Legal tech news: Lawyers now face accelerating changes

Change in the legal industry is accelerating, according to a 2024 research paper, and in-house counsel must embrace innovation to meet the demands of the evolving commercial environment. A surge in the adoption of legal tech solutions, more flexible talent models and strategic partnerships are set to augment in-house capabilities.

At the forefront of a rapid transformation, in-house legal departments are focusing increasingly on adaptability. According to Raymond James (European Legal & Tech Services Insight, 2024), legal professionals are leveraging data analytics, artificial intelligence and automation to streamline processes and optimize decision-making.

Positioning themselves well beyond the confines of conservative legal practices of the past, modern legal teams are earning their place as strategic partners in business growth, embracing change and spearheading transformation.

In-house legal departments set to transform completely

Greatly influenced by the digitisation of its operating model and the innovative solutions for flexible service delivery, the role of in-house counsel is in the middle of a notable transformation, according to the European Legal Tech & Services Insight by Raymond James Investment Banking. New technologies and tools are driving change in how legal advice is given and how teams are structured.

The macro drivers impacting legal teams

Greater cost consciousness since 2008

The 2008 Global Financial Crisis (GFC) profoundly reshaped corporate strategies. Businesses and departments were pushed to focus on reducing costs, a shift that has continued and become more intense for legal teams in recent years. As a result, organizations are bringing more legal work in-house and general counsel are expected to do more with less.

‘Cost center’ to ‘strategic partner’

No longer seen purely as cost centers, legal departments are now recognised as strategic partners within the organization. Their bourgeoning involvement in risk management, compliance and business strategy has cemented them as the ‘protectors of the business’. Rather than reacting to legal problems, in-house counsel are expected to foresee and mitigate risks. As general counsel take on higher value strategic work, more high volume, low-value work is being outsourced.

Shift to fixed and capped fees

Demanding contingent, fixed or capped fees directly addresses in-house counsel’s need for visibility and transparency. The billable hour model, traditionally used within law firms, has grown unpopular due to its unpredictability — for both legal departments and their clients. Ruled by the clock, law firms must the count numbers of hours they work and can bill for. When the focus moves to achieving the desired outcome, they are incentivized to enhance efficiency and streamline processes. This provides in-house counsel and their departmental client with certainty and upholds their faith in the effectiveness of the service provided.

Increased regulatory burden

With a growing need to comply with complex regulations, legal teams face more pressure to ensure the organization stays compliant to avoid fines, reputational damage and litigation. This has led to the departments outsourcing risk where the cost of non-compliance exceeds the internal compliance cost, the Raymond James report indicates. By outsourcing when the stakes are high teams are mitigating risks by bringing in external expertise.

Liberalisation of legal services provider ownership

In-house legal teams report that the legal market is increasing in choice and flexibility in legal services provision, according to the report. Non-lawyer owned firms, such as Alternative Legal Service Providers (ALSPs), can enter the market and offer specialist legal services, increasing competition for traditional law firms while providing in-house counsel with more options.

The fundamental changes facing legal professionals today

Coined by Gartner, the ‘nexus of forces’ is the combination of social, mobility, analytics and cloud technologies — all powerful trends reshaping many legal organizations. For General Counsel, this means they can redesign their entire legal service process, shifting from traditional legal operations to a more agile, efficient and tech savvy environment.

Artificial intelligence (AI)

Reliance on AI technology and automation has been amplified, reaching further into the legal process. Now used for more sophisticated applications, AI has transcended its original narrow scope of routine tasks such as document management. Legal analytics, research and case strategy development are among the tasks law professionals are using legal tech tools for an overall productivity boost and an increase in operational cost savings.

AI technology can be split into subsets, all with different uses that can benefit in-house counsel. Natural Language Processing (NLP) can be used to analyze large volumes of legal text. Used to predict case outcomes, Machine Learning (ML) learns and retains information from data outputs. For legal departments striving to stay competitive, the integration of AI into everyday work practices is critical. Expected to be among the top trends in legal tech 2024, these technologies are at the core of legal innovation.

Crowdsourcing for mass collaboration

A disruption of the traditional model, where legal work resided solely in the domain of legal professionals, crowdsourcing broadens the talent pool. Outsourcing is no longer limited to external law firms. There’s a growing need for non-lawyers to undertake more duties according to the Raymond James report. That is not to say the role of the lawyer will become redundant, rather traditional roles are evolving as demands of the legal landscape become more complex.

This is evident in the rise of legal operations. Teams of dedicated professionals are taking on duties such as data analytics and compliance oversight, with their involvement allowing lawyers to focus on tasks that require legal expertise.

Augmenting lawyers’ abilities and enabling their team to deliver fast and more precise services, the evolving role of non-lawyers is less about replacing attorneys and more about complementing them. With a larger, more flexible talent pool, in-house lawyers can take a more dynamic approach to legal work, potentially reducing costs while speeding up processes.

Flexible legal service delivery

With the rise of ALSPs and flexible service models, legal teams no longer have to rely on in-house staff or external law firms for the majority of their work. Instead, legal departments can access expert legal support on demand, frequently at a lower cost than traditional law firms.

Flexible legal service delivery includes everything from on-demand legal professionals, to contract-based outsourcing, to technology-enabled self-service tools that allow in-house teams to handle tasks they would have previously outsourced.

Fewer juniors, more ‘legal engineers’ and tech expertise

Raymond James predicts the ratio of junior lawyers to seniors will drop and eventually entry level jobs will vanish. Tomorrow’s legal solutions will be delivered by a mix of professionals including outsourced legal providers, ‘legal engineers’ with tech solutions, project managers and paralegals.

The report indicates that people will still be doing ‘the artisanal’ work, comprising advisory, complex deal structuring and interpretation of statutes and case law ‘at the margin’. However, a mix of people and technology are already delivering commercial contracts review, e-discovery, standard compliance and procurement. Technology, without humans, is delivering text comparison and document assembly work.

Legal technology continues to drive change

Technology is at the centre of legal innovation. Introducing simplifications to what was once a complex landscape of everyday tasks, artificial intelligence and automation are fronting a significant transformation. They allow in-house counsel to redirect towards conscious initiatives for firm growth and client experience, focusing on high-value tasks while tech and alternative models handle routine, lower-value work.

Much more than adopting new tools, legal departments must rethink the very structure of their operations, ensuring they remain competitive and deliver value in a domain increasingly driven by legal tech innovation.

Why are we at the inflection point now?

Known for being resistant to change, the legal profession has been characterized as deeply rooted in its traditional practices. However, the evolution of technology — namely AI and automation based tools — has led to a crucial paradigm shift within the legal landscape.

From case management to contract analysis, AI has the capacity to become a game changer in legal practice. The rate of change is going to accelerate because we have the data, the tools and the infrastructure to enable AI:

  • Data lakes enable access to all structured and unstructured data at scale.
  • Software applications provide the tools to collect and interpret the data.
  • Cloud storage is ubiquitous and cheap.

The Raymond James report explained there are five growth areas of AI in legal tech and innovation that will affect the ‘practice of law’. They minimize repetitive tasks and enable teams to make data-driven decisions. These legal tech examples can have a significant impact on the efficiency of legal departments:

  1. Legal research: AI brings legal information to decision makers for precedent case analysis and eDiscovery.
  2. Big data law: Using NLP and ML to process cases, contracts or other legal data to identify patterns and make predictions about outcomes.
  3. Computational law: Rules and data-driven AI used to mechanise decision-making, ultimately allowing legal domain experts to build systems that administer specific processes.
  4. Legal infrastructure: Tools and platforms that connect stakeholders within the legal system.
  5. Online dispute resolution: Helping resolve disputes and avoid costly court processes.

There are many silver linings

Promised to revolutionize the legal profession optimizing workflow and streamlining operations, legal technology can help in-house counsel to do more at a lower cost. As Dr Katherine King, the Chief Executive Officer of Yarris Technologies and the co-founder of Dazychain matter management platform noted, there are many benefits to the technological advancements.

“These changes will increasingly democratise the profession, reducing some of the exclusivity and high prices, ultimately making legal services available to more people,” she said.

“Only the seriously smart lawyers will retain the opportunity to provide the complex advice and legal strategy work. Most future corporate matters work will be driven exclusively through self-service aided by technology. However, other opportunities stretch across the whole legal services spectrum and are open to a wide range of different skills and interests, such as those in the areas of legal operations management and consulting,” Dr King explained.

A new generation is entering the legal field, one that already has a working knowledge of AI, tech tools, cloud computing and how to use them effectively. For general counsel, this makes implementing AI and automation practices all the easier.

When asked whether she would advise a young person to become a lawyer now, Dr King said: “Absolutely. But only if they accept their career will be vastly different to what it was in their parents’ era.”

Leverage the power of legal technology

Poised to continue playing a vital role in the transformation of the legal sector, legal technology is the key to your team becoming more systematic and adaptive.

Dazychain allows you adopt automation technologies easily, providing centralized data base for your team to navigate intricate legal cases comprehensively, reduce administrative burdens and increase productivity.

The legal departments that use technological advancements to their advantage will have a leading edge as the digital era reshapes the legal domain.

 

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