Top Technological Disruption in Legal Field

A looming possible recession in the United States and the pessimistic world economic growth rate forecast published by the International Monetary Fund are triggering concerns in almost every sector of the economy. However, the LegalTech industry continues its evolution and disruption of traditional legal services unhindered. How can state-of-the-art IT technologies streamline business processes within the legal field? What benefits can digital disruption bring to your business?


legal software development


Are You Making the Most out of IT Opportunities to Effectively Deal with Data?

Alternative services are disrupting many industries these days, so it’s no wonder the same trend is taking hold in the legal industry. Technology provides vast opportunities for communication, data mining and knowledge discovery. A competitive landscape is formed by innovative companies providing more value with their services. Business disruption is led by companies that leverage different business models and utilize the most advanced technologies for effective analysis and synthesis of data and getting insights for better productivity. Disruptions in any field lead companies to search for new competitive advantages and process optimization.

The 2019 Report on the State of the Legal Market revealed that over the past decade traditional business models have largely broken apart, driven by a number of factors. Among them is the exponential growth of the availability of market information about firms and their practices, the rapid growth of new technologies making legal work less labor intensive, and significant market shifts after the Great Recession of 2007. Other factors fuelling the search of alternative service sources are the noticeable uptick in office expenses, technology, marketing and business development, and library expenses. 

According to the Thomson Reuters’ 2019 Report on the State of the Legal Market, the modern legal industry recognizes the alternative legal service provider (ALSP) market as better defined, quickly growing, and broadly adopted. In just two years, from 2015 to 2017, revenues of this market have grown from $8.4 billion to about $10.7 billion. Alternative legal service providers perform many tasks traditionally done by law firms, such as:

  • Litigation and investigation support
  • Legal research
  • Document review
  • eDiscovery
  • Regulatory risk and compliance

To be able to adequately respond to market pressures and to differentiate themselves from competitors, law firms must adopt new technologies. These technologies enable more efficient operations and interactions with clients. The question is, which technologies are the best for your firm? 

Here we face the so-called “Innovator’s Dilemma” – a business’s decision on either adopting changes triggering market disruption and aimed at future needs of customers or to focus all efforts on current customers’ needs.

Harvard professor Clayton Christensen was the first to raise the issue in 1997 in his book The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business. The problems he revealed still ring true today. Outstanding companies can do everything right and still lose their market leadership – or worse, disappear completely. 

Industry disruption is driven by powerful and future-oriented improvements and innovations, yet such innovations are usually unknown and unprofitable in the first instance. Disruptive innovations are usually initiated by startups or small companies providing alternative services – their new technology and business models are too unusual or too small to catch the interest of industry giants. Regardless, truly disruptive innovations find their niche in the market and allow innovators to capitalize on the advantages of first-movers. Following that, market leaders are forced to embrace such innovations to stay relevant.

When speaking about legal services, keep in mind the considerable amount of information and documents legal firms deal with every day. Indeed, documents and data are at the heart of the legal services industry, as well as successful and efficient communication with clients. It is logical to assume that the technologies enabling data acquisition, data preprocessing, data harmonization, data processing in research and electronic data processing are those that can be advantageous for legal services companies.



The Tech Market Is Mature Enough to Support Disruptive Innovations

The ILTA's 2018 Technology Survey revealed the technology trends that are rapidly moving the legal market towards new skill requirements and substantial changes. There is increasing pressure on attorneys to master technical skills and adopt new and powerful tools to the benefit of clients. Special attention is given to technologies such as artificial intelligence (AI) and machine learning. According to the said survey, “100% of the largest firms (over 700 attorneys) indicated they are pursuing AI/ML projects, and more than a third said they had “one or more AI/ML tools in production.”

What are examples of successful legal tech implementation? The first item of disruption is AI chatbots. The artificial intelligence technology behind AI bots is mature enough to make routine work of lawyers and attorneys, even if this work means interacting with customers.

Interaction with clients

As defined by Technopedia, chatbots are artificial intelligence programs “that simulate interactive human conversation by using key pre-calculated user phrases and auditory or text-based signals”. One of the very first chatbots to go online was ALICE (Artificial Linguistic Internet Computer Entity). It was created and launched by Dr. Richard Wallace more than 20 years ago. ALICE, like many other contemporary bots, is not perfect and has some drawbacks, but it inspired the launch of numerous other bots.

Lawyer bots speed up the work of legal firms and allow clients to serve themselves online. Automated legal applications help support existing customers, recruit new ones, and even create marketable legal products. What are the most common applications for AI bots in the legal field?

Chatbots are used in cases when customers are unlikely to hire a lawyer in any case. Such bots provide customers with extra information and help them through problems in simple cases. For example, DoNotPay AI powered bot was created to dispute parking tickets, and this year its capabilities have been expanded to allow users to appeal other fines, initiate disputes with retailers and even file lawsuits. It is a machine learning chatbot, meaning it gets more sophisticated with time. 

Another chatbot, BillyBot, can help you to find a barrister or a mediator for your legal problem. It works as a traditional barrister’s clerk – it provides basic legal information for online users and helps them decide whether professional legal assistance is needed. If it is, the bot can make appointments and deal with the tasks a human clerk usually does. 

The AI-based Robot Lawyer LISA (Legal Intelligence Support Assistant) is designed to create simple legal documents, such as non-disclosure agreements (NDA), eliminating the need for a lawyer at the initial stages of negotiations between parties. LISA asks a series of simple questions to the initiator of communication and then sends a created document to the reviewer to make changes if necessary. This bot also can help with drafting commercial, business and residential leases.

As we already mentioned, documents are at the heart of legal business, so document workflow automation is critical for a successful practice. What advantages can LegalTech bring in this regard?

Text Analytics and Big Data Processing

Manual review of contracts and data preparation is extremely time and resource consuming. Here we can talk about two technologies that come to the aid of legal companies: 

  • OCR and PDF software to facilitate data ingestion, access and modify information locked in paper-based documents and PDFs
  • AI and machine learning to understand and extract entities, facts, and relationships from complex contracts

Improved legal technology can assist legal firms with case assessments, proper data collection and knowledge discovery in databases. State of the art data processing systems can make the work of lawyers much easier and more efficient. Big data and knowledge discovery (kdd) data mining can help a company realize if the case is worth the lawyers’ time and predict the case outcomes while researching jury members, relevant data and details of the case and similar case outcomes.

The amount of data involved in the legal sphere is enormous, and growing exponentially – new cases, new legislation and new judgments appear on a daily basis. These enormous volumes of data have to be effectively managed and knowledge has to be extracted from them. This implies the need for an effective data science life cycle, data warehouses and data processing cycles.

The companies that effectively collect data, clean it, put it all together and make sense of it to derive business insights are definitely ahead of the curve. Equally as important is having high quality data before you start the analysis. ETL (extract, transform, load) data technology can be the answer to this problem as it allows efficient data integration in data mining. ETL data warehouses help consolidate data from multiple source systems, i.e. they are able to collect, transform and assemble data in an automated manner, thus saving users the time and effort of doing so manually. Using open source ETL tools and online analytical processing can significantly streamline the litigation process.

All types of legal documents have a lot in common with each other. They are well structured and sectioned documents containing titles, headers and key words. Server recognition, data capture and natural language processing help lawyers identify the key information in the documents, such as sections, clauses, entities, contract terms, obligations and other facts, which can be used to extract critical business intelligence necessary for legal work. The extracted knowledge can be used by other systems, such as contract lifecycle management system, accounting, procurement, logistics, HR, etc.

The current legal tech market already offers tools for online analytical processing of various legal documents. For example, the LastDraft, a cloud-based online service, allows collaborative work with documents and their revisioning. It facilitates documents workflow automation – as your team can work together on contracts, agreements, proposals, statements, and other communications; compare, accept, or reject any changes in them in real-time, avoid overwriting and minimize mistakes.

Blockchain in LegalTech – Revolutionizing Contracts, Escrow and Decision Making

Another technology that is already transforming the legal field is blockchain. Simply put, blockchain allows storing data (blocks) in a public database (chain). Data is stored in a digital register, or ledger of transactions, in which all blocks are encrypted, so everyone can have access to all the information but only a user who owns a special cryptographic key is able to add a new record to a particular chain. The advantage of the technology is that it is extremely difficult to lose the data as the register is not stored at a single location. Registers are distributed in identical copies among hundreds or even thousands of computers around the globe.

As we mentioned earlier, law firms all around the globe are facing diminishing demand from corporate clients and stronger competition from non-traditional players. That is why adopting the technologies capable of automating and streamlining legal business processes can be a winning move. One of the most known buzzwords associated with blockchain is smart contracts, which are sets of terms and conditions that can be automated. Smart contracts leave no place for human errors by automatically executing transactions when all the conditions contained in the contract are met. Similarly, smart contracts can be used as escrow agreements – in cases when a payment will not be executed until a product is delivered. Special conditions like breach of contract and payment of fines can be predefined. 

Smart contracts imply higher transaction security than normal transactions as both parties in the contract must follow it through until completed. Allegedly, this will eliminate the discrepancies of wording in normal agreements that can lead to a dispute. Smart contracts supplemented with AI can reduce the need for human verification, intervention or analysis, thus making the business process even more efficient.

One example is the CodeDrop - Blockchain Escrow App Prototype developed by Archer Software. The app implements specially developed consensus achieving logic, which ensures receiving payments for vendor, receiving source code in accordance with the agreement terms for client, or full refunding the customer's account if it serves as an escrow holding and regulating the payment of funds required for two parties involved in a given transaction. A DAPP allows for a customer to request a specific scope of work and secure payment with the platform Texand for a vendor to deliver and get the secured payment. The app uses an external Etherium payment control mechanism – a platform based on blockchain technology.

Blockchain technology can support other areas of legal services such as intellectual property, chain of custody and property records. A blockchain system supporting such records can simplify the process for conveyances and liens, it can protect the data against loss from physical means such as fire or theft, and cross-check records automatically to let users know if an attempted conveyance was done incorrectly. Intellectual property searches in blockchain based systems can be streamlined and some of the tasks currently performed by lawyers can be automated.



Bottom Line

Using cutting-edge technology, legal firms can significantly shorten eDiscovery and case processing times, streamline business processes and even minimize human errors often made in the process of legal data processing. AI chatbots can help address client inquiries faster, and automated data processing systems can save lawyers’ time and clients’ money. Efficient data warehouses and ETL tools can enhance document workflow automation, necessary data extraction and finding insights to develop the most successful strategies.

Our team of professionals experienced in AI and blockchain technology will gladly help your firm find the best solution for your business. Contact us to get more information about possible applications of these technologies for your business.