The Tech in LegalTech for Legal Teams

The Tech in

LegalTech
By Practiceleague

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What is it that comes to mind when you think of legal technology? Let us put things into perspective - as an industry, it reached a valuation of $1.2 billion in 2019 itself, with this number rising visibly with the pandemic in 2020 and 2021. Gartner predicts that investments in legal technology would have increased threefold by 2025, with spending in legal technology amounting to a whopping 12% of the total in-house budgets. Staying ignorant is no longer an option. It’s time we acknowledged that automation in the delivery of legal services is a necessity, not a luxury. But before we jump into the different ways in which we can include these technologies into the framework of our daily tasks, we must take a step back to understand what these technologies themselves are. For us to be able to truly extract the maximum potential from technology, we need to first understand their nature. Introducing – the tech in legal tech.

1) Artificial Intelligence and Machine Learning:

Artificial Intelligence and Machine Learning are two terms that have been used almost interchangeably with legal tech, and for good reason. In simplest terms, AI is the capability of machines to learn from experience and perform tasks based on that knowledge.
Advancement in the field of Natural Language Processing opened multiple doors for the integration of AI into the delivery of legal services, may it be in contracting, due diligence, legal research or even electronic discovery. Today, AI and ML have permeated into almost every aspect of the legal practice, constantly learning, and evolving.

a) Contract creation and lifecycle management:

Perhaps it is the logical structure of contracting that makes it the perfect use case for the application of AI-based automation. Some of the most widely adopted legal technology solutions that have come up in the world are in the field of AI-powered contract lifecycle management, helping lawyers effectively reduce the time spent in contract creation, negotiation, execution, and overall management. Intuitive CLM tools are able to learn from legacy contracts, enabling legal departments to whip up various contracts in a matter of minutes

b) Data extraction and summarization:

The integration of AI into contractual data has enabled hassle-free extraction of essential data points like renewal dates, contract value, the amount of liability, etc. Instead of spending countless hours going through contracts and earmarking this information, users can now extract and summarise contractual data by simply uploading their contracts onto the system. This structured data, which has been amassed from various vendor and supply contracts, commercial contracts, leases, and licenses, can now be utilised for negotiating better terms, assessment of potential risk, and keeping a track of timelines and compliance.

c) AI powered legal research:

For decades, legal research was synonymous with libraries, law journals and reference digests, with lawyers spending hours looking for the right caselaw. The 1990s witnessed the digitization of judicial opinions and court records, which consequently led to the maintenance of databases by WestLaw and LexisNexis which could be accessed over the internet. However, users were still struggling with trying to formulate effective keywords and complicated Boolean search operators. The integration of AI into legal research helped researchers include more context into their queries, with tools like CaseText’s CARA A.I. giving tailored search results by enabling users to upload their case- briefs.

d) Legal budgeting and spending:

Ask the head of any in-house legal department what their biggest concern is, and you are sure to receive one unanimous answer – reducing legal spend. It isn’t just the cost factor – lawyers are wasting countless hours calculating billables and reviewing invoices, a fairly administrative and repetitive task. AI powered legal budgeting tools provide an integrated method of setting budgets, reviewing legal spend, managing payments and providing updates in real time. Combining predictive analysis, machine learning and historical data, an AI powered budgeting tool is able to increase budget accuracy and predict areas for reduction.

e) Case management:

Anyone who has ever had to retrieve data from court websites will know that they are rarely user-friendly. In a nutshell, case management pertains to the end-to end management of all the requirements for a single case or dispute - from drafting and filing of court documents, and reporting - to coordinating with counsel outside the organisation. AI powered matter and case management integrates these numerous tasks, helping legal departments to effectively reduce the time spent in coordination and follow- up, while simultaneously giving them access to real-time updates and key insights.

2) Blockchain:

In simple terms, a blockchain is a data structure which holds details of every transaction in the form of blocks which cannot be altered or erased by any single entity. Highly decentralized and transparent, it ensures secure transactions between parties, proof of which is present in a decentralised ledger. Applying this to the execution of contracts, we get agreements based on an “If- then” premise, namely, smart contracts. In a smart contract, the blockchain contains lines of code with these pre-conditions; the contract gets executed automatically as soon as the aforementioned conditions are fulfilled. The smart contract movement has opened a parallel world of opportunities for commercial transactions. As of today, companies as big as global insurance AXA are already switching to smart contracts and capitalizing on this piece of legal innovation to make their contracting simpler and more effective.

3) Cloud Computing:

Document and management of paperwork, storage, archiving and retrieval were some issues that lawyers have struggled with for as long as memory serves. Switching to cloud based storage has provided efficient and cost effective options of storage and back up, with the added advantage of increased accessibility.

a) Increased security and safety:

Unlike on-premise storage where your data is constantly at the risk of loss, data stored on cloud is highly secure, due to multiple factors. Companies offering cloud storage understand that the security of your data is your foremost concern, which is why they employ a variety of safeguards to protect your data. Due to the multi-level encryptions, constant security updates, built-in firewalls, and regular third-party testing - the data stored on the cloud is much more secure than anything on your hard disk.

b) Agility:

What happens when a solution needs to be deployed immediately, without loss of any time? Setting up systems can take anywhere between 2-4 weeks, which could result in the loss of time-sensitive opportunities. “Agility” refers to the ability to swiftly adapt in response to changes in business environments. Cloud computing enables business agility by providing instant access to all stored data within seconds, without losing any time in setting up of systems and storage. Companies can now have access to all their data 24*7, regardless of where their employees are situated.

c) Easy scalability:

Business is often volatile, with the need to store large amounts of data changing rapidly. In terms of cloud computing, scalability refers to the ability to increase or decrease IT resources to meet the changing demand. The absence of the requirement of any hardware means that users can sign up and use cloud solutions within minutes, by being able to simply transfer all their existing data to the cloud.

d) Cost effectiveness:

With no hardware-based restrictions, and the flexibility of paying only for the space that you utilise, the cost effectiveness of the cloud has become the biggest contributor to its success. With low infrastructural cost and less dependence on IT services and maintenance, switching to cloud-based storage has become an obvious step for most companies.

e) Universal availability of data:

The term “data silos” refers to a collection of information in an organization that is isolated from and not accessible by other parts of the organization. Not being able to access the right data at the right time causes law firms and legal departments to lose countless hours in communication and duplication.

f) Global Information security compliance:

As a result of rapid development in technology, especially in light of the multiple standards and the integration of open-source activity focussed on cloud computing, there exist multiple standards of compliance for the information security protocol for cloud storage. Numerous professional and technical organizations address various aspects of cloud technology, offering their own standards, recommendations and guidance for successful cloud implementation. Before signing up for cloud-based solutions, IT leaders need to conduct a thorough research into these info-sec compliance standards and understand which one is the most suitable for them.

While these advantages of cloud computing were already reason enough for its universal adoption, it was the pandemic that proved to be the nal and most forceful push. As courts became virtual and lawyer’s offices became remote, the only way to provide universal access to all data was through switching to the cloud.

4) Open API:

Ever wondered how different software and applications communicate with each other? An application programming interface or API is a part of software code that lets one application communicate with another application and exchange data or access its features. We see multiple uses of API in our daily lives, from the food that we order where Zomato links with Google Pay to help you use UPI for paying for your food, or when MakeMyTrip links with an airline website to enable you to book your fights.
The legal world is no different. APIs help build interoperability between various legal technology tools and ensure that different systems function in a complementary and cohesive manner. Some examples of API usage in legal technology include enterprise management software using APIs to link with lawyer’s calendars to scheduling appointments, E-signature tools linking with contract lifecycle management tools to ensure the seamless execution of contracts and case-management tools utilizing APIs to access court records and judgments present on the websites of various courts and tribunals.

5) Data Analytics:

Data Analytics refers to the science of analysing and recognizing patterns that occur in a particular scenario by analysing structured data sets. The application of data analytics to legal data has enabled law firms and in-house counsel to be led to the emergence of a new stream of legal tech - legal analytics.

a) Litigation analytics:

We understand that litigation equals cost; the decision to initiate any legal action hinges on the probability of a favourable decision. Parties would rely on the advice and experience of their counsel to take a calculated decision concerning initiating litigation. Enter litigation analytics. By analysing a host of factors present across thousands of decisions, legal analytics tools are able to accurately predict the outcome of a potential litigation, down to which claims will succeed and which won’t, the estimated amount of damages and even whether a motion is likely to be granted by a particular judge.

b) Legal operations:

Today, the running of an in-house legal department is no different from any other department of the company- heads must operate and report like business functions. Lawyers need to talk numbers, and data analytics helps them have a firm grasp on numbers related to revenue and expenditure. Integrating data analytics into the management of their daily operations helps in-house departments understand which areas can be optimised, which aspects should be cut down, recognise roadblocks and bottlenecks, and take proactive steps to cure them.

c) Business decisions:

Which areas offer opportunities for growth, where is the best return on investment? In-house and corporate counsel today aren’t just looking after their company’s contracts and compliance; they are playing a proactive role by weighing in on various finance and business decisions. Tools of data analysis enable in-house counsel to offer data-backed insights to assist in the company’s corporate planning, budgeting, and resource allocation.

The aim of technology is to enable you to do more in less. In order to choose the right legal technology tools for our organization, it is imperative that we first understand what they do, and whether the functionalities they offer will actually prove useful for us. The legal technology movement is here, and it is NOW; let us make sure that we take an informed step forward.