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In recent years, lawyers have embraced new technologies, with legal tech facilitating the digital transformation of the legal sector. The Covid-19 pandemic was a key factor in accelerating the adoption of legal tech by the sector as lawyers had to adapt to the changing legal environment as well as clients’ needs and expectations.
The benefits of legal tech
The adoption of legal technology has brought about many advantages to the legal industry, including:
- Faster data processing. This means that lawyers spend less time on routine administrative tasks and more on high-quality, impactful legal work for their clients. Artificial intelligence (AI) can be used to populate contracts with clauses and automated messages, reducing the time spent on repetitive and tedious tasks.
- Greater billing transparency of legal services. Clients pay extortionate hourly rates to lawyers and legal tech can help them track the day-to-day progress of cases and deals through practice management software. Inflation is also putting pressure on law firms to make their pricing more transparent.
- Reducing the risk of errors. AI systems can be used to monitor and store critical data and reduce the risk of human error breaches in law firms. Cloud-based technologies can also provide greater security than paper-based systems when it comes to document storage.
In an interview with The Financial Times, Eleanor Lightbody, Chief Executive of Luminance, a UK-based legal tech company, explained how AI is used to reduce the time needed to review contracts. She stated that this time saving is important as “the contract landscape can be complex as there has been an increase in regulation and an increase in compliance, and companies need to comply with all of these.”
During the Covid-19 pandemic, legal tech became of greater importance to law firms as they shifted to remote working. For example, this move meant that electronic signatures for contracts became more widespread, as opposed to wet signatures typically used in the legal industry. There became a greater need for legal technology solutions as professionals moved to virtual meetings, e-voting management, and online document collaboration.
Tech use will continue to grow
According to a report by LawtechUK, evidence indicates that the increased use of digital technology by legal service providers could result in productivity gains worth up to GBP1.7 billion ($2.1 billion) annually. The same report highlights the growing investment in specialist legal tech providers in the UK and estimates that annual investment in lawtech start-ups and scale-ups could grow up to GBP2.2 billion ($2.7 billion) by 2026.
Both law firms and clients are reaping the benefits of digital transformation in the legal industry. While the use of legal tech does come with its own set of risks, including cybersecurity and regulatory risks, automation of the sector will continue to drive efficiency and streamline legal operations.