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The legal ecosystem is witnessing a fundamental shift with service delivery models being transformed at a pace never seen before. If investment activity is a strong indicator of the scale and urgency of unmet customer requirements, legaltech joined the $1 billion investment club in December 2018 – a nearly fourfold rise from levels seen in 2017.
You know things are really changing when law firms – traditionally known to set aside a minuscule percentage of their budgets towards technology – have had innovation and legaltech teams join their ranks. This tremendous spurt of activity is part of a larger trend of businesses migrating legacy infrastructure to the cloud and an increasing emphasis on data-driven decision making.
Technology is making it possible for legal teams to parse through a mountain of unstructured data with speed and accuracy, to separate the wheat from the chaff by extracting relevant nuggets and discerning meaningful patterns.
In fact, volumes of legal data is ideal training ground for any AI solution. The more case law or contracts that an AI solution is fed, the better it learns to detect errors and inconsistencies. In comparisons of manual contract review versus AI-assisted contract review, an AI solution consistently fares much better on parameters of accuracy and time taken.
An AI solution is also best suited to handle large-scale legal reviews necessitated by change of law. For instance, companies are now reviewing their existing and new contracts for compliance with the European Union’s GDPR norms without disturbing their internal workflows.
I find enthusiastic acceptance of technology solutions as an enabler of legal services to be a common thread in my conversations with conglomerates, SMEs and startups alike, irrespective of industry sectors they operate in.
What makes legal services so ripe for disruption? Legal data is essentially unstructured in nature. In a single litigation case, valuable information floats in transcripts, emails and thousands of documents. On the transactional front, AI has the capacity to sweep through clause libraries and suggest best-suited clauses for a set of documents. The due diligence process in a typical M&A deal necessitates an army of junior lawyers to pore through paperwork. It’s not a good use of any lawyer’s time to review thousands of pages and case law only to conclude that the bulk of it wasn’t relevant to solving the problem at hand.
This is a win-win scenario for all. Clients benefit from significant cost savings and faster turnaround time, law firms can take on more high-value work with their existing teams, lawyers can eliminate the drudgery and focus on strategic skills, and businesses can close deals faster. There’s also the undeniable aspect of traditional legal billing being heavily reliant on hourly-billing and lump-sum models. With constant pressure to cut legal spend, clients are demanding pricing innovation and flexibility from traditional legal service providers.
We now live in an age where legaltech is driving the conversation on alternative fee arrangements and legal pricing is a specialised skill in it’s own right. With this growing shift from passive curiosity to active implementation, the future is exciting for legaltech.
The author is the Head of Customer Success at SpotDraft.