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What Next for LegalTech?

Back in 2017, the International Bar Association held a seminar in London focusing on what law firms might look like in the near future. One of the panel discussions had the catchy title “Clients are from Mars, law firms are from Venus” – the topic being a look at how client demands and traditional legal practice often differ in their priorities, and more importantly how firms were having to alter their focus to keep up with client expectations.

The growth in legaltech seen over the past few years is both a symptom and a cause of this trend. A symptom because law firms are increasingly turning to technology to deliver more of what the client wants – better value, transparency, efficiency, predictability, and in commercial law anyway, legal services that deliver direct benefits to the bottom line.

At the same time, innovations in legaltech have been the driver of these demands because they have made alternatives to the status quo possible. The adoption of certain kinds of business and project management tools by agile, disruptive firms has allowed them to drive efficiencies to the point where they can offer clients highly attractive alternative fee arrangements, putting traditional incumbents under considerable pressure on cost.

AI-driven automated ‘legal bots’ and online self-service platforms have threatened to cut the lawyer out of certain retail legal services altogether, forcing players in these markets to justify their role and add value to it, often through greater use of technology.

It is difficult to see the future of legaltech making any great departures from the course it has already taken. The rapid adoption of new, innovative technologies in legal practice hasn’t happened for the sake of it – nearly every new breakthrough either helps lawyers do their jobs more efficiently and effectively, or leads to better outcomes for clients. In both cases, the end goal is better returns and better margins for practitioners.

Given the rapid rate of innovation that seems almost intrinsic to technology, predicting what legaltech might look like in the future feels a foolhardy venture – who knows what will come next? But, given the current state of play, here are three of the more likely possibilities.

Most contracts will be written in code

Smart contracts are already gaining traction across commercial law. Using the same technology cryptocurrencies are built on – Blockchain – smart contracts allow agreements and transactions to be executed automatically and without the need for third-party verification, e.g. without a lawyer checking that all the T’s and C’s have been met. This is because Blockchain is a self-verifying, self-replicating system that cannot be tampered with once a ‘block’ (such as a contractual agreement) has been created.

This might do lawyers out of a job in terms of managing contractual obligations, but as with most things that can be automated, the efficiency and cost-savings it offers make demand from the client side inevitable. The contracts will still have to be written in the first place, however – although in the case of smart contracts, this doesn’t mean typing up a lengthy agreement full of finer legal points and clarifications, it means coding them as a software programme to run in the Blockchain. There are currently a number of on-going efforts to write domain-specific languages that will capture the nuances of contractual law in code, and also enable easy transfer between contractual text and code.

Preventative law will aim to stop disputes before they happen

Data analytics is one of the most important trends in legaltech. With so much of legal practice relying on research methodologies, the application of advanced search and analysis algorithms can drastically reduce time spent on discovery and rapidly give lawyers all the relevant information they need to focus on interpretation.

Legaltech service providers like Lex Machina use data analytics to help lawyers plan litigation strategies based on in-depth analysis of case details and precedent. But the next step beyond that is the potential to use analytics to prevent the need for litigation in the first place. Already widely used in risk management across the business world, so-called Big Data techniques can identify risk patterns from historical data to such a degree of accuracy that they can reliably predict how and where they will occur again in the future. By revealing all the potential risk points for litigation in advance, firms will be empowered to take action to prevent disputes from happening.

AI-powered expert systems will make a come back

Expert systems were an early attempt to create machines that were as good at dispensing legal advice as qualified lawyers. They enjoyed limited success, mainly because the rule-based algorithms they relied on were not very good at nuanced interpretation, no matter how vast their reserves of legal knowledge were.

With the way AI is advancing, it is difficult to see a future where computerised systems capable of dispensing serious, practical and actionable legal advice won’t reach full maturity. This isn’t because we are close to building computerised robots that can think like humans, only faster and at greater depth. It is more because the family of capabilities that fall under the AI umbrella is expanding, and when you combine various strands, you can achieve powerful results.

For example, by combining Big Data analytics techniques discussed above with natural language processing approaches, you can build artificial interpretive platforms that are able to match user intentions (desired outcomes) with analysis of written case or statutory law and come out with a meaningful synthesis based on probability. Moreover, if you apply Machine Learning techniques, the systems can use the success patterns of their own suggestions to refine what they do, meaning they get more accurate over time. This has huge potential in commercial law in particular, in areas like compliance, contract law and intellectual property.