The Disruptive Technology in the Legal Industry
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The Disruptive Technology in the Legal Industry

Christian Fahey, Vice President of Legal Affairs, Inmarsat Plc.
Christian Fahey, Vice President of Legal Affairs, Inmarsat Plc.

Christian Fahey, Vice President of Legal Affairs, Inmarsat Plc.

The legal profession and the delivery of legal services more generally is facing unprecedented disruption driven by factors including changes in client expectations, the licensing of alternative business structures (from a UK perspective this means law firms owned partly or wholly by those outside the legal profession such as the ‘Big Four’ professional services firms), the rise of legal operations (the centralisation of a function that seeks to optimize the delivery of legal services) and advances in technology (the latter being the focus of this article).

This article explores what LegalTech (legal technology) is, the potential benefits of LegalTech adoption, what use cases LegalTech solutions are being developed to address and finally suggests an approach for its adoption.

What is LegalTech?

LegalTech in its broadest sense is the use of technology in the provision of legal services. Unlike in other industries such as the music and taxi industries where digital disruption has led to a few companies emerging as the front runners (think Apple, Spotify, Uber, Lyft etc.) LegalTech is disrupting the legal sector through the development of solutions designed to improve one or more specific areas involved in the delivery of legal services, primarily in the following areas:

The rise of LegalTech, underpinned by advances in artificial intelligence (AI) and machine learning (ML), has gained significant attention in the legal sector over recent years with bold claims that LegalTech solutions will replace the need for lawyers. As the hype has died down somewhat and lawyers breathed a collective sigh of relief (though it is likely certain functions will be staffed much more leanly in the future) what has become clear is that law firms and in-house legal teams who leverage LegalTech in the right way are likely to better and more effortlessly serve their clients.

How can LegalTech help?

LegalTech when applied in the right way and for the right use case can be a great advantage for legal departments but there is a cost which will need justifying. This means that such departments will have to argue the case that there will be an expected return on investment, whether through a reduction in costs for the legal department, an increase in productivity or improved service delivery, better risk identification and mitigation and/or improved client satisfaction.

The USPs of LegalTech are solution specific but often include claims they can reduce time spent on administrative or mundane tasks (which is important because lawyers are very expensive), provide better analytics, offer improved access to information, and standardisation of documentation.

Use case examples

Some examples of where LegalTech solutions are being adopted include:

• Due diligence: This is the process by which a buyer of or an investor in a company, asset or business investigates the target to obtain sufficient information about the target’s business to help decide whether the proposed transaction represents a sound commercial investment. It is essentially an audit of the target’s legal, business and financial affairs. During the due diligence process the target generally creates a dataroom (usually online) storing relevant records of the target for the buyer or investor to review. Features of LegalTech solutions in this space include helping generate more accurate due diligence reports in a faster timescale and the use software based on ML to carry out tasks such as finding and collecting clauses from the contracts loaded onto a dataroom for review by the lawyer, potentially improving lawyer output by claims of 20-40%.

  LegalTech when applied in the right way and for the right use case can be a great advantage for legal departments but there is a cost which will need justifying ‚Äč 

• E-Disclosure: In the field of disputes, parties in many jurisdictions are obliged to preserve and disclose to their opponent documents pertaining to the dispute including electronically stored information. E-Disclosure is the process of identifying, preserving, collecting, filtering, reviewing and disclosing such electronically stored information. e-Disclosure LegalTech solutions can assist with this process, collecting the data without damaging its integrity and automatically organising such data in an efficient and cost effective manner.

• Contract review: Companies entering into agreements with suppliers or customers will generally do so on either their own, the supplier’s or customer’s terms which can vary significantly. Where using the other party’s terms, such terms will need to be reviewed and negotiated depending on the risks identified. The process can be slow and costly, and is prone to human error. LegalTech solutions here include features that automatically and quickly locate certain pre-specified information in contracts (e.g. liability clauses and termination rights), and display the results through an interface helping users refine or organize results.

A relatively recent example of adopting LegalTech was the introduction of an e-signature and contract management solution for Inmarsat’s non-disclosure agreements (NDAs). The set up and adoption of the solution was fairly straightforward, easier in fact than agreeing the internal process we wanted automating, finalising the agreement template to be used and rolling out the internal training. Since going live, the business benefits have included providing the business with the means to self-service its NDA requirements, speeding up the time to execute NDAs, providing greater control over the integrity of the agreements, ensuring all the required data fields are completed, providing automatic prompts where steps haven’t been completed and keeping a centralised store of the signed NDAs.

How to approach LegalTech?

For every LegalTech success story there are plenty of war stories and the legal industry is by no means immune from getting things wrong. The reasons for a failed adoption of Legal Tech vary from a lack of buy-in from the wider legal team and business, a failure to align user requirements with solution functionality, the solution doing one or more tasks brilliantly but others less well (and therefore fails as a whole), a lack of training in the use of the solution, the adopted solution fixing a problem but not the right problem. In fact, the same reasons for the failure of tech adoption in any number of other industries.

One message that comes though time and time again when LegalTech is discussed is that those looking to adopt LegalTech should start with the problem and then work to find a solution. This means assessing your processes and procedures, identifying any problem areas and then approaching the market to see what solutions can address those problems and working forwards from there.

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