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LegalTech: key issues and secrets of successful adoption

REUTERS/Kai Pfaffenbach

COVID-19 may mark a tipping point in the use of legal technology, as law firms and legal departments turn to the use of such tools to meet the challenges of remote working and changes in professional practices due to the pandemic.

Such a shift, however, essentially accelerates a pre-existing trend towards using legaltech that has been driven by several key considerations. These include client demands for greater efficiency, the need to manage the vast quantities of data demanded by modern compliance and pressure to harness ongoing evolutions in technology.

As Nayeem Syed, Assistant General Counsel, Global Technology, at Refinitiv noted in the article ‘Tech adoption challenges in corporate legal departments’, the landscape has changed for in-house legal teams, who are encouraged to adopt new technology offerings to produce improved outcomes.

These recent advances encompass such well-known innovations as e-disclosure, contract automation, matter management and newer cognitive technologies, including artificial intelligence (AI), machine learning and predictive analytics.

However, while there is strong appreciation of the importance and benefits of legal tech, in-house barriers to adoption still remain. In fact, Syed notes that “for many organisations, adopting new legal technologies is perplexing.” Though with planning, buy-in, and training—the key benefits will be cost-savings, time-savings, and reduced risk.

Everyday implementation

Gaining the understanding and confidence to deploy these legaltech is often an arduous process. That can lead to the slower adoption of legal technology, as researchers from Oxford University, in collaboration with the Law Society of England and Wales, recently noted.

Their study found that the adoption of AI-based technology among lawyers remains low, with just 16 percent of respondents applying AI technology to due-diligence, and a mere 12 percent doing so for e-disclosure/technology assisted review. Less than 25 percent of respondents used any form of AI-assisted technology.

Given that technologies based on machine learning and natural language processing have been seen as comparatively easy wins for AI-based tools, the Oxford research programme suggests that significant benefits are being overlooked.

Indeed, barely just over a quarter (27 percent) of respondents used legaltech for legal research, with due diligence, e-disclosure, and regulatory compliance being the next most popular areas of use.

According to Professor Mari Sako, Professor of Management Studies, Said Business School, University of Oxford, these figures are surprisingly low. “Given the widespread hype around legal practice innovation in general and AI-assisted [legaltech] in particular, we have a picture of a relatively low level of take-up of, and training for, [legaltech] among our survey participants”, Sako said.

While the study found that law firms increasingly understand the need to embrace the challenges posed by legal tech—as indicated by 53 percent of lawyers in private practice—only 19 percent of in-house lawyers shared this forward-thinking perspective.

A dynamic opportunity

In part, law firm interest in legaltech is driven by a growing realisation that such technologies may pose a significant threat to their profitability, as noted in an upcoming Thomson Reuters/Acritas report of top 100 law firm financial directors.

The survey found that financial directors at more than one in four large UK law firms believe advances in AI raised issues to which they would need to respond. Reporting initially on the survey’s results, Samantha Steer, Director of Large Law Strategy at Thomson Reuters Europe, concluded that those leaders have the right idea: “properly deployed, AI should allow law firms to both lower their cost base and win new work”.

Some sectors are ready. Larger firms are more vocal in tackling the complications and advantages of legal tech, as Meredith Williams, of Shearman and Sterling, observed in a February 2020 The Hearing podcast. And the Oxford University research also showed that lawyers themselves were generally willing to undertake training in technology-related issues.

Yet such awareness is still not universal. A January 2020 Cambridge Journal of Regions, Economy and Society study suggested that while law firms were very well aware of rampant challenges to their current business models, an associated resistance and an unwillingness to explore further benefits were sometimes factors as well. The latter concerns may come down to structural issues.

For those that do adopt legaltech, there are clear competitive advantages: enabling businesses and law firms to outpace their rivals, reducing legal costs, improving legal process management and adding value to legal skills by leveraging technology appropriately and automating relevant processes. These transformative developments are sure to continue as the organisational, economic and industry consequences of COVID-19 unfold.

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