Legal technology, also known as Legal Tech, refers to the use of technology and software to provide legal services. Legal Tech companies are generally startups founded with the purpose of disrupting the traditionally conservative legal market. According to TechCrunch, as of December 2014, "legal technology is booming, with companies attempting to disrupt the legal space at every level and from every angle" and Forbes noted in February 2015 that there were “hundreds of legal startups popping up all over the US and Europe”.
Contents
Definitions
Legal technology traditionally referred to the application of technology and software to help law firms with practice management, document storage, billing, accounting and electronic discovery. Since 2011, Legal Tech has evolved to be associated more with technology startups disrupting the practice of law by giving people access to online software that reduces or in some cases eliminates the need to consult a lawyer, or by connecting people with lawyers more efficiently through online marketplaces and lawyer-matching websites.
Industry context
The legal industry is widely seen to be conservative and traditional, with Law Technology Today noting that "in 50 years, the customer experience at most law firms has barely changed". Reasons for this include the fact law firms face weaker cost-cutting incentives than other professions (since they pass disbursements directly to their client) and are seen to be risk averse (as a minor technological error could have significant financial consequences for a client).
However, the growth of the hiring by businesses of in-house counsel and their increasing sophistication, together with the development of email, has led to clients placing increasing cost and time pressure on their lawyers. In addition, there are increasing incentives for lawyers to become technologically competent, with the American Bar Association voting in August 2012 to amend the Model Rules of Professional Conduct to require lawyers to keep abreast of "the benefits and risks associated with relevant technology", and the saturation of the market leading many lawyers to look for cutting-edge ways to compete.
Investment in Legal Tech is predominantly focused in the United States with more than $254 million invested in 2014 in the United States, however there is significant growth worldwide.
Stanford Law School has started CodeX, the Center for Legal Informatics, an interdisciplinary research center, which also incubates companies started by law students and computer scientists. Some companies that have come out of the program include Lex Machina and Legal.io.
Key areas
Traditional areas of Legal Tech include:
More recent areas of growth in Legal Tech focus on:
United States
Seed round:
Series A and beyond:
More established legal technology companies:
Russia
Legal research: