Legal Technology: Inside Law's Digital Revolution

Learn more about the Harris Williams senior professionals featured in this article.

Key Learnings

• Several legal sector trends, including rising competition and customer expectations, are driving a greater need for legal technology solutions.

• Due to accelerating tech adoption across the world of law, the legal tech space is expanding quickly with high-value opportunities for investment.

• Innovative legal tech platforms that feature core traits for success are well positioned for growth going forward.

The needs of legal technology and services companies are rapidly evolving amid an increasingly competitive and complex environment, causing the sector to undergo a much-needed digital transformation. As cloud adoption accelerates across the world of law, legal technology companies will continue to be supported for long-term growth.

Here, our Technology Group and Business Services Group share what’s sparking the legal industry’s technology revolution and which high-value traits investors should look for in innovative legal tech platforms.

The Legal Sector’s Need for Tech

Today, little of what lawyers do is influenced by seamless, purpose-built technology and the legal sector is behind similar professional services industries in its cloud migration. But that’s changing quickly due to intensifying competition and higher customer expectations across legal services.

“At the recent Legal Tech Fund Summit, we saw that a rising need for better work efficiencies and seamless customer experiences is creating more demand for tech solutions that tie together all the workflows across the legal space,” says Walker.

In addition, changing team structures within corporate legal departments and law firms is further driving tech adoption throughout the legal industry. Lawyers are often working with a wider range of in-house, contract, and outsourced professionals to find more efficient ways to get legal work done, which is also helping to push the pace of tech adoption.

“Together, these forces will influence how legal tasks are accomplished and change the law ecosystem as human capital is reorganized to leverage technology and create operating efficiencies,” explains Tsui.

However, there are some limitations for how fast tech evolution can happen. In the U.S., for example, there are rules set by state bar associations that affect what non-lawyers can do.

“Although hurdles exist that limit the scope of work alternative legal service providers (ALSPs) can engage in, Utah and Arizona are important regulatory sandboxes to follow,” notes Walker. “These states are exploring legacy rule changes to allow non-lawyers to own law firms, which could enable law firms to follow the path of ALSPs toward greater innovation and accelerated change through technology and sophisticated legal process workflows,” he says.

The confluence of these trends makes legal tech a rapidly growing subsector with ample white space for forward-thinking players to capture expanding demand. “We are in the earliest stages of the legal technology revolution with substantial opportunities for value creation, and M&A investors are taking notice,” points out Titterington.

A Focus on Innovation & Integration

Opportunities for investment exist in innovative legal tech, legal human capital, and legal process outsourcing business models that feature core characteristics for success.

For example, winning tech companies across legal services are creating tools with exceptional user experiences that enable lawyers to be more effective, efficient, and productive. “Businesses that leverage technology with the goal of fully automating key processes, while maintaining the same level of service and client experience, will garner investor interest for years to come,” says Tsui.

In addition, top-performing platforms are bringing novel solutions to market for an evolving user and client base. Corporate legal departments, for instance, are seeking to do more in-house through technology, tech-enabled outsourced solution providers, and temporary legal professionals.

“Models that address the needs of this evolving and increasingly complex client base can establish trusted relationships with decision-makers who direct the majority of legal spend,” notes Tsui.

Best-in-class tech businesses are also looking to supply end-to-end, fully integrated tools. “The legal tech market currently lacks all-in-one solutions,” says Walker. “The ability to deliver, develop, or package multiple point solutions in a single value proposition will be a key differentiator and provide the chance to capture significant market share.”

Titterington adds that seamless interoperability is another important point of focus for investors: “Law firms typically have several separate legacy solutions that are a pain to use and can’t interact with each other. New cloud solutions making the biggest impact are streamlining the whole lawyer experience and driving valuable efficiencies.”

Lastly, as cloud adoption and integrations achieve stronger penetration rates, artificial intelligence and machine learning solutions that can leverage these data sources and tie them together will thrive going forward. “Innovation can now focus on value-add solutions versus cost-saving or time-saving solutions, including case intelligence, true business intelligence, contract automation, and negotiation success prediction,” says Tsui.

White Space in Legal Tech

With tech adoption continuing to accelerate across law, legal tech platforms that create high-quality experiences, provide all-in-one offerings, and connect key constituents will be best positioned for growth.

To learn more about value-creation opportunities within the legal tech sector, please contact our senior professionals.