LegalTech has been a promising industry for some time now — but for years, it has failed to be the disruptive force that FinTech has been for the financial industry. The failure to capitalize has a lot to do with the legal profession itself, which is known for being traditional, risk-averse, and overwhelmingly committed to the very basics.
Then the pandemic hit, forcing the legal industry to revamp and innovate overnight. LegalTech was there to save the day: digitizing workflows and data and increasing efficiency by automating routine practices. Documents had to be shared digitally, lawyers and their staff needed to collaborate remotely, and in-person court proceedings had to turn into virtual litigation.
These changes had a domino effect on other long-standing issues in an industry known for long hours, tedious work, and alarming rates of depression and burnout. This obligatory foray into digital transformation freed lawyers to do better, more strategic, and more engaging work — something that benefited attorneys and bottom-lines alike. It's no wonder, then, that Gartner forecasts that LegalTech will grow threefold by 2025.
Three ways to harness LegalTech
Whether you're a law firm, in-house counsel, or a business that could benefit from accessible legal services, here are three ways you can harness LegalTech to make your processes more efficient, less risky, and more profitable.
If your firm is anything like the average law firm, contracts eat up an enormous amount of time and money. Firms spend hours searching for documents, cutting and pasting relevant text, and coordinating negotiations and renewals over phone and email. The costs are staggering: The average lawyer reviews 173 contracts per year, costing businesses nearly $80,000 a year in in-house counsel hours.
But the costs they impose aren't just financial — they also create an enormous drain on lawyers themselves, leaving them with little time or energy to do their best creative and strategic work. They also expose firms to unnecessary risk imposed by human error.
Luckily, there's an app for that. LegalTech offers the possibility to automate the whole lifecycle of contract management — from the moment negotiations begin through signing and renewal. AI and other tools allow firms to create tailored contracts and monitor compliance. Contract management software also allows data to be shared with all necessary parties, avoiding information silos and ensuring everything is accurate and up-to-date.
When it comes to LegalTech, the devil is in the details — the repetitive, mundane tasks that are essential to your work but often are time-consuming and quite frankly, time-wasters. There are types of LegalTech software that are uniquely suited to help identify and automate these tasks and help save big on time and money.
With the rise of e-billing in the legal industry, firms are poised to take their financial processes out of the Ice Age and into the 21st century. LegalTech software can help firms and other businesses to deal with legal costs. For example, using AI to read on and between the lines to find areas of overpayment, then adjusting the invoice or flagging it for attention. Another example is switching from paper invoices to digital systems, which can mitigate human errors and the time it takes to fix them (and is also better for the environment).
Drafting an NDA is one of the most common parts of running a law firm, and these contracts deserve both their own category and a corresponding LegalTech solution. Some firms report processing a whopping 100,000 of these contracts a year. And while smaller law firms and other businesses might process fewer, the cost adds up: The average price of filing just one NDA ranges from $114 to $456 — a line item that can quickly compound.
Law firms and other businesses can adopt a LegalTech platform that generates both standard and highly-specific NDAs on-demand, using AI to tailor language to the person and issue at hand. This type of LegalTech solution can assist in eliminating the bloat of administrative tasks and help employees focus on more important initiatives without sacrificing security or effectiveness.
LegalTech adoption is vital
Compared to sister initiatives like FinTech, LegalTech has grown less evenly and conquered less market. The issue lies not within the technology that’s available, but within the historic response to people attempting to change the legal industry's byzantine system of rules and processes. However, the legal industry is at a tipping point, and law firms that adapt to the new normal and adopt new technologies will find themselves at an advantage economically. And they’ll also clear the way for employees to focus on the work they want to do for the clients who need them at their best.