2020 was a big year for the legal industry. Virtual hearings and electronic authentication of documents that used to be difficult or impossible are now the norm. No wonder legal tech companies are reaping the rewards.
In October 2020, RBC bought Ventures Founded, an app that helps entrepreneurs with founding documents and legal agreements. That same month, DoProcess, a popular Toronto-based real estate software company, acquired NoticeConnect, a website that allows attorneys and trustees to post notices to creditors and other will-seekers. Two months later, software giants Dye and Durham bought DoProcess for $ 530 million.
In many ways, 2020 ushered in a long overdue technology revolution. The surge in legal tech acquisitions also shows how quickly law firms, legal departments, and courts can change. Alternative legal services, a collective term that encompasses legal startups, established technology firms, innovative law firms, and other niche organizations, are poised to break new ground in the Canadian legal industry.
“Most lawyers and attorneys face what they have done in the past,” said Chris Bentley, director of the Legal Innovation Zone (LIZ) at Ryerson University. “They rejected technology, embraced the past, fought against services in the cloud, fought against the use of online research tools, and refused to videoconference with customers.”
Founded and NoticeConnect are both alumni startups of LIZ, Canada’s first legal incubator. According to Bentley, business for startups is booming during the pandemic. “When the pandemic broke out, our founders did not have conversations, but many conversations and then signed contracts.”
Expect more law firms and internal departments to follow suit this year. Co-authored by the Georgetown Law School Center on Ethics and the Legal Profession and the Thomson Reuters Institute, the Legal Market Report 2021 shows a shift towards legal technologies in U.S. companies to increase investment in technology. The report also predicts that law firms will reduce physical office space, create new training programs for fee payers and support staff, revamp marketing and business development, and focus on health and wellness.
“There are great opportunities for lawyers and law firms, but they don’t have the luxury of time,” says Bentley. “You have to conquer the market. For example, I spoke to a managing partner at a law firm about Alexsei (a LIZ legal research startup) and he wondered what that means for the young lawyers they usually hire. It’s time to adapt. “
A renewed focus on legal transactions promises to be a clear trend in the coming year as well. The area of management has grown over the past five years, driven by the formation of the Corporate Legal Operations Consortium in 2016. In Thomson Reuters’ 2020 Legal Department Operations Index survey, 81% of departments reported having legal departments Jump of 57% in 2019.
In-house counsel also look for technical solutions. Almost 75% of those surveyed named the focus on internal data security, internal efficiency and the use of technology as high priorities.
Getting work from in-house lawyers can be challenging for legal startups. Heather Suttie, a legal marketing and business development consultant, says new startups need to focus on who’s managing the workflow and making customer support a priority.
“A lot of GCs will use a big brand name for their litigation, but they could use a startup for their document review,” she says. “Whatever you develop, you have to be able to adapt it. As soon as you have a GC on board, you have a new employee who can support you. “
Another trend in 2021 will be a renewed focus on collaboration in the workplace. The 2021 State of the Legal Market Report found that prior to the pandemic, only 37% of lawyers wanted to work remotely. Three out of four lawyers now prefer to work from home. Suttie says the shift will create problems in law firm culture, especially for traditional law firms where face-to-face conversations with partners are so valuable.
“Team members are used to meeting each other and having spontaneous conversations,” she says. “This is important. For some teams, not working in a traditional structure can lead to a loss of culture. The challenge is that people get paid off, they may forget who can help them and that they can pick up the phone and call someone. “
Many of these changes, like working from home, will be permanent. While law firms and legal departments work to keep up, alternative legal service providers can step in. Bentley says it is time to shift the conversation to systemic reforms, such as regulators, that enable more competition in the legal services market.
“While lawyers congratulate each other for using Zoom, we still have a lot of progress to make,” he says. “How do better data and technology help consumers? How will law firms and other companies revolutionize the way legal services are delivered? ”
Julie Sobowale is a law and technology journalist.