3 Legal Technology Trends You Should Know About Right Now

legal technology trends

From workflow automation to the continuing rise of legal ops and ALSPs, here are the top legal technology trends to keep an eye on right now.

The legal industry is changing — again. In a profession that has been traditionally slow to adopt technology, and has a reputation for lagging behind the digital transformation wave, momentum is finally picking up.

Change only accelerates, and with change comes new or elevated legal needs, and new players have entered the market to meet those needs. Alternative Legal Service Providers (ALSPs) have become the harbingers of change for the legal industry, driving in-house teams and law firms alike to prioritize technology and new modes of service delivery.

Houlihan Lokey’s 2022 Legal Technology and Services Update underlines the trends we’ve already seen emerging. Here are the top three trends from the report that we found most interesting, along with some added research and observations of our own.

Workflow automation solutions are rising in adoption, driven by their ability to help law firms and corporate legal departments drive greater efficiency, reduce costs, and deliver work more quickly.

Legal workflow automation refers to the automation and optimization of legal workflows to maximize efficiency, eliminate errors, and provide more value to clients, or in the case of in-house legal teams, to their business.

And as the market evolves, many are seeking custom workflow automation solutions that fit their firm or company’s unique needs and processes. In a recent BRYTER survey of Fortune 500 GCs, when asked to identify the #1 opportunity to improve efficiency in the legal function, 52% said process and workflow refinement. 23% pointed to specialized legal technology (What’s Keeping Your GC Clients Up at Night? BRYTER, 2022).

Infographic: Legal teams' #1 concern in 2022
Source: What’s Keeping Your GC Clients Up at Night? BRYTER, 2022

Another driver of increasing costs is rising regulatory and compliance risk. This only adds to the pressure on law firms and corporate legal and compliance teams to explore new processes and software.

Average compliance spend: 2017 vs 2019
Source: Houlihan Lokey, Legal Technology and Services Update, based on a Gartner study of 117 organizations in the second half of 2020.

With proven legal workflow automation software already on the market, there is a clear opportunity for firms to step in and help legal teams to meet business demands by adopting specialized technology.

Firms like Ashurst, Addleshaw Goddard, Simmons & Simmons, and more are already building custom digital solutions using BRYTER’s no-code legal application development platform and offering those solutions to meet their clients’ unique needs.

You can learn more about GCs’ needs and how top law firms are responding in by downloading our report — What’s Keeping Your GC Clients Up at Night?

2. Legal service models are changing and ALSPs are on the rise

Clients’ growing volume of legal work and tightening budgets necessitate new legal service models.

Alternative legal service providers (ALSPs) are becoming increasingly utilized by corporates and law firms seeking to reduce costs. Houlihan Lokey believes this adoption will accelerate, “owing to the belief that the outsourcing of certain tasks to ALSPs rather than assigning them to in-house or external attorneys can better preserve margins.”

Use of ALSPs by Law Firms and Corporations
Source: Houlihan Lokey, Legal Technology and Services Update

This shift is rippling through the entire legal service market, and changing the norm for service delivery models. As a result of the increasing availability and adoption of ALSPs:

  • Corporate legal departments are bringing more work in-house, opting to avoid rising outside counsel costs and accommodate needs for expertise in specific areas, working directly with ALSPs.
  • Law firms are investing to compete with ALSPs. Traditionally, firms struggle to achieve enough profitability and efficiency to compete with ALSPs’ cost structure in certain areas. Now, firms are investing in technology to change their own delivery models and increase the profitability of some services while accommodating pricing pressure from their client base.
  • Legal technology adoption has accelerated. ALSPs are among the first to adopt and utilize legal tech, and automated workflows have resulted in efficiency gains and reduced turnaround times for their law firm and corporate clients, driving their increased interest.

3. Legal operations is taking the spotlight — and spearheading change in the industry

Legal operations in corporate legal departments is increasingly taking center stage, driven by the function’s ability to manage costs and accommodate a shift to remote and hybrid work.

In our own survey, 62% of teams said they already have a legal ops function, up from the 33% previously reported by CLOC in 2018. Another 12% are already making plans to build the function in their department soon.

Source: What’s Keeping Your GC Clients Up at Night? BRYTER, 2022

Another notable point highlighted in the Houlihan Lokey report is that most Legal Ops Managers are not lawyers. In the 2021 CLOC State of the Industry survey report, of the 58% of departments that reported having a Legal Ops Manager, 40% said the role is served by a non-lawyer.

Legal Ops Manager survey
Source: 2021 CLOC State of the Industry survey report

The makeup of the legal industry is shifting to accommodate more specialists with backgrounds in project management, operations, software development, and more in addition to law. This diversification of backgrounds is a necessity to accommodate clients’ shifting needs, but it’s also an opportunity to make law more innovation-friendly. There will be growing pains for sure, but ultimately, having a greater collection of expertise to inform how legal services are packaged and delivered will be good for the industry.

So what does all of this mean for legal professionals?

In short — legal service delivery is changing because needs are changing. More non-lawyers are helping the legal industry embrace an evolution. To keep up with the speed of a digital-first world, legal too will need to embrace the technology that our counterparts in other industries embraced years ago — namely, workflow automation.

If you’d like to explore how you can use legal workflow automation for yourself or your clients, you’re invited to book a demo and ideation session with us.

Houlihan Lokey’s full 2022 Legal Technology and Services Update is available freely here.

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