten free contracting, dispute resolution through interpretative mime, and the power of meditation to unblock your no-code chakras.

Hope you enjoyed that. Let’s see how many of these predictions come true.