Changes in Legal Tech Development: What to Watch in 2023 | Forte Group

Changes in legal tech development: what to watch in 2023

Today’s advanced technologies enable legal industry players to work more quickly and efficiently. In 2020, Gartner research predicted 40 percent of corporate legal departments intended to increase their spending on legal IT systems or software by at least 10 percent by 2023. So far, this prediction is coming true. Technologies such as AI and predictive analytics are already integral to legal practice and eDiscovery-oriented enterprises. The 2022 Wolters Kluwer’s “Future Ready Lawyer” Survey report highlights the extent of the shift to the state-of-the-art mode:

Ongoing legal industry trends 

According to the survey, legal professionals cited several trends emerging across the industry: 

  • Client-law firm regulatory processes that help companies create unique methods to address customer problems using tailored, sector- or customer-oriented regulatory workflow solutions, provide secure transmission of data, instructions, counsel, and customer collaboration
  • Dashboards that enable legal enterprises and entities to monitor legal output and capacity, highlighting their efficiency, and tracking progress and metrics. This allows for more flexible changes and improved service and performance 
  • Private cloud services that offer organizations scalability, cost savings, reliability, access, and security.

AI will create the greatest value when it is fully embedded in tools and processes. In other words, when users don’t even realize they’re using AI technologies. It will have the biggest impact when it is used to understand legal documents: document review, contract analytics, preparation of legal cases, and improvement of legal research. At the same time, it will also pave the way for a new generation of legal alerting that will report legal changes as and when relevant to individual legal professionals and the cases they are working on.

Source: The 2022 Wolters Kluwer’s “Future Ready Lawyer” Survey report

Now, to the predictions that will shape the future of the legal world.

1. Metaverse: merging digital and real assets 

In addition to considering the anticipation of various legal issues, law firms should also consider the effects that blockchain technology could have on how they do business. Lawyers can now simplify their transactional processes and permanently store legal agreements on a shared ledger that is available to all parties.

Lawyers must collaborate with, or at least become regular software users creating smart contracts for blockchain projects their clients launch. Off-chain contract automation can make attorneys’ practices more productive (e.g., replacing manual contract creation/processes with pre-set ones). Additionally, firms providing services to individuals could continue to extend their reach to potential clients inaccessible in the physical world by offering expanded virtual consultation for remote clients or those with mobility limitations.

That said, it’s also important to note that it will not only be metaverse-related cases that law firms will be dealing with that can be referred to for legal assistance. Whether by replacing physical products and meetings with virtual ones, replacing real-world presence with virtual interactions, or virtual twins can help optimize the physical world.

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2. Cloud-native platforms: developing products with a new approach

Overall, only 36 percent of attorneys agree that their company needs to be well-prepared to tackle the most significant trends that will influence them in the next three years. Approximately two-thirds of lawyers state security worries as an excuse for not using the cloud. However, the belief that the cloud is less secure than local storage is a myth. Big cloud storage companies have comparable or better security than many corporate data centers. SaaS and cloud solutions are on track to eclipse on-premises IT solutions across all key markets worldwide. At the same time, enterprise IT spending on public cloud computing will surpass spending on traditional IT by 2025

The legal field will increasingly depend on SaaS and cloud platforms post-2023. Cloud systems bring two significant advantages: 

  • scalability to allow for storing immense amounts of eDiscovery data in one place, 
  • and cost-effective pay-as-you-go models, offering predictable monthly fees and long-term savings.

Organizations are switching to cloud-based systems using the 6R model, and development teams now use cloud frameworks and platforms to build products. The advantages to cloud-based systems include rapid development cycles, serverless functions, machine learning (ML) and analytics, and resilient, automated tech. Challenges regarding the change will impact vendors, costs and IT team management and culture.

Read also: Your guide to the top 6 software development models 

Cloud services provide mobility, efficiency, and cost-effectiveness with easy setups. Cloud storage can expand with an organization’s growth, making workflows mobile and flexible. Data can be accessed on any device, anytime, anywhere.

If servers crash, an organization risks losing money and data, and taking a reputational hit as a reliable and trustworthy provider of legal services. When utilizing monitored cloud services, the probability of downtimes is reduced, as IT specialists can monitor and maintain the cloud resources, resolving any problems that may arise.

3. Embedded data and analytics: measuring productivity and defining best practices

Automation has been a top of mind for legal professionals for some time. Several processes have been successfully automated to date, including: 

  • Legal research and data collection;
  • E-discovery research (for instance, to be used for digital evidence in court proceedings);
  • Document review and verification.

As successful law firms evolve towards employing a comprehensive view using data analytics, the next step will be to monitor developments and track progress on new related offerings. The ability to increasingly capture more actionable data allows an organization to further develop their analytics capabilities and define and prioritize best practices. 

From the perspective of clients’ or customers, legal automation also has benefits. 

Recent studies like Law 2023 show that the general public and legal technology users will have more access to objective information and more clarity on the effectiveness of law firms and individual lawyers. This, in turn, will organically rearrange the market positions and preferences toward the firms with the best track record. 

This is an incredible opportunity for those stepping into niche markets — actionable insights allow such organizations to cement their position as a preferred service provider. Importantly, automation does not happen for the sake of automation — changes to legal markets will be driven not only by organizations’ innovations but also by individual lawyers’ skills and experience.

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4. Cybersecurity: increasing vigilance to the solution infrastructure

The ability to anticipate future risks, protect sensitive client information, and recover mission-critical operations after a cyberattack is a necessity for legal practices.

Legal departments and law firms need to be hypervigilant about the ways they handle, transfer and store data, as well to maintain safe work practices up to date. With the right tools, firms can securely share encrypted data within their own organizations and externally with clients, witnesses, and courts while maintaining compliance. Globally, the average cost of a data breach increased 2.6 percent from USD 4.24 million in 2021 to USD 4.35 million in 2022 — the highest it’s been in history, according to IBM Security’s “The Cost of a Data Breach Report.”

Companies operate increasingly in complex business ecosystems requiring connections to IT assets from a diversity of users across various organizations connecting from anywhere and from any device. In the context of the continuous threat of cybersecurity breaches, the adoption of zero trust becomes a core architecture principle.

How can your legal tech-driven enterprise effectively adapt to change?

The independent long-year research on the legal industry’s future, conducted by Law 2023, showed that the driving force behind any company’s offering is a deeper understanding of users’ experience.

User research and innovation will shape the client experience of legal products. 

Regardless of industry, every service organization needs to understand their customer’s behaviors to design offers and services that help convert, bring value, and nurture client relationships. Tracking and utilizing historical data, and building capacity around this crucial insight helps anticipate customer desires before they become needs.

Even if an organization is in the early days of considering their digital transformation, or more aptly, their digital evolution, there are opportunities to refine and augment any current capacities. Law firms can make use of customer service experiences to enhance existing relationships. The important caveat being to proactively offer something new rather than simply reacting to requests. Here are some tactics to consider in determining your overall strategy:

  • Adopt a structured, value-generating approach for building software that focuses on profitable, rapidly expanding markets where business has an ownership advantage.
  • Explore what automation has to offer for a particular market niche — look to automate tasks, reduce labor costs and allow teams to focus on high-value tasks.
  • Adopt a customer-first mindset, and invest in R&D solutions to improve user and employee experiences.
  • Leverage existing R&D capabilities to explore new ways of applying and practicing law — and reap the benefits of being the trailblazer. 

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Oksana Mikhalchuk

by Oksana Mikhalchuk

Oksana is a technology writer at Forte Group. She is passionate about creating content about tech trends and the untapped potential it carries for digital business transformation.

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