Many said that 2019 was a year where legal technology was starting to move out of its early stage and had begun showing some signs of maturity, but is that true? Below are some of the trends we saw that support this, and some that don’t.
The rapid growth and development of the global legaltech sector has been firmly support by extensive network of startup investment and incubator programmes and tech launch labs created and driven by universities, law firms and corporates. According to the Legaltech Startup Report 2019 (Thomson Reuters and Legal Geek) investment in this sector in the UK in 2018 double the previous year at £61m. 2019 Figures are estimated to have significantly surpassed this.
The US is also seeing massive numbers in funding, projects and rapid development. According Zion’s LegalTech / AI report, the global legaltech artificial intelligence market was valued at approximately USD 3,245 million in 2018 and is expected to generate around USD 37,858 million by 2026, at a CAGR of around 35.94% between 2019 and 2026.
Mergers of leading industry platforms and service providers is also clear indication of a market on a strong growth trajectory. As outlined in this LegalTech article by law.com discussing some of the biggest M&A deals in 2019, factors such as consolidation of a mature market, increased VC funding in LegalTech or innovative technology development and opportunity, saw significant action in mergers and acquisitions including some big-brand organisations like Leverton and Brevia last year.
The past few years has also seen significant development by larger established organisations investing substantial budget ad resources in developing their LegalTech divisions – think EY, PWC, Deloitte to name a few key brands.
Lack of adoption of AI by corporates continues to challenge large-scale progress. To quote McKinsey’s global report on AI adoption:
Most respondents whose companies have deployed AI in a specific function report achieving moderate or significant value from that use, but only 21 percent of respondents report embedding AI into multiple business units or functions. Indeed, many organizations still lack the foundational practices to create value from AI at scale—for example, mapping where their AI opportunities lie and having clear strategies for sourcing the data that AI requires.
Tech innovation and adoption is a major consideration for clients in selecting (or continuing to work with) their legal providers. Improved efficiency and value are primary differentiating factors in winning more work. What is proving challenging is the continued fragmentation of the market, with thousands of software, hardware, tech accessories, and systems providers firms need considerable knowledge and expertise in selecting right tools to suit their specific requirements.
A targeted technology strategy has become and essential business tool for firms embracing tech advancement, in order to become a more efficient, competitive, client-focussed organisation.