The Legal Technology Boom: Reasons for Slow Adoption by Corporates

The Legal Technology Boom:

Reasons for Slow Adoption by Corporates
By Practiceleague

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The term “Legal Technology” applies to a wide range of products today, ranging from simple lawyer recommendation platforms to practice management tools that allow firms to perform multiple functions through a single tool. Condensed into the simplest of terms, legal technology is any application of technology that helps in the delivery of legal services.
2018 was an important year for legal technology - investments in Legal technology surpassed the $1 billion mark; this number grew to $1.23 billion by the third quarter of 2019. If numbers are to be believed, then this was the equivalent of a bumper crop for our techie-farmers in the legal field (pun intended). Moving to the current, as of 2021, (thanks in part to the technology- related requirements of remote working and hybrid working), 49% of law firms have reported that they are effectively using technology today, and 47% have said they can improve technology adoption and plan to do so. This is a sea change from the earlier scenario – as can be seen, for example, according to a survey conducted by Gartner in December 2018, a whopping 81% of legal departments - or 8 out of 10 corporate legal departments said that they were unprepared to support their organization’s digital initiatives. This shows the industry trend, and the potential that has now begun to be tapped into.

We have always heard that “lawyers are characteristically slow towards the adoption of technology”; even when technology and automation are clearly a part of their daily lives, from the smart watches on their hands to the MacBooks on their desks. It is obvious that the adoption of technology enabled automation will result in increased efficiency and reduced error. Why, then, are some of the sharpest minds still reluctant to make this switch? In this piece, we examine some of the biggest hindrances to the adoption of legal technology and the reasons behind their existence.

1) The Credibility Factor :

Lawyers are expected to operate at high levels of accuracy at all times, where one wrongly drafted clause in a contract can result in damages worth millions of dollars. Naturally, this need for accuracy permeates into every aspect of their work, with most lawyers preferring to complete a task manually, as compared to risk getting inaccurate results through the usage of an automation tool. CEOs and product managers, take note: Simply automating a process and reducing the turnaround time is not enough - in order to be trusted and adopted, a tool must increase efficiency while not compromising on correctness.

2) The Cost Factor:

Ask the sales team of any Legal technology product at which stage most deals fall off, and the answer will be the same - during cost negotiation. When it comes to adoption, it is the Chief innovation officers or managing partners who take the final decision, and this is often based on a cost-benefit analysis. Could the same level of productivity be achieved by hiring a couple of more associates or paralegals? If yes, then it is unlikely that the tool will be easily adopted. Here’s a simple fact - technology is hardly ever adopted for the sake of technology or advancement; more often than not, the driving force is cost reduction. Today, cost remains one of the biggest hurdles in the active adoption of legal technology products globally. However, it is heartening to note that as a general trend, the percentage of budget allocated by law-firms to technology technology has been growing year on year.

3) Security Concerns:

Remember the Sony cyberattack where leaked emails cost the media giant millions in damages? A security breach, or leakage of sensitive data is one of the biggest concerns faced by any law firm or in-house department. Owing to the very nature of their occupation, lawyers are privy to confidential information at all times, and must be extremely careful when it comes to data security. Almost 32% of lawyers surveyed cited “concerns over information security” as the reason for the lack of adoption of legal technology. Even after the numerous benefits it offers, cloud storage is yet to find popularity amongst the legal fraternity due to concerns over security. This holds true for all other solutions as well.

4) The need for new learning:

Entering multiple passwords, complicated user interfaces or the requirement of inputs or commands being in a specific format are tremendous hurdles to the adoption of any tool. On the other hand, a solution which invokes a feeling of familiarity, may it be in the terms of design or accessibility, is much more likely to be adopted - like shifting from driving a car with manual gears to an automatic.

Remember, time spent on learning how to use a new software is sadly not counted amongst billables. Even today, most law firms do not have a separate knowledge management or tech adoption team to oversee the smooth on-boarding of new tools, resulting in most lawyers shying away from its adoption altogether. A 2020 survey by Bloomberg puts “lack of tech-savvy users” as the biggest hurdle towards the adoption of legal technology, by 49% of respondents. A successful tool is easy to use and does not require too much upskilling.

5) Lack of Interoperability:

The term “interoperability” refers to the basic ability of different computerized products or systems to readily connect and exchange information with one another, without restriction. In terms of legal technology, it translates into a product seamlessly fitting in place with your core business processes. A solution as simple as syncing the calendars of all partners to a practice management tool can save countless hours spent on managing schedules. Tools for the automation of contract lifecycle management are some of the most widely adopted solutions throughout legal technology due to their ability to integrate with multiple processes. A solution that operates in isolation will often be viewed as a liability. Lawyers need to collaborate with their counterparts in other departments as well as organizations on a daily basis - the inability of a tool to be able to sync with other processes, may it be over email or other functionalities, is often a huge hindrance towards its adoption.

Even as we see a gradual increase in the number of organizations actively deploying tech tools in their daily functioning, the speed of this adoption remains slow. As we have discussed above, this hesitation is not unfounded; if anything, it is time for companies in the legal technology space to take tangible steps towards their resolution.

As more customers demand greater efficiency and more accountability, a large number of law firms and in-house legal departments are opening their doors to legal technology. As its consumers discover the obvious potential and immense possibilities afforded by technology in the legal sector, law firms and corporate legal departments are increasingly joining the legal technology revolution.