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Gerard, could you please briefly explain, what you currently notice in the legal industry regarding the usage and implementation of Technology?
We are seeing globally two distinct legal services markets. One, where law firms and a growing number of alternative legal service providers look after the legal needs of private consumers and SMEs (small and medium sized enterprises). At the other end of the scale, major business law firms service the needs of larger organisations. It is worth noting that these business law firms increasingly compete with expanding in-house corporate legal teams.
In the first segment, the Business to Consumer (B2C) legal market, we see rapid change where LegalTech applications and the Internet redefine entire market segments and create new ones, such as automated flight delay claim processing. Law firms in this market are more likely either already embracing LegalTech and deliver their services directly and cheaply to consumers, or they are ‘on the way out’.
The second segment consists of major business law firms servicing larger companies and government. This is the B2B segment. Here we still see many firms generating very attractive returns, particularly at the top end and in specialist niche markets. LegalTech has been adopted less widely at these law firms, and there are good reasons for this. Not least among them – it is extraordinarily difficult to convince top-earning partners that the market is undergoing a fundamental shift and they need to be part of it or miss out. Surprisingly, many of these clients also fail to demand the use of technology to improve client service and provide better value. This part of the legal services market shows a classic example of the ‘innovators dilemma’. Until recently, few major business law firms have taken notice of the arrival of IT powered legal service providers, including the legal arms of some of the Big Four accounting behemoths.
In the B2B market, we see interesting geographical differences in the uptake of LegalTech. A handful of large B2B law firms in the Anglo-Saxon countries (US, UK, Australia, NZ, SA) and parts of Asia are starting to invest in or collaborate with innovative tech players. At the other end of the scale, only very few, if any, continental European firms have shown much interest in LegalTech.
Could you give us some more details on what law firms should have done or should have invested in until now?
Law firms that have stayed current with their operational systems are in a far better position to use LegalTech to serve clients and collaborate with in-house legal teams through modern platforms. A law firm that has not yet invested in these technologies is well advised to engage with its customers and build this critical infrastructure sooner rather than later.