What is going to happen in 2023? Who knows? Once again, you do. Perhaps….
Artificial Lawyer asked a range of experts from across our sector the following question, ‘How much will the legal innovation ecosystem have changed – and in what ways – by 2024?’, this is what everyone said. Here is Part Two of your responses, Part One was yesterday. Enjoy.
—
Roisin Noonan, COO at TLB and co-founder of oneNDA and Claustack
By 2024, we will see:
1. Normalisation. The use of legal tech will become increasingly normalised and what is considered “innovation” now will be standard. Legal will be much further along the path that Finance and HR took many years ago in leveraging tech to digitise manual workflows, capture and meaningfully report on data and generate real efficiencies for their businesses.
2. Standardisation. Standardisation will be the rule, not the exception. There will be continued growth in the creation, adoption and use of community-driven industry standards as companies look to gain efficiencies in the BAU contracting and data protection by curtailing (wasteful!) negotiations. Standardisation of internal template suites and processes will also emerge as a key priority for in-house Legal teams, as they continue to move away from the artisanal and towards the strategic value-add.
3. Consolidation. There will be a substantial consolidation of the market. Right now, the market is fairly fragmented, with legal tech providers, law companies and law firms all providing pieces of the legal optimisation puzzle. Over the next few years, we’d anticipate to see consolidation creating a potentially smaller but more sustainable and helpful ecosystem.
—
Haley Altman, Litera (partly) and partly doing other things.
I think we will see an increase in data integration and interoperability of systems as larger providers continue to acquire point solutions to provide for more holistic systems and workflows. This will be important to increase adoption by reducing context switching and duplicate data entry which are barriers to adoption. Hopefully the interoperability and data integrations will start extend further cross-providers. I think you will continue to see a focus on business of law applications that enable firms to unlock greater access to revenue with connections among CRM, expertise and BI systems.
It will be interesting to see the impact of OpenAI and ChatGPT but I don’t think either will meaningfully change how lawyers work by 2024. It may push vendors and users to think more broadly about knowledge and how to access relevant information quicker and in more standardized manners. We’re seeing developments from vendors on this front in the drafting space and I think this will continue to evolve as more attributes about a deal or document can be tagged and recognized.
—
Alexandra Lennox, Director of LawtechUK
Not a lot in some areas, a lot in others. Why? Corporate budgets are tighter in a recession, investors are more cautious in a downturn BUT the Government is still very focused on growth and innovation (Ministry of Justice and Department for Business, Energy & Industrial Strategy are both investing millions in legal service innovation in 2023). AND we may start to see fruits from the Judicial Review and Courts Act 2022, which will pave the way for online procedure rules that will allow new digital services developed by the private sector to integrate properly with the courts digital system.
What will this mean?
- The legal innovation ecosystem will become more spread out across the UK and less centred around London, as a result of Government investment in the sector that has a levelling up agenda to deliver on and remote working becoming the norm. This is a trend we’ve seen develop at LawtechUK, with key clusters in Manchester, Leeds, Birmingham, Bristol and Edinburgh (to name a few) becoming more established.
- We’ll see ‘justice-tech’ recognised as part of the legal innovation ecosystem. The incoming Online Procedure Rules and the Ministry of Justice’s focus in this space will encourage a wave of innovation and scaling of new products and services providing legal support to address the access to justice gap. We’ve seen young lawyers in particular wanting to feel like they are contributing to a greater purpose and big firms doing more pro-bono hours, which will further fuel innovation in this area.
- There will be further consolidation in the B2B lawtech market, as tighter corporate budgets and more cautious VCs make this a necessity. As the market continues to mature, purchasers of lawtech are becoming more sophisticated and smarter, as are the lawtech vendors.
—
Anthony Seale, CEO, Legatics
Going into an economic slowdown, we will see a shift in how busy different practice areas are. Counter-cyclical areas, such as restructuring and insolvency will need quick ways of expanding their delivery capacity. Experienced lawyers take time to train, so they’ll need to turn to technology to help deliver their service.
With less work to go around in other areas, we will see increased fee pressure. Simultaneously, the mantra of ‘too busy to innovate’, won’t apply. Law firms that take this opportunity to innovate and embed technology into their practice will both protect their profit margin in 2024’s tighter times and set themselves up for success long into the future. As the economy bounces back, we’ll then see an even bigger difference between firms that do and do not make this investment.
—
Tim Pullan, CEO, ThoughtRiver
Right now I’m sensing marked shift in sentiment towards boldness and I predict this will lead to some radical decisions in corporates that sweep away legacy process, and these decisions will quickly become precedents across industries. As one example I have spoken to 2 large corporates in the last week who have eliminated all manual legal process from all procurement contracting. Not done perfectly with all gaps and possible risks covered, but done nonetheless. Massive technology advances, as well as economic necessity are also going to be a big factor in this new mood, with AI in particular now irresistible as an automation proposition for many low-level manual tasks.
Also, we’ll see mass adoption of chatbots by SMEs looking for quick, free input on legal questions. Even if it’s wrong sometimes, they’ll still use it, it’s too convenient whilst being good enough.
—
Sacha Kirk, Co-Founder & CMO, Lawcadia
In the next 12 months, the legal industry will need to respond to the challenges of an economic downturn, cyber security threats and increased regulation. These external factors, combined with the struggle to find and retain staff, will make for a challenging year for industry leaders and people managers. These pain points will be the catalyst for:
- An increased focus on tightening up information security infrastructures and policies with industry players looking to “defend” their assets against possible cyber threats and avoid unwanted attention from the relevant regulators.
- Soft people management skills and employee engagement will come to the fore, triggering new strategies to engage and retain staff. Action on diversity and inclusion, non-traditional work structures, and an emphasis on empathy will be king.
- Increased demand for technology implementations that aid in the workflow, management, and reporting of regulatory responses (client-focused, client to firm, and between firms), as the legal industry grapples with the complexity and time-consuming nature of maintaining onerous regulatory obligations.
- In-house legal departments focus on demonstrating value for money and reducing wastage (time and financial resources) as the industry deals with wage hikes, inflation and increased business costs.
- The utilisation of technology to simplify workflows and improve efficiencies as more work is moved in-house and matter volumes increase.
—
Nick Watson, CEO, Ruby Datum
This ship moves slowly! However, as the Wolters Kluwer “Future Ready Lawyer” report highlights, the clients of law firms are expecting more innovation, which predominantly takes the form of a tech stack which empowers the teams behind their legal work.
Now, law may be a slow-moving ship, but when the wind changes direction and those in the lead start to adjust their sails, the others quickly follow. Large firms are innovating at an increasing pace – and the profits reflect this beautifully. We have the stats now, and other firms will start to take notice – and ultimately copy their lead (as typically happens). Some legacy tech firms knew this shift was coming and have locked people into painfully long contracts for this reason, and continue to tighten their grip on data portability (which we all know is simply unsustainable long-term).
AI continues to get smarter, and NLP algorithms such as OpenAI’s text-davinci-003 model will see many cool, experimental projects being released – automatically generated “human readable” contracts, did someone say?
Knowledge Management will be a hot topic – larger law firms especially are looking into ways to harvest their enormous banks of data in order to drive value-added services, predictive models, and cost efficiencies to their clients. I’d like to think smaller firms will pool together and collaborate, but I don’t see this as a reality by 2024, until they are in a “sink or swim” situation (there is still time, don’t worry!)
More legal tech start-ups will fade away (sorry, many of you clearly have not done your market research). It both delights me (because innovation is happening) and pains me (I hate to see people struggle) to see how many of you are working to solve the same challenges.
—
Alex Herrity, Director – Global Legal Solutions, Adidas.
I don’t expect radical change over the next 12 months within the large corporate in-house legal sector at least. I anticipate that belt tightening in light of economic pressures could impact the Legal Tech marketplace as many teams look to fettle with their existing tech to get more out of it, and plan for 2024/25 rather than spending big in 2023.
I suspect there might be a squeeze in the CLM space which is appears to be oversaturated, and we might get a high-profile casualty where VC money runs dry and customer conversion has been too slow to become sustainable.
That being said, I think we will continue to see more symbiotic-optimizing point solutions – plug-ins or connectors to existing applications / platforms with inexpensive licence models that leverage increased connectivity to existing systems and greater appetite for adoption in specialist and in-house teams.
—
Jerry Levine, Chief Evangelist, ContractPodAi
Many legal technology vendors have historically focused on solving tech-related problems without thinking about the humans involved in this tech adoption and usage. As AI continues to evolve, it will bring about new tech-related problems that can’t be solved by technology itself, but rather through increased collaboration between technology and human involvement. By 2024, we will see a deeper focus on HCI (human computer interaction) and an enhanced look at generative AI to predict contractual language, assist in finding answers and ultimately deliver a best-in-class legal platform. As a result, there will be a greater reliance on AI-driven document analysis and review for low-value items in the new year and beyond.
—
Karl Harris, Lex Machina (part of LexisNexis)
One aspect of the legal innovation ecosystem I expect will undergo some significant changes is in the arena of venture funding. Venture-backed startups contribute significantly to the legal innovation ecosystem, and venture funding is the lifeblood of these new ventures. My company, Lex Machina, was once a venture-backed startup, and we wouldn’t have gotten to where we are today without venture capital investors. In 2023 and 2024, I anticipate that venture funding for startups will shift in two distinct ways depending on whether the legal startup is in the early “new venture” stages or the later mature and established stages.
For the more established mature startups, and especially those that are not yet profitable, it will likely be more difficult to secure legal funding in the next two years. This is due to a general slowdown in later-stage venture funding related to the lower valuations found in the public markets. What this likely means is that those startups will either struggle to grow as they’re forced to cut costs, or they will need to be acquired. I would expect a strong uptick in acquisitions due to this slowdown in later-stage venture investing. Furthermore, I suspect that while a strong proportion of the M&A activity in the last couple of years was executed through private equity firms rather than strategic acquisitions by large companies, with the pending economic slowdown, the balance will likely shift back to strategic acquisitions and away from private equity acquisitions.
Now, for the early-stage “new venture” startups, the opposite trend could occur in which there is a rise in the formation of new venture-backed companies. This could happen for three reasons: one, when the economy slows, there will likely be layoffs at both law firms and companies, and therefore people will be available to pursue entrepreneurial ventures in a way they weren’t before. Two, it will continue to become less and less expensive to launch a new company – economic downturns tend to be good times to start a new business. And three, we haven’t seen the same slowdown in seed and early-stage venture investing that we have at the later stages because these newer companies are further away and more isolated from any turmoil in the current public markets. Therefore, new venture formation and investing is unlikely to slow down as much as later-stage investing, and may in fact increase.
—
Anthony Widdop, Global Director, Legal Operations, Shearman & Sterling
By 2024 we will start to see more members of the legal innovation ecosystem branch out beyond their individual “nodes”, to develop informal and formal relationships and alliances. For law firms this will include working more closely with ALSPs and other key players to create solutions for their clients that bring the best of different types of provider. I anticipate more “uncommon” partnerships with players that may not be an obvious fit, but could add value in new and unique ways. When looking at the history of innovation in other sectors, we see that uncommon partnerships often bring different insights which can create an innovation spark that leads to new products and services.
—
Richard Mabey, CEO, Juro
2023 will see the combined impact of inflation and slow growth bite, so by 2024 we’ll see how this pressure affected the legal innovation ecosystem. Companies that could grow and deliver their solutions efficiently will have thrived and those that couldn’t will have struggled. One positive effect here will be that legal innovation won’t be able to confine itself only to ‘legal’ in order to get buy-in and traction – which means solutions need to be built for everyone in the business, rather than needing a law degree and a six-month onboarding to figure out. Simplicity and speed of adoption will dominate.
—
Helena Hallgarn, VQ Virtual Intelligence + Standards Monitor
By 2024 we should have moved to the third generation of legal tech, where focus is on using advanced technology to solve legal problems based on the customer needs. Instead of just making lawyers use tech (legal tech phase one) or replace some of the tasks being done by a lawyer (legal tech phase two), we are now moving away from the focus on the lawyer and how lawyers traditionally manage legal tech. Instead of putting the lawyer in the center, we will look at the legal problems that are out there with a fresh new perspective. How can they best be managed and solved? By applying advanced technology to legal problems, we can hopefully initiate new opportunities in the legal tech sector.
—
Horace Wu, CEO, Syntheia
Technology will have made leaps and bounds in 2023. We are already seeing early indicators with ChatGPT at the end of 2022. The ecosystem, however, may not change a great deal.
I think the legal innovation ecosystem will start to bifurcate into two tracks – those willing to put their data in the cloud and those who are less willing to put their data in the cloud. Firms and organisations actively adopting cloud will benefit from improved technologies and new vendors. I think the bifurcation will be imperceptible in the first half of 2023, because the economic circumstances will slow the adoption of new technologies. It will start to speed up as vendors lower their prices, and more certainty returns to the economy.
Overall, by 2024, I think we will see a lot more options that support the legal innovation ecosystem at the lower end of the market. I think the top end of the market will actively explore a lot of possibilities, but it will not have changed a great deal because people and processes will hold back the tides of change.
—
Olga Mack, VP at LexisNexis and CEO of Parley Pro
In-house counsel or legal ops teams manually connecting or integrating various mission-critical solutions – such as CLM, matter management, and e-billing – will increasingly become a dated practice by 2024. Buying different solutions that do not have an industrial-grade data flow connection will be akin to using a typewriter today. The days of “arts and crafts” legal tech projects are numbered. Instead, you will start getting significant ROI on your purchase on day one with the push of a button.
Going from app to app and reconciling data practices will also be sunsetting. Expect all you need in one place, seamlessly connected and transparent. It will be powered by a collaboration engine that unites your law department, facilitates appropriate conversation across the entire company, and safely includes outside stakeholders.
And then expect some more…
Having all your tools in one place is an excellent start. Having your raw materials and data is even better. Practicing law without accessing the latest guidance and benchmarks is akin to a doctor giving a prescription without lab results or following the latest medical research. Expect an increase of helpful and actionable content and analytics delivered right in your tools that takes your work product to the next level.
This is magic: modern tools + content + data = practicing on top of your license. This is where we are heading by 2024.
—
Hugo Seymour, Chief Operating Officer at Della
Fruit is getting harder to pick. Time, energy and investment has been put into legal tech. Quite a lot of the low-hanging fruit is no longer a viable business prospect and the gap between what is possible using Microsoft or Google services and specialised providers will shrink. This will lead to legal tech firms merging and acquiring each other to allow for the delivery of differentiable services rather than features.
—
Noah Waisberg, CEO, Zuva
I don’t expect big changes over the next year. My experience in legal tech has been that there is little change in any given year, but meaningful progress over a bunch of years. Funding markets seem tighter now, but that should mean more of a return to pre-2020 normal for legal tech companies.
—
Prashant Dubey, Agiloft Chief Strategy Officer
By the end of next year, CLM’s “GPS-esq” live data visualization of contract data will have established itself as 2023’s digital transformation darling. Traditional, paper contracts might give you a certain amount of visibility into the lay of the land and a general route to success, but next year the enterprise will see that they can provide so much more.
Digital contracts’ extensive information provides a better understanding of individual relationships, as well as the wider ecosystem of relationships with suppliers and customers—what terms led to successful outcomes, what trends point to things that typically go wrong, etc. CLM solutions turn ‘flat’ contracts into data-rich decision-making tools. Like a GPS system, real-time data feeds from contracts show decision-makers not only the direction strategies will take them, but also where reality may impact those strategies, making CLM and the visibility it provides THE enterprise digital transformation darling of the year.
—
Thanks again to everyone for providing your predictions. Plenty of food for thought here.
Additionally, something else people may want to have on their radars for next year are two great Legal Innovators conferences taking place in the US and UK in 2023:
Legal Innovators California – San Francisco in June 7 and 8, 2023
And,
Legal Innovators UK – London in November 8 and 9, 2023
I will be chairing both of the two-day conferences as usual and also will be publishing updates on Artificial Lawyer throughout the year, featuring conference details, speaker profiles and more. Keep an eye out for those throughout next year! I look forward to seeing you in London and San Francisco in 2023!
Richard Tromans, Founder, Artificial Lawyer and Legal Innovators Conference Chair.
—