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Gerard, you just spoke about LegalTech at the annual Credit Suisse Law Firm Client Day near Zurich. I understand the focus was on cyber security and sector specific technology for law firm clients. Where do you think we are at present with LegalTech at law firms and in-house legal teams?
The overwhelming majority of law firms have started to engage with digitisation. However, so far they primarily use LegalTech for administrative and financial management, and – in a few instances – as a ‘digital bolt-on’ to the traditional way of delivering services. A few multi-national in-house legal teams are a little more advanced. They are starting to use LegalTech to transform their function, to address cost and value demands in their businesses.
However, the entire industry suffers from the lack of platform suppliers. Everyone is forced to follow a ‘best-of-breed’ approach, i.e. piecing together software and online services often from more than 50 separate suppliers. This is in stark contrast to the emergence of powerful digital platforms in most other industries.
What LegalTech do law firms and in-house teams use today?
Beside industry-specific financial, HR, marketing and collaboration software, we are seeing some firms and in-house teams adopt document automation and contract management solutions. Both are used with or without machine learning capabilities. In-house legal teams have started using LegalTech for matter and contract lifecycle management. Most larger firms and in-house teams also use sophisticated solutions for e-discovery and due diligence, in the relative rare event of large-scale litigation and mergers.
And what comes next?
Over the past year, a few LegalTech service providers began offering artificial intelligence (AI) support for existing or new products. For example, one of the two leading document management vendors has purchased an AI software provider and is now extending its existing product. Another workflow vendor is also broadening its services through the acquisition of two start-ups. These are early signs of legal-specific platforms emerging where law firms and in-house legal teams no longer need to painfully assemble and integrate ‘best-of-breed’ services.
AI and in particular machine learning is already here. It is present in more than a third of the newer LegalTech products and services. We have seen it first in e-discovery, contract review and due diligence. We expect it to become pervasive within a few short years.
Given what you heard at the Credit Suisse Law Firm Client Day, what are your thoughts on digital platforms for corporate legal services?
The tussle over who will control the future of professional legal services does not appear to have fully started yet. This may sound odd given that most industries are well into their digital transformation. Take for instance the car industry – or more accurately – the ‘ride business’ where the digitisation continues apace. This Link provides you with this week’s major announcement. #Waymo is #Google’s autonomous driving platform business and the current market leader.
What does this have to do with corporate legal services?
As time progresses, it is becoming clearer what ‘#digitisation’ really stands for. It is about injecting a platform layer between those prepared to spend money for a service and those who provide the service or goods. The company or companies that operate the #platform will win. In the short-term, the buyers of services will also win through a better user experience and much better value-for-money. In the medium to long-term, however, the ‘platform takes it all’ through oligopoly or monopoly power and premiums. Think advertising – there is no longer a way around #Google and #Facebook – they have grabbed more than 57% of the market from nothing in just over a decade (recent US figures).
These ‘platform plays’ are helped by ‘goods’ such as cars, planes, books, movie theatres, libraries, etc. morphing into ‘services’ like rides, trips, reads, streams, online performances at an ever increasing pace.
In commercial #legal_services, our Institute is researching the question of who will be the platform players in commercial legal services and how they will alter our highly regulated and largely #analog markets? Any guesses?
In future contributions we will expand on this topic by looking at the role #LegalTech will play in establishing platform players.