What is going to happen in 2023? Who knows? You do. Perhaps….
Artificial Lawyer asked a range of experts from across our sector the following question, ‘How much will the legal innovation ecosystem have changed – and in what ways – by 2024?’, this is what everyone said. Here is Part One of your responses, Part Two is tomorrow. Enjoy.
Karl Chapman, CEO, Kim Technologies
The big and unstoppable trends of the last few years will continue to gather momentum:
- the inevitable rise of the platforms (as opposed to point solutions)
- the march of ‘no code’ (not low code) tools
- the desire for IT functions to reduce their tech stack (to save costs and to drive integration and data insight)
- the critical need for technologies to be API rich (REST APIs are increasingly key table stakes)
- the need for actionable data (to support end-to-end digitisation)
These will be complemented by four emerging themes accelerated by the above and driven by increasing buyer sophistication plus what will be a challenging economic back drop in 2023 (and 2024!)
- commodity pricing from vendors (see next two points)
- vendors developing tools with markets beyond legal (to achieve economy of scale and drive commodity pricing)
- tools from outside legal becoming common in legal (aided by organizations striving to reduce their tech stack).
- increased focus by buyers on the financial stability of vendors (why take the risk)
The pace at which these trends become norms will be heavily influenced by whether we have a mild recession, a deep recession or a depression.
Jenifer Swallow, legal tech expert and former boss of LawtechUK
The investment landscape will remain difficult for the coming year, so we may see lawtech companies with great offerings taking longer to get to market and/or to customer volume. That said, there has been some decent funding coming in e.g. to later stage lawtechs so we can expect to see pockets of great growth and adoption there as their devs dig in on customer need and they raise their profile with marketing dollars.
The lawtech conferences and conversations with legal businesses this year have demonstrated a broadening of the cohort of lawyers paying attention to tech and innovation and wanting to be part of the evolution – we can expect more pilots, more upskilling, more strategic commitment in 2023 – of course along with a whole raft of continued lethargy. There are also some exciting products coming up to launch and a wave more at the feasibility stage as can be seen in accelerator cohorts and InnovateUK grant applications, so 2023 will also be a gestation phase on many levels.
We know big shifts will come when tech and innovation become a necessity not a nice to have in the minds of budget holders. The economic and wider societal environment over the coming year will be a forcing function to that necessity, with GCs in particular in line for more specific and informed pressure from their CFOs on cost and from their boards on ESG and #failuretoprevent.
The incredible growth of lawtech in the regulatory compliance space will continue to track to the latter, with widespread appal at the Post Office Horizon Scandal also seeding into corporate and regulatory consciousness an imperative for higher standards across the board. Lawyers will need to demonstrate – to risk committees, regulators, insurers and societal stakeholders – that they have their arms around both their own legal department, and the governance environment of their employer-clients, using the state of the art to achieve that. #Ethics will be trending, also influencing expectations and accountability around how technology is used in law as well as how the law is used for tech.
We may also look back on 2023 as the year when the penny drops on the opportunity of smart agreements/smart data and the fact that contracts, if structured correctly up front, can perform and oversee your obligations for you. With the legislation and policy changes in the UK around electronic trade documents and digital assets, and the context-agnostic nature of the technology, there are some exciting opportunities there for the taking. Adoption in this space alone will shake up the legal innovation environment considerably, and increase the availability of business-required data, including for better compliance, economic growth and shared/big data insights.
I remain excited about the consumer and SME space also, for the year ahead, with some tenacious founders going after mass market opportunities that are also tipping points more broadly for the legal sector. Once you have seen what is possible there is no going back and that naturally cross pollinates from consumer legal innovation into business, as we saw with fintech, impacting the ecosystem overall.
Serena Wellen, Senior Director at LexisNexis
The legal industry will experience tremendous advances in search precision, accuracy and personalization, powered by AI. Search technology will employ ML to deconstruct legal content, converting dense, unstructured data into a more highly granular form, enabling search technology to extract more information, metadata and context from legal documents. Similarly, AI will ingest individual user behaviour data to create more personalized and contextually relevant search experiences. Combined with advances in semantic search and NLP, lawyers will experience exponentially faster and more relevant search results.
By 2024, the industry will have solved the issues surrounding LLMs (Large Language Models trained on impossibly large data sets), including verifying the origin, accuracy, and subjectivity of the LLM output so that these models can be safely and reliably used in the legal domain. This will enable the creation of advanced legal applications such as more accurate, automated document summarization and drafting as well as voice-enabled search and question answering.
Finally, the industry will experience an even deeper integration of first- and third-party data, analytics and content into attorney workflows, tools and platforms, making them super-robust and seamless. By minimizing context switching and the need to master multiple interfaces and tools, attorneys will experience greater efficiency and productivity.
Isabel Parker, Consultant, Digital Legal Exchange
2024 will see the emergence of the corporate legal team as a dominant player in the legal innovation ecosystem. In-house teams will be highly sophisticated in their use of technology and their dependence on external counsel will dramatically reduce. Corporate legal teams will collaborate with strategic partners (my guess is the Big 4) to build products to automate non-strategic operational work – and will sell those products to other legal teams in their sector, with the Big 4 or skilled ALSPs providing a managed service in support. In-house teams will cease to focus on cost savings and headcount management and will become revenue generators for the business. Law firm legal tech/legal ops consultancies will be quietly mothballed.
By 2024, we will also see significant fragmentation in BigLaw. More boutique firms will emerge as the costs of supporting BigLaw infrastructure continue to spiral and the culture of the BigLaw model comes under increased scrutiny. The new boutiques will be culturally very different from the firms that spawned them: customer centric, lean, diverse and innovative in the way that they price. BigLaw will claim that these smaller firms do not pose a threat – but they will privately be rattled and will struggle to compete for the best young talent.
Michael Grupp, CEO, BRYTER
It will not look entirely different: There is a rocky 2023 ahead and change is still slow in legal. But as budgets are getting more available and procurement of legal tech gets faster and easier, we will see change – but only in fields where things have proven to work and where we can see measurable (say: easily demonstratable) and quick benefits: Document automation will become even more of a commodity, CLM and workflows automation will continue to be rolled out. And many legal teams will run at least a legal front door or first self-service portal for their organizations.
In general, teams in law firms and in-house will continue to become more diverse: re-organization of the teams, more legal engineers and other specialist roles.
Carla Swansburg, CEO, ClearyX
I’m going to sound very cynical here but nonetheless…Given the slow (but steady) pace of change, I don’t see a lot of distinction between now and 2024. I think we will see some further consolidation of legal tech tools into more “platform” plays, but even then we aren’t seeing a lot of fast integration of the tools larger players are acquiring. I HOPE we will see some of the acquisitions become integrated in a way that provides real value to users (much like the contract express/HighQ integration allows for a lot more seamless solutions development). I expect we will see a few less successful tools fold, some will be acquired and possibly shelved, but at risk of showing my cynicism I truly see little other than small, marginal increments of change in how legal services incorporate technology. Having said that, I think more and more law firms and in-house teams will find ways to incorporate technology into their work – there’s nothing like a recession/financial crisis to hasten adoption of tools that create efficiency!
Shilpa Bhandarkar, CEO, CreateiQ – part of Linklaters
I think we will see much more consolidation in the market. I’ve said this before but I think current market conditions will accelerate this into reality. Therefore, by 2024, rather than having a patchwork of point solutions for specific parts of transactions, users should hopefully have access to more end-to-end solutions – or products designed for interoperability so that users can then design their own tailored, end-to-end solution.
There is also likely to be a greater focus on adoption, training and integration of tech – rather than only onboarding new tech, which is where much of the focus has been over the last few years. Combine that with the continued focus on automation and digitisation, and suddenly legal data stops being a theoretical competitive advantage and starts becoming much more real. The ability to surface the right data to the right people at the right time will be a real differentiator in managing risk, as well as for the overall client experience.
Ben Allgrove, Chief Innovation Officer, Baker McKenzie
The pace of change will continue to be evolutionary rather than revolutionary. In-house teams will continue to focus on CLM, vendor management and alternative staffing, without the partnership model between law firms and clients fundamentally changing in the way it needs to. Recessionary and inflationary pressures will put the squeeze on transformation budgets at law firms, causing innovation efforts to focus on core digital transformation imperatives rather than experimental efforts.
Kelly Harbour, SALI Board Member and Chief Business Development Officer, Goulston & Storrs
I think we will continue to see consolidation in the market – specifically, more acquisitions by some of the players who have been actively acquiring over the last few years, including Intapp and Litera. I also expect that 2023 will bring material gains in the integration of legal tech products – within tech companies that have acquired new products, within law firms with an ever-growing list of technology solutions, and between law firms and in-house law departments as all parties seek to break down barriers to information-sharing.
A related prediction: With open questions around the economy and legal services demand in 2023, I would not be surprised to see firms pull back on new investments in technology and instead focus on how to get more out of their enterprise data. That goal may be achieved through some combination of more robust integration between systems, increased scrutiny on data governance and quality, and use of data models or some form of AI to generate insights that lead to competitive advantage – either by predicting opportunities, alerting firms to relationships at risk, or simply harnessing internal know-how with external resources to better serve clients.
I also suspect that these data-focused efforts will increasingly rely on industry-standard classifications and data tagging, which support business analysis and allow systems to exchange data. A leading example is the Legal Matter Specification Standard published by The SALI Alliance. We have seen tremendous momentum of adoption of the LMSS in 2022 among service providers like Thomson Reuters, who announced that they are implementing the LMSS in all of their products, to law firms, to legal departments at Microsoft and Intel. There is an API working group with The SALI Alliance making great strides as well, including some of the biggest names in legal tech, which will make the transfer of data between organizations and systems seamless.
Shifting back to legal tech itself, some softening of demand could free up lawyers who have been overextended over the past few years and give them time to focus on technology projects that require their expertise, if firms are willing to make investments in what may be a down year regardless. I am less confident that firms will seize this opportunity given the risk of investing during an uncertain year, but it is something I will be watching.
Conan Hines, Senior Legal Technology Advisor, Clifford Chance (New York)
Things continue to change incrementally in legal. There hasn’t been any revelation since the Blockchain Bust – which probably didn’t help the cause. Firms should, in light of the economy, invest more into tech and optimization, but I am skeptical this will occur (especially in the US market). Firms will slowly add to their innovation teams, if they have them, with analysts and consultants, while those that do not have this function will dip their toes in the water. Legaltech vendors will continue to prosper in law departments but find less enthusiasm in the law firm market until the economy recovers.
Tara Waters, Ashurst Advance
US firms entering the captive ALSP space is a trend I think we can expect to continue, which has the potential to have significant effects on the ecosystem outside of the US. The volatility of the big tech landscape may serve the legal landscape well with regard to available tech talent—and certainly law firms seems to be moving up the maturity curve in terms of how they are seeking to leverage technology beyond “legaltech”. Clients are also maturing their thinking around legal innovation, and I expect more of them will establish their own legal operations teams. This, in turn, will result in an increase in tenders for ALSP panels and push legal service providers to expand their offerings (whether organically or through strategic partnerships) in order to have more bites at the pie.
Jack Shepherd, iManage
More maturity in frameworks of thinking. Innovation will transfer a lot more into efficiency than blue sky ideas. Teams will be more disciplined around identifying problems, rather than seeing problems through the lens of a particular solution. Many types of projects that are primarily driven by hype (e.g. blockchain) will slip away, as 5-6 years of spend on these types of projects will not have shown material success.
Ned Gannon, President, eBrevia
By 2024, we’ll see an increased number of law firms offering tangential services to their core business in the vein of both captive ALSPs and legal tech / legal ops consulting. This next year will also likely bring further consolidation among legal tech vendors driven by market forces and a desire by acquirers to enhance the offerings in their product suite. While pilots of new technologies will certainly continue, there will be an increased focus on implementation and adoption of existing tech and measuring ROI both within law firms and corporate legal departments. Finally, the approach of 2024 will bring a variety of new startups focused on legal domain specific content generation.
Thanks to everyone for your responses! Part Two – with many more people from across the legal innovation ecosystem – will be published tomorrow!