After years of being behind the pace on technology, the legal profession is catching up. According to a 2018 survey of law firms by PwC, the 10 largest firms with headquarters in the UK all say that technology is the most significant challenge facing the industry in 2019-2020.
The priority being given to technology is the result of clients demanding more services for less money, the encroachment into legal affairs by the Big Four accountancy firms and competition from nimble providers offering alternative legal services.
Lawyers now recognise that the sector has to change, and fast, but the problem now is too much technology.
“There’s been an explosion of innovation in this sector in the past three or four years,” says Paul Greenwood, chief information officer at Clifford Chance, a magic circle (top five) London law firm. “Previously we were dealing with a relatively small group of medium to large providers of specialist legal software. What we face is a constellation of small providers.”
The size of the sector is hard to pin down — a list compiled by Stanford University features nearly 1,250 legal technology companies, while a start-up map put together by Legal Geek, which runs lawtech events, includes more than 250 from across Europe. It is clear, however, that the growth in legal technology start-ups has accelerated after years of lagging behind other specialist technology in areas such as fintech. Legal Geek’s tracker shows 25 start-ups offering legal documents as a service, 11 that do document automation and 15 that provide a legal services marketplace.
Firms face a tyranny of choice. A report this month by the UK Law Society found that while “there has been an increase in the number of firms offering lawtech products in recent years . . . that rise has not been matched by the rate of take-up by legal practitioners”. Karen Lockhart, director of business and practice systems for US firm Baker Botts, says: “One of our biggest challenges has been finding the right tools for our lawyers and for our business users.”
Another challenge, she says, is “being agile enough to keep them up to date.”
It is not just the overwhelming number of providers of services — from document management to e-discovery tools and online dispute resolution — that causes problems for firms: lawyers also face a specific challenge because of the sensitivity of the data they handle.
While innovation has been cloud-based, some clients, particularly in financial services, have objected to their data being transferred to lawtech providers in the cloud without express consent. That has slowed adoption by firms, says Mr Greenwood.
Another hindrance is the patchwork nature of the providers, with different legal tech apps often unable to be used with each other and clients’ data having to be uploaded to separate systems.
Some of the legal technology industry’s most established companies are trying to solve this problem by creating specialist platforms designed to make it easier to integrate a variety of lawtech apps.
Thomson Reuters’ acquisition in July of HighQ, one of the highest-profile UK lawtech companies, formed part of a push by the global data group to develop a single mooring for its portfolio of legal offerings.
Separately, iManage’s product has expanded from document and email management to offer a cloud-based platform with services including automated document reviews and security and governance products. Meanwhile US company Intapp has evolved from being a time-recording service. It bills itself as “the industry cloud for professional and financial services”.
“Firms see the need to modernise,” says Jose Lazares, who works on product strategy and business management at Intapp. “Many are testing AI and other solutions on the business of law but a lot of those technologies were built for other industries,” he says.
Intapp, HighQ and iManage have been developing legal technology for nearly two decades and their products are well-known.
Another ambitious attempt to create a legal tech platform has come from Reynen Court, a start-up backed by a consortium of the world’s largest law firms, including Latham & Watkins, Clifford Chance and Paul Weiss, and launched in September 2018.
The company had spent a year building an app store-style platform for law firms to access apps from within one operating system, a development designed to overcome concern about integration and avoid the need to secure overlapping cloud consents from clients. The software is still in its beta-testing phase with five companies and a full launch is set to take place in January.
Andrew Klein, Reynen Court’s founder and chief executive, warns that law firms generally are not focused on how to “handle the pace and variety of innovation”. Moreover, he says: “The challenge for any firm is that it’s very hard to predict today what [are the] 10 most important [products] that are going to win.”
Even if platforms can reduce the number of legal technology vendors, providers reject any suggestion that there may be a single one-stop shop for all legal technology needs.
“There could be a series of big platforms”, with iManage, Thomson Reuters and others hosting major branded apps and a provider such as Reynen Court bringing together more niche products, says Mr Greenwood.
That would still transform the way lawyers use technology, he says.
“If it does what we hope it will do, it should make the difference from ‘tech that has potential’ to widely used apps that make a real difference within law firms.”
The case studies below showcase legaltech platforms. They were compiled by RSG Consulting
Case studies: Platforms will help solve the tech buyers’ headache
HighQ and Thomson Reuters
HighQ, established in 2001 and one of the earliest legal technology companies, was bought in July by Thomson Reuters for £365m. Set up by Ajay Patel, who is profiled in the market-shapers section of this report, the company was one of the first to put its apps in the cloud and offer software as a service. It took six years for HighQ to win its first client but it has grown to employ 400 people and boasts annual sales of £18m. Thomson Reuters sees HighQ as an essential part of its strategy to build a platform business from which it can run all its products and bring together service providers and consumers. HighQ’s products have been behind many legal innovations. These include the streamlining of the process by which Santander registered 600 small and medium-sized enterprises — at two-thirds the cost of doing it manually.
The largest document set handled by Relativity’s software is 870m pieces of paperwork. The e-discovery company may not be a household name but its products are used by more than 70 Fortune 100 groups and enable investigations into public companies. Relativity is used by many third parties to build further applications and products. Last year, the company launched Relativity Trace, a compliance tool for the financial services market. The product monitors internal communications for any improper behaviour, such as collusion between traders via messaging. This helps companies to act quickly and lessen the risk of fines.
Since its beginnings as a document and email management system in 1998, iManage has turned into a platform business. It covers the entire document management process for major corporations and professional service firms and has more than 3,000 clients, including 75 of the top 100 European firms. iManage not only integrates documents filing, it manages contract terms and prepares organisations for repapering exercises such as those prompted by Brexit and the phasing out of the London Interbank Offered Rate, the benchmark for short-term interest rates. The platform also enables organisations to spot unusual behaviour among staff, and can pick up on clues that a person could be about to resign. It can identify possible system hacks.
Intapp has created a technology platform that focuses on client engagement for professional and financial services firms. It covers the initial welcome given to clients and then guides the development of the relationship. Over the past 18 months Intapp has acquired DealCloud, OnePlace and Gwabbit, which will enable it to improve its deal origination and client relationship management systems as well as the data it collects.
With three new products: Terms, Experience and Pricing, it can help law firms understand their client commitments and give clients greater transparency on costs.
The products help law firms speed up activities — such as conflict searches and knowing their commitments to each client — by up to 70 per cent.
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