Whether you are using the computer for the first time or just looking at a pulley, everyone is fascinated by how easy life became with technology. All industries and humans now utilise technology for resource management, transparency, and/or error reduction to increase accuracy, productivity and profitability.
Legal is at the cusp of technology and innovation. Pandemic has shaped more work for in-house legal departments especially with less workforce remaining due to financial constraints. While technically restrained previously, the legal industry's long overdue automation cannot be overlooked.
Several circumstances, including the pandemic, have heightened the desire for legal departments to embrace technology, with general counsel under unprecedented pressure to manage their legal burden and drive efficiency in their departments.
Zack Hutto, the Lead Advisor for Corporate Legal and Compliance Tech at Gartner, said: “Legal departments will increase spending on technology to reduce the dependency on outside counsel, address COVID-19, and satisfy a long-overdue need to modernize, digitize and automate legal work”.
Efficient legal processes can be created through collaborating teams, automating legal services, and adopting digital processes. Further these also help in achieving expedient workflow and business awareness among legal professional.
The 2020 Gartner’s State of Legal Function survey, highlighted the positive sides of technological innovations and the impact they would have on the productivity of legal teams. Based on the survey, Gartner predicted the 5 Legal Technology Trends, we will talk about them in this article.
#1: By 2025, legal departments will increase their spend on technology threefold
Even though spending on new resources and manpower are limited, expenses on legal technology continue to rise in pandemic strained environment. Legal technology will help in legal workflow automation, boosting productivity especially with mundane and repetitive tasks and thereby helping the in-house team to focus on complex legal strategies.
Legal department expenses on Legal technology have increased 1.5 times to 3.9% of the total budget in 2020 from 2.6% in 2017. Gartner predicts legal technology spending will soar approximately 12% of in-house budgets by 2025, a threefold increase from 2020.
#2: By 2024, legal departments will replace 20% of generalist lawyers with non lawyer staff
With the rise in cross-functional departments in the legal space, non-lawyers will support the legal department with their technical and operational expertise. The rise in the operational and technical roles within the legal departments will accustom law firms to work more with scarce resources. Gartner predicted that the percentage of legal operations managers within the legal department grew from 34% of legal departments to 58% from 2018 to 2020. Such roles will see wider acceptance in Fortune 500 companies.
#3: By 2025, at least 25% of spending on corporate legal applications will go to nonspecialist technology providers
The market has been long dominated by specialist technology vendors, who have limited penetration within the legal departments. In the last few years, C-suite executives have recognised the value of legal departments and how the automation and transformation of the department will drive organisation-wide strategic initiatives.
Innovative startups (not necessarily legal techs) are finding ways to uncover the power of artificial intelligence (AI), machine learning (ML), automation, and other emerging technologies to help different departments including legal to utilise the potential of data and also repurpose information at-hand.
#4: By 2025, corporate legal departments will capture only 30% of the potential benefit of their contract life cycle management investments
One technological investment that every legal department has made or wants to make includes contract lifecycle management (CLM). The legal department’s return on investment on CLM is likely achievable through the operation-pro approach and use of technology.
Gartner quotes: “Legal departments that choose to follow a “big bang” approach and implement advanced contract life cycle management (CLM) solutions and features will limit success and ultimately accomplish only a fraction of the expected value. To get the best return on CLM investments, build a deliberate, practical plan for CLM technology adoption by investigating, documenting, and prioritising desired business outcomes and the necessary operational capabilities to achieve them.”
#5: By 2024, legal departments will have automated 50% of legal work related to major corporate transactions
Post-pandemic, there has been a rise in the demand for corporate transaction and M&A work.
“Eighty-seven percent of legal departments we surveyed in 2020 expected their total number of in-house full-time employees to stay the same or decrease,” says Zack Hutto. “Traditionally, larger workloads could only be met through higher in-house productivity or costly outside counsel. Advances in natural language processing and machine learning (ML) technologies open a third way for handling these critical tasks.”
What future looks like
The technological evolution of legal, rise of legal operation and non-legal professionals within the legal department, and technology roadmaps to achieve the return on investment (ROI) point towards the “flexible to change” legal departments, delivering client-centric solutions.
Developing a robust technology strategy adapting to changes in corporate setup, and advancing in the technology market will be critical to success.
Disclaimer: The views and opinions expressed in this article do not necessarily reflect the official policy or position of Novum Learning or Legal Practice Intelligence (LPI). While every attempt has been made to ensure that the information in this article has been obtained from reliable sources, neither Novum Learning or LPI nor the author is responsible for any errors or omissions, or for the results obtained from the use of this information, as the content published here is for information purposes only. The article does not constitute a comprehensive or complete statement of the matters discussed or the law relating thereto, and does not constitute professional and/or financial advice.