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What is the current state of legal technology around the world?

Joe Raczynski

05 Apr 2019

Image credit: REUTERS/Dado Ruvic

Technology discussions once reserved solely for select Chief Information Officers (CIO), Chief Technology Officers (CTO), and technologists—are now commonplace for executive committees, partners, and associates at law firms. This transformative shift over the last four years is remarkable to witness. With wider audiences leaning into the conversation, the reality has surfaced that technology is becoming a differentiator with the business and practice of law.

Having met with over 500 law firms, corporations, government agencies, and startups in the legal space during the last thirteen years in the US, I have always wondered what is happening abroad, beyond what I read. Late last year a unique opportunity to travel to multiple international locations for work surfaced. This presented the chance to consider that as the technological revolution takes hold around us, is the legal technology world shifting at the same pace globally?

Traveling 37,000 miles, I started in Washington DC, and then went to New York, Grand Cayman, London, Dubai, Auckland, and finally Sydney. Before this trip, I visited with legal associations and legal industry personnel in Canada, Costa Rica, and Poland. These discussions included intimate gatherings of global law firm leaders, heads of startups, medium sized regional law firms, and leaders in the US and UAE government sectors.

The differences, similarities, and nuances of legal technology around the world

The legal industry around the world is pivoting and many are passionate about legal technology. Transitioning away from a niche world of a select few inside law firms caring—to a current world where the doors are being blown open to everyone tilting their head to listen. Partners, associates, internal support group, and the executive committees are all immersed in the conversation. Prompted by their clients inquiring about use of technology, and quite frankly, lawyers are also worried about their own jobs and the viability of their business as technology, such as document automation, is now able to handle some of the more repetitive legal tasks.

UK: My discussions and experiences have led me to believe that the UK legal market is on average ahead of the curve when it comes to the use and implementation of legal technology. I witnessed medium sized firms rapidly testing and using many of the latest artificial intelligence (AI) infused applications to seek efficiency. While they acknowledged no solution was perfect, they felt compelled to test these solutions to see where they could find competitive gains. Law firms in London, and the greater UK, endeavor to take more chances than any other part of the world. The business structure of how law firms are run is certainly a motivating factor. Another significant pressure for UK based firms are the Big Four accounting firms taking business away, due to the legislative change from the Legal Services Act 2007 which added the model of ‘alternative business structure’ and permits non-lawyers to own a legal practice. In this scenario UK, law firms are first to truly experience this competitive pressure, but significant changes in market practices is increasingly becoming global, clearly edging into the US.

In addition, before the latest trend for law firms to link up with universities was in vogue, partnerships with universities was particularly robust in the UK. Upon meeting with the University College London, they echoed these same sentiments of active participation from law firms and corporations.

Supporting these firsthand accounts, is evidence from Acritas’ Global Elite Law Firm Brand Index 2018. The firms producing the largest leap forward in brand recognition are clearly global, recently merged with a significant presence in the UK: including Clifford Chance, Linklaters, Allen & Overy, and Herbert Smith Freehills. Based on my conversations with these firms and the statistics, I believe their innovative strategic plans are pushing them further, faster.

The courts in the UK are also making advances through technology. In 2014, the Rolls Building, which is part of the Royal Courts of Justice (RCJ), began deploying an electronic filing solution—C-Track from Thomson Reuters. The system enables the UK legal profession to adopt more efficient and cost savings work practices by using digital technology for case management and e-filing. To date, the RCJ continues to expand the use of this digital technology into other courts in the system.

US: The US market is rather bifurcated. There are firms pushing the envelope along the same lines as what the progressives are doing in the UK, but still many firms stay on their traditional course. By firsthand account, a typical strategic plan remains similar to years past, if not decades ago with incremental change for many in the medium law firm space.

Investment in new tools and workflows come at a cost to the partners, who must commit to that investment for the future, and many are not inclined. I was asked to present to a US based firm with 200 attorneys recently by their Executive Director. He pleaded with me to describe to his committee about the impact of AI on the firm in the next five years, so they could prepare as he was near retirement. The committee dismissed the notion that AI would have any impact on the firm. This view is not an outlier.

The recent statistics in Peer Monitor’s 2019 State of the Legal Market, supports this account of those who adopt legal technology or deny it. We see the Global 100, more specifically the top 50 firms, growing while the rest stay below market averages. There are exceptions in niche markets who buck this trend and have seen upticks in their profitability. However, on the whole, those firms that have not evolved are stagnating.

Another statistic from Acritas surrounds the support for innovation in this space. They draw a direct correlation between those firms that have established plans around innovation and growth. Their report cites, “Innovation can spark increased client advocacy and budget spend, so that when clients view firms as innovative, client advocacy almost doubled and share of spend was 50 percent higher than non-innovative firms.” While this exists across jurisdictional lines, medium sized law firms in the US could have the most to gain from these learnings.

UAE: What stood out the most for me in Dubai was the commitment from the government to advance the ease of legal access to the people. If you were to turn the US government on its head, you might get some of the innovation that the Emirati are advocating. All forms, requests, and even initial court filings will be completed online. The response times are slated to be rapid. By 2022 the Dubai government will have most of their public information moved onto a blockchain, for redundancy and security. Likely in this upgrade will be company records and public records—think deeds, corporate filings, as well as birth or death certificates.

As for law firms, one of the biggest in the UAE that I met with is pushing what they can do with all currently available technology tools on the market. Law firms in the UAE seem to reflect a lighter version of what is happening with legal technology in the UK, typically with a direct connect into those firms for direction and strategy.

New Zealand: Outside of the top eight firms in the region, several other firms I spoke with were crafting their portfolio of technology tools to assist their practitioners be more efficient. One firm was building a workflow automation tool on the transactional side with a bevy of coders onsite as well as in India to support the development. They were embracing an Agile method, in which they frequently discussed these tools with their clients. This collaboration further solidified the relationship and were an integral part of increasing the efficiency for work completed on the client’s behalf. Of the advancements in operational practice, one area that surprised me was the slow acceptance of alternative fee arrangements by firms as each firm awaiting the results of early adopters.

Australia: What most impressed me in Sydney was both an adventurous spirit when it came to legal technology, but surprising a generally cautious nature toward adopting new ways of doing things. After spending time with numerous managing partners and innovation officers, it seems that Australian firms have the potential to lead the way into newer technologies. That said they sat similarly to their neighbors in New Zealand. Fixed fee arrangements have been around for years, but are not used frequently yet. One managing partner told me that Australian firms have leaders that can make bold decisions, but are testing the waters with newer forms of legal technology in their marketplace and looking for someone to jump first on the boldly visions.

Legal Tech startups are thriving in Australia. This is certainly supported by the most recent Tech and the Law 2018 Wrap Up guide by Thomson Reuters. “In 2018 more than $1 billion was invested in legal technology, three times more than the previous year”, globally. In Australia alone, there are currently 93 legal startups with legs in the country. The Australian Legal Technology Association continues to thrive with interactions from both the startup community as well as traditional lawyers with curiosity.

In a recent conversation with Stevie Ghiassi of Legaler based in Sydney, who specializes in blockchain enabled legal solutions and scheduling, he described this community with gusto. What he is trying to do is bring the latest tools available to the legal industry. In doing so, it is likely that they will disrupt many of the current law firm functions and he is happy with that philosophy—as are many of his peers.

Technology journeys

After hitting 98,000 miles for the year in total travel, I am witness to a significant shift in the way that law firms look at technology. Changes evolving from the back-office support centric views of yesteryear, to the front and center underpinnings of how new tools can alter business and practice legal workflows. The shift is here, though each country seems to have various degrees of acceptance of this new reality and more importantly the practice of it. What creates the distinction are outside factors which either push or pull a firm to accept this new norm. The progressive state of the legal system in the UAE and UK has legal technology at the forefront, and it will be interesting to see what adjustments will occur around the world as a result. I do believe that while our legal technology community is large and expanding, the collective will continue to converge, eventually reaching the point of an e pluribus unum around the world.

Use of the cloud is on the rise in law firms Embracing legal document automation—the benefits are many Legal Geek Conference 2019—key takeaways for in-house lawyers Already a record year for legaltech startup investment The 2008 financial crash spawned a new industry in the City—the ‘regtech’ boom Evaluating integrated legaltech transformation: Legal Geek 2019 Conference Dark web for legal researchers—casting some light on the shadows A new report: Legaltech Startup Report 2019—A Maturing Market Managing legal caseload capacity – with data analytics The ‘go-to’ event of the year—Legal Geek Conference 2019