Challenges and opportunities in the Legal Tech space

At Off Road Legal we are constantly talking to technology and software companies, both established enterprises and small start-ups. Our purpose is to be as clear as we can about current challenges and options in the market and empower our clients to make the best decisions for success in the digital age.

We pay close attention to what law firms or in-house teams say about their needs, what appeals to them, what they are finding difficult in their searches for legal technology. For those who are already users of products, we want to know what process led them to choose those products? What have their experiences taught them? Finally, we are always looking out for signs for what is coming in the future and what trends are emerging.

Here are some high level takeaways from our many encounters to date, which may help others in their own investigations of the current landscape of legal technology, the challenges and opportunities for the users and what the future might hold for this sector.

Lack of definition is holding back progress

Discussions amongst lawyers and between lawyers and technologists are beset by vagueness and elements of cross-talk. Lack of clarity is getting in the way of progress. The legal and technology worlds still need to standardise language used to describe technology and the use cases within legal services. It is vital to promote a higher level of common understanding. Efforts such as the Cloud Business’ Legal Transformation Manifesto are a great starting point.

There are several initiatives afoot to seek ‘standardisation’ to promote technological advance, such as standard clausing and lexicons, but these are not necessarily enhancing the dialogue to help lawyers and technologists create common understanding.

Even the phase ‘legal technology’ remains unclear and poorly defined. Indeed, the creation of the category “LegTech” has probably more to do with the software companies and their investor needs. They find it valuable to talk of FinTech, RegTech and now they have LegTech. But it’s not meaningful really to the users.

I think the label ‘legal technology’ is useful to indicate that a product has something to do with the legal process and that it might be useful to legal practitioners, but serves for little else from the perspective of the lawyer. The real point is whether a digital product satisfies your particular needs. Discovering and understanding your needs is where the initial effort should go. Lawyers are trained to think critically about definitions and often default to debating the meaning of the phrase ‘legal technology’ instead of debating the technology itself, what they should adopt and why.

2. “Data” is misunderstood

A significant example of this lack of definition is that lawyers have not fully grasped the meaning of ‘data’. For example, lawyers will refer to concepts of data such as ‘big data’, but in wildly different ways than are understood by data scientists.

‘Big data’ of course is recognisable by volume, velocity and variety. Almost nothing in the legal sphere qualifies, especially in the realm of contractual documentation. This and other misunderstandings such as the concept of ‘agile’ development of software indicate the educational gap that needs to be closed.

3. The choice is overwhelming

Choice is good for competition and for increasing the chance of finding the best fitting technology. However, even looking at just one legal tech category, namely ‘CLM’s (Contract Lifecycle Management) systems, the choice is overwhelming. I found evidence of nearly 900 products described as CLMs. It is hard to know if this is diversification or simply oversupply.

How can you even begin to discern which CLM is right for you? ‘CLM’ can mean different things to different people. How can you tell them apart? How much time are you going to spend figuring out these questions? I know of one firm which had 4 people dedicated for 6 months to CLM selection. In the end they chose more than one solution.

The paradox of choice is a well known barrier to decision making. The point here is to be wary of using labels alone to identify solutions, and instead define exactly what your needs are and then find an efficient process to reveal who can satisfy your needs.

4. Legal buyers struggle to clearly express their needs

Clarity and precision in the expression of needs is core to good choice. Both purchasers and vendors benefit. It speeds up choice. But what are the challenges?

For a start, legal technology is a very broad concept. Products range from the generic tools used by everyone including lawyers to highly specific products only created for the sole use of lawyers. Think MS Word versus an automation workflow for Court Forms (like N260).

There are several problems here. Lawyers have not traditionally thought about what they do as a process and defined it in, say, process language which is always going to be a key ingredient in the ‘needs’ definition. Relative to other industries (take accountancy as one) they have held back technologisation (and the skills and learning that go with it). The Legal profession is innately conservative and perplexed by the thought of radical change.

For lawyers this means that their effort to define ‘needs’ must factor in the requirement to take entirely different approaches to how they operate. A quote attributed to Henry Ford, “If I had asked people what they wanted, they would have said faster horses.” sums this up. In short, lawyers will have to stop thinking along the lines of incremental improvement (faster horses)  and start to invent entirely new ways to deliver legal services. Inevitably this will demand the use of digital capabilities and thus the deployment of legal technology.

5. Market leadership requires empathy

It also seems inevitable that the legal technology market will consolidate to a core set of providers and solutions, because this has happened consistently in other sectors. Currently, LegTech offerings are still in expansion mode. The downside of this is the increasing paradox of choice, the upside is the creation of many different approaches which can be challenged and tested in the practical arena to stimulate better solutions.

However, there is a need for diversification in solutions because, putting it simply,  the needs and approach of large commercial business-focussed practices differ dramatically from those of smaller retail or ‘people law’ focused law firms. Different subject matter areas and specialisms have different requirements.

Given these considerations and the points considered above, what type of approach will make legal technology providers leaders in their field?

I think that the providers who deserve to come out on top will be those who address as a priority the psychological and practical dilemma which lawyers find themselves in. This is not at all about ‘function’ or ‘features’ it is purely about the users and their very human needs. Who is going to minimise the pain of change and transformation? Will they be able to make the technology responsive to these needs in ways which it has so far largely failed to do? In other words, who is going to take the most empathic approach to allow lawyers to adapt to a ‘better’ new world with the least disruption.

6. The rise of the ‘platform’ and configurability

While software was ‘product’ or activity specific, the result of which was that it tended to a technology provider’s ‘best fit’ view of how lawyers would conduct a process, increasingly software is more ‘adaptable’ by the users. Such products are labelled as ‘platforms’ The platforms give users the power to fashion or ‘configure’ the function of the tool according to the design they choose, and they can reconfigure this design any number of times and in multiple permutations.

This  means that any entity which is good at patterning processes and procedures, has carefully thought about how to measure and monitor and report on its activities can adopt a platform and go to work to design how it will be configured to match these needs. This is very healthy because it points to the two vital key elements for success:

(i) know what you do and the implications of your business in detail; and

(ii) be very good at designing and maintaining the ‘machinery’ which drives those ideas forwards with best effect in a changing landscape.

You can start at a small scale, just one routine or workflow and build up from there. It avoids the step-change, big bang impact which many ‘out-of-the-box’ solutions can impose. You can adapt and iterate as much as your operational and design capability and imagination will allow.

As one technologist put it, ‘Lawyers don’t have a problem with technology, they just want technology which works’. Configurable platforms are a great way for lawyers to devise exactly what they think ‘works’.

7. Technology etiquette

Legal professionals are charged with high standards of probity. Ethics is a core discipline. Doing the right thing, taking, where required, fiduciary responsibility, accounting to our clients for the gains we make, working predominantly in their best interests.

Technology is complicating this picture. The ethics of AI is a growing field of thought in the legal world and beyond. What is the right thing to do with AI is a difficult question, but a much simpler question is: when providing legal services to clients, which technology ‘should’ a law firm adopt in order to satisfy standards of working in the best interests of its client and providing appropriate levels of service?

Here is one example: document execution. Now that e-signature has been widely adopted, the old paper and pen methods are inconvenient. The contrast with e-signature adoption in other industries and the legal industry can be quite stark. There is a good chance that in the near future we shall see regulators start to take control of the situation and possibly dictate some minimum standards for the adoption of technology in line with social norms.

What do you think? This is what we see in the current legal technology space, but is it your experience? We'd be very interested to hear your thoughts, please reach out and get in touch if you want to join this discussion.