Legal tech’s next challenge: The real deal behind the ‘tech’ in legal tech tools

As the new decade begins, and digital transformation continues to overhaul the law industry, a new frenzy of hopes and predictions for legal tech is shaping up. But the jury’s still out, and we need to focus on what really matters.

Authors: Calum Hedigan is the Co-founder and COO of LegoLex and Justas Pangonis is the Co-founder and CEO of LegoLex.

For the past five to ten years, legal tech has been one of the biggest buzzwords in the legal industry. It’s on the lips of every lawyer out there, yet 2020 has arrived and what do we see? We see an industry in which 58% of lawyers in Spain don’t have adequate cybersecurity installed for their firms (something which, given that confidentiality is perhaps a lawyer’s most important obligation, is outright unacceptable in this day and age). But that’s merely the tip of the iceberg when it comes to technology actually being applied in the legal industry. [¹]

This begs the question: why?

After two years of working in the legal tech industry, we’ve had the distinct opportunity to speak with some of the best lawyers across the UK and Spain, as well as the founders of some of the most talked-about legal tech startups. From the outside, the oft-quoted headline, “713% growth: Legal tech set an investment record in 2018” may make it seem like all is well. This is a perfect example of how data can be twisted for publicity; $1 billion of investment in legal tech tools, when the legal market is worth over $800 billion, is pitiful. In reality, the convergence of lawyers and technology is advancing at a painstakingly slow rate.

Drawing on our experience, we believe there are five main factors weighing down the growth of the sector:

  1. Seeing lawyers as clients instead of law and technology partners
  2. The technology: quality, impact and price
  3. Lack of a long-term, game-changing vision
  4. Complacency of the incumbent market players
  5. Law firms not being treated like businesses

Today, let’s take a look at one of them:

Seeing lawyers as clients instead of partners

In October 2019, we participated in the Legal Geek Conference in London. This, the largest legal tech conference in the world, proclaimed to be showing off the best of the best in legal tech tools for law—and undoubtedly, there were some brilliant new tools to be discovered at the venue. However, one tool that caught our attention was developed not by some big tech company, but by a barrister. Ross Birkbeck was inspired by all the sophisticated tools available for editing home videos (a passion of his), but disappointed by the tools available for a profession that has existed for millennia.

He decided to create Casedo, a document-bundling tool for the legal industry. It allows lawyers to save time and optimize the organization of all client records and documentation into one file. This is a perfect way to keep track of long-term clients, and even more useful for unexpected courtroom situations. Imagine you’re cross-examining a witness and he contradicts a previous statement, but you can’t remember exactly what he said before. Casedo allows you to find out in an instant, whereas before you would’ve had to rummage through a thousand pieces of paper before locating the answer. This is just one of the many uses of this incredibly straightforward tool. Simple, yet genius.

If the legal tech industry is truly going to thrive, legal tech companies must re-evaluate their current strategies.

Tools for law: Not All that Glitters is Gold

At the Legal Geek Conference, we visited all the different stands, saw all the startups, and spoke with both the sales reps and the technical teams behind the scenes. But in spite of a few bright sparks, there were quite a few ugly ducklings.

Salesmen were telling us about their revolutionary AI that uses machine learning (buzzwords thrown about like there’s no tomorrow) to help lawyers analyze thousands of documents within seconds. The algorithm starts to become effective once a tiny amount of data has been processed, and it requires zero manual training. This guy would have convinced me… if I hadn’t already discovered that this is not the case (and not by a long shot) after speaking to lawyers who had previously used this magical, analytical godsend. And don’t get me started on how much this thing costs…

Another proposal was a contract-drafting and analysis tool which suggests the best wording for different clauses depending on what the machine learning algorithm has picked up from previous documents. The reps told us their AI is built on [insert complex IT jargon here] and can speed up the drafting of important documents. After a long line of questioning, we eventually discovered that their AI is actually based on documents from four law firms—peanuts in terms of the big data [²] required to create a machine learning algorithm which is a truly effective option for legal tech tools.

On top of that, it was unsupervised, meaning that there were no lawyers in place to check and double-check that the machine was learning correctly. Given the infinite nuances and interpretations of the law, the close supervision of lawyers is a vital aspect of the development of any legal AI tools for law which will have a far-reaching impact.

One of the top lawyers at a London law firm we visited described these companies’ sales tactics as “a lot of smoke and mirrors.” They told us about an encounter with a legal tech company that, after a lot of catchy sound bites, turned out to be selling a puffed-up workflow.

Given that we told these companies we were from the legal industry, it was a shame they didn’t open up about the shortcomings of their technologies. Instead, buzzwords were bandied about with superfluous exaggerations of their sophistication. Of course, sales puff is sales puff, and it must be taken with at least a pinch of salt. However, it unfortunately demonstrated that they did not understand their customers, nor the dynamics of law and technology, their target market.

 shows the oldfashioned tools lawyes used to have

The Challenges of Adopting Tech Tools

Lawyers are trained to be critical to the point of skepticism. We believe this has become a large factor in deterring many lawyers from joining the legal tech revolution; they don’t buy it. Literally. Many tech tools are not effectively solving everyday practical issues in the legal sector, and aren’t convincing law firms of their potentially game-changing benefits. So the remaining lawyers who still have faith, and are looking to hold you to your word regarding all the fantastic stuff your tech can do, aren’t going to be happy if it isn’t up to par.

This leads us to the second point: the legal community is very tight-knit. People talk. And if they spend a big chunk of their budget on disappointing technology, their lawyer friends are going to know about it.

Additionally, it’s worth noting that experienced lawyers outnumber relatively inexperienced lawyers by a huge margin. Nearly 70% of lawyers in Spain have at least sixteen years of experience, and that figure surpasses 60% in other European countries. [³] If we assume a lawyer begins practising fresh out of law school at the age of twenty-four, this means that seven in ten Spanish lawyers were born before the 1980s.

Unless they chose to specialize in IT law and were passionate about technology, it’s likely that half of the technical terms used to describe these systems don’t resonate with most lawyers. That, combined with a critical legal mindset and overhyped disappointments, could lead to a general sense of negativity associated with software salesmen.

Law and technology: Back to the Drawing Board

Law firms and lawyers should not be seen as clients. They should be seen as partners. Law firms hold the key to the success of legal tech and the development of real legal AI. They have all the knowledge, all the experience, and all the data. They know their pain points, and they have lawyers that can effectively scrutinize AI’s learnings and keep it in check. And when it comes to large law firms, they might even have the cash to take your legal tech solution to the next level.

If the legal tech industry is truly going to thrive, legal tech companies must re-evaluate their current strategies. Instead of trying to solve the big problems that 1) technology cannot yet handle and 2) law firms are reluctant to accept, why don’t we work with the lawyers on the ground who handle all the grunt work? Instead of aiming for a moonshot, why not focus on tools that save lawyers thousands of hours of manually checking for signatures?

Take Casedo as an example: the result of a barrister’s realization that a tool as simple as document bundling can provide huge benefits at a low cost. A true understanding of the fundamental problems that lawyers face on a daily basis cannot be engineered from the outside. We must strive to create real relationships with law firms and encourage them to open the door to their industry, so that we can build its future together.

shows the author Calum Hedigan

Calum Hedigan is the Co-founder and COO of LegoLex, a legal technology company that offers legal project management for complex international operations and finds verified, specialist legal counsel for international businesses. Simultaneously, they are developing and commercialising their own legal tech. Calum graduated from IE Law School with a Dual LL.M. in Law, Entrepreneurship and Technology, after having studied the Dual LLB in Spanish law and English law at IE University. He has experience working in Freshfields, Cuatrecasas and Cleary Gottlieb.

shows the author Justas-PangonisJustas Pangonis is the Co-founder and CEO of LegoLex, a legal technology company that offers legal project management for complex international operations and finds verified, specialist legal counsel for international businesses. Simultaneously, they are developing and commercialising their own legal tech. Justas was previously an independent legal consultant for two years, with experience in Sorainen, a top law firm in the Baltics, as well as having co-founded L’Essence, a startup targeting high-end hotel chains. He previously studied the Dual LLB in Spanish law and English law at IE University.

Note: The views expressed by the author of this paper are completely personal and do not represent the position of any affiliated institution.

[¹] II Estudio de Innovación del Sector Jurídico 2019, Grado de Implementación de las Nuevas Tecnologías en el Desarrollo del Negocio, Lefebvre.
[²] The 3 V’s of Big Data: a large Volume of data from a wide Variety of sources, processed at a rapid Velocity.
[³] II Estudio de Innovación del Sector Jurídico 2019, Años de Experiencia Laboral: Abogados, Lefebvre.