Legal technology, also known as Legal Tech, refers to the use of technology and software to provide legal services. Legal Tech companies are generally startups founded with the purpose of disrupting the traditionally conservative legal market.
Legal technology traditionally referred to the application of technology and software to help law firms with practice management, document storage, billing, accounting and electronic discovery. Since 2011, Legal Tech has evolved to be associated more with technology startups disrupting the practice of law by giving people access to online software that reduces or in some cases eliminates the need to consult a lawyer, or by connecting people with lawyers more efficiently through online marketplaces and lawyer-matching websites.
The legal industry is widely seen to be conservative and traditional, with Law Technology Today noting that "in 50 years, the customer experience at most law firms has barely changed". Reasons for this include the fact law firms face weaker cost-cutting incentives than other professions (since they pass disbursements directly to their client) and are seen to be risk averse (as a minor technological error could have significant financial consequences for a client).
However, the growth of the hiring by businesses of in-house counsel and their increasing sophistication, together with the development of email, has led to clients placing increasing cost and time pressure on their lawyers. In addition, there are increasing incentives for lawyers to become technologically competent, with the American Bar Association voting in August 2012 to amend the Model Rules of Professional Conduct to require lawyers to keep abreast of "the benefits and risks associated with relevant technology", and the saturation of the market leading many lawyers to look for cutting-edge ways to compete.  The exponential growth in the volume of documents (mostly email) that must be reviewed for litigation cases has greatly accelerated the adoption of technology used in eDiscovery, with elements of machine language and artificial intelligence being incorporated and cloud-based services being adopted by law firms.
Investment in Legal Tech is predominantly focused in the United States with more than $254 million invested in 2014 in the United States.
Stanford Law School has started CodeX, the Center for Legal Informatics, an interdisciplinary research center, which also incubates companies started by law students and computer scientists. Some companies that have come out of the program include Lex Machina and Legal.io.
Traditional areas of Legal Tech include:
- Document automation
- Document storage
- Electronic discovery
- Legal research
- Practice management
- Case management
More recent areas of growth in Legal Tech focus on:
- Providing tools or a marketplace to connect clients with lawyers
- Providing tools for consumers and businesses to complete legal matters by themselves, obviating the need for a lawyer
- Data and contract analytics
- Law practice optimization
- Use of legally binding digital signature, which helps verify the digital identity of each signer, maintains the chain of custody for the documents and can provide audit trails
- Automation of legal writing or other substantive aspects of legal practice
- Platforms for succession planning i.e Will writing, via online applications
- Providing tools to assist with immigration document preparation in lieu of hiring a lawyer.
Notable Legal Tech companies
- Bloomberg Law
- Lex Machina
- Ravel Law
- Rocket Lawyer
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