Are you wondering if legal tech will replace law firms? The traditional legal profession has remained largely unchanged for centuries, but recent advances in technology are starting to chip away at this age-old institution. Legal technology, or legal tech, has brought a disruptive force to the field, bringing up the controversial question: will it replace law firms?

The legal sector, similar to other industries, has been profoundly impacted by the digital revolution. The value of the legal tech market, estimated to be around $17.6 billion in 2021, has been predicted to skyrocket to over $27 billion by 2025, according to a report by Grand View Research. This massive influx of capital indicates a growing appetite for solutions that can streamline and automate the legal process.

Legal tech automates mundane tasks, such as contract review, legal research, and due diligence, thereby freeing up lawyers’ time to focus on more complex, value-adding tasks. AI, a key component of legal tech, can analyze millions of legal documents in a matter of seconds, a task that would take a human weeks, or even months to complete.

Traditional law firms

Research by LawGeex found that AI achieved an accuracy of 94% in spotting issues in Non-Disclosure Agreements, compared to an average of 85% for experienced lawyers.

That said, it’s not all doom and gloom for traditional law firms. Legal tech still has its limitations. One report from McKinsey suggests that while 23% of a lawyer’s job could be automated, 77% of the tasks they perform are beyond the scope of current technology.

Lawyers’ roles in advising clients, applying judgment to complex legal matters, and representing clients in court are areas where technology falls short. While AI can process and analyze vast amounts of information, it lacks the emotional intelligence and negotiation skills required in the legal profession.

The adoption of legal tech

The Law Society of England and Wales found in a 2020 survey that only 30% of law firms were making use of AI and automation. The report cites issues such as lack of tech knowledge, cybersecurity concerns, and reluctance to change as major barriers to the adoption of legal tech. This indicates that law firms, despite the rising tide of technology, continue to play a significant role in the legal sector.

The introduction of legal tech has also highlighted the importance of data privacy and security. The legal profession is one steeped in confidentiality, and the transition to digital platforms has raised serious questions about how sensitive data is handled. According to a 2021 report by the American Bar Association, 29% of law firms experienced a data breach, highlighting the growing concern about cybersecurity in legal tech.

Technology continues to advance

It’s clear that the future of law lies in a partnership between humans and machines. The legal profession isn’t being replaced; it’s being reshaped. As technology continues to advance, lawyers who can effectively leverage these tools will be the ones who succeed. Instead of replacing law firms, legal tech is compelling them to evolve, rethink their conventional models, and integrate tech into their practice.

Technology also democratizes access to legal services. Research from Legal Services Corporation revealed that in 2021, 86% of the civil legal problems faced by low-income Americans received inadequate or no legal help. Legal tech solutions like automated legal document generators and AI chatbots can bridge this justice gap by providing affordable, if not free, legal advice.

What do young lawyers think of practicing law?

The idea of working for 10 years just to have the opportunity to invest money and “make partner at the firm” isn’t as attractive to millennial lawyers. Old-school law is failing. Younger lawyers want work-life balance. They want to help clients, earn money, and go hiking (or drinking) on weekends.

But things are getting hard for new law firms these days. Technology companies such as Avvo and LegalZoom are entering the industry and crushing small law firms that don’t have a marketing budget to compete. Many clients find their lawyers online these days and many lawyers don’t understand things just like SEO and pay-per-click advertisements.

Tech companies have other advantages as well. They are not regulated in the same way that law firms are. They don’t have to report to the law society. Tech companies have no industry-wide regulator.

This means tech companies can grow much faster than law firms. Further, they also often have a better business model, since the management is made up of businesspeople instead of lawyers. Many lawyers are too risk-averse to grow a company.

Tech Companies Can Raise Capital Easier Than Law Firms

It’s also easier for these technology companies to raise capital. Some companies such as Avvo are success stories in how legal tech companies can raise money. The owner of Avvo just sold his company for around $850 million USD. Other companies such as Atrium are a warning to other legal tech companies. Atrium after raising $65 million dollars appears to have failed.

Avvo created a legal technology opportunity. It’s a one-stop shop for legal needs.

They just laid off most of their legal staff. Atrium tried to run a law firm and a tech company at the same time, and it seems they are shutting down the law firm part of their business. Instead, they plan to focus on providing tech services to lawyers.

If you are starting a legal technology company or want to build a legal technology opportunity, below are some tips on how to be successful.

Understand the legal space

The best legal tech companies are created by people who understand the legal space. You should have been a lawyer or have at least worked in the legal industry for many years prior to starting a company that sells to lawyers.

How can you tell lawyers if you don’t understand their needs? How can you help lawyers improve their efficiency in going to court when you have never been to a courthouse? If you don’t have a legal background, then find a business partner who is a lawyer or comes from the legal industry.

Law firms are heavily regulated

It’s also important that you understand what can be improved and what can’t be in the legal industry. Lawyers are heavily regulated, and they must follow the law society’s rules. If you design something that is helpful for them, but they can’t use it, then it’s useless. Lawyers are not going to risk losing their license to use your product. Lawyers that get disbarred are publicly shammed on the law society website.

Know the law society’s rules before you start selling to lawyers. Keep in mind the rules are different (but often not much) in each state and province. Some places like Quebec and Louisiana follow a completely different legal system (based on French law) instead of British law. Most of the other provinces and states follow the same laws.

Law Firms Have Dropped The Ball

According to the Clio Legal Trends Report, 64% of law firms don’t even answer their phones when called. This makes competing against law firms easy. All you really have to do is answer your phone…

There are very few law firms that do anything creative. There are some law firms that meet clients over video conferencing. Axess Law is another creative law firm, that has office space inside Walmart.

Most law firms just hope that any company or law firm that tries something innovative will fail. Many companies that try to beat a new path do fail, but it only takes a few to change an industry. These law firms that wait and see what happens will be out of business in the next decade. Avvo changed the legal industry in the USA, but Canada hasn’t had any game-changers yet.

Law firms and legal tech

Most law firms are a decade behind in technology and are just starting to look at using Facebook and Google for marketing. Perhaps next decade they will consider AI and big data. Lawyers are often the last people to adopt new technology.

Law firms need to catch up to other industries, or they will be in for a hard time over the next decade.

Legal tech investment is changing the legal industry. Confidence in hiring the right lawyer is the value generated by legal tech platforms.

Much has recently been published about “legal tech platforms” and their implications on the legal field. Regarding the tech platforms, I’m making a reference to the online business model instead of just the tech startups Avvo, Rocket Lawyer, and LegalZoom are being promoted as the next-generation legal tech sites, and I want to dig a little more into this concept.

So what’s the legal technology platform? The best analogy I have encountered is in the Deloitte Business Trends Report on “Business Ecosystems” from 2015. It said, “Platforms are layers of infrastructure that set standards for a system in which many separate entities can operate for their own benefit.

“Good examples of these types of real platforms in our everyday lives would be Uber, Booking.com, and Amazon among the many platforms that are built on the sharing or collaborative economy business model.

Tech Platforms Replacing Law Firms

Companies like Uber offer a well-marketed platform with advanced features for all of its drivers. Layers of infrastructure on which the app is designed to help scale both the engagement and the growing demand for new ventures (such as Doordash). Legal tech can use technology as well to improve the client experience.

The terms of service that Uber enforces set out rules for each of its services. Each service has a predetermined set of regulations for the service level offered and anticipated by consumers when using the product. Further, it’s important that all of their drivers meet this service each time. The rating system enforces this set of standards. Legal tech investment is going to continue to grow.

Legal Tech Companies Reputation

Confidence is the best value generated by legal tech platforms. The social element of a tech company creates a level of confidence through user ratings and reviews. Who’d have thought we’d get to the point of embracing a technology platform enough to hire a taxi with an operator who has no specific qualification and drives his private vehicle? Or book a room on a smartphone in a stranger’s home in another part of the world?

It’s all quite fascinating, but how does that really translate to legal tech platforms, if at all?

Companies like Avvo, Rocket Lawyer, and LegalZoom have established marketplace and business models in the legal tech industry.

Customers have achieved this by creating automation for their legal forms and documentation. They have enabled their clients to choose the particular legal services they need. Further, they do this using transparent pricing. Individual or small law firms reap the benefits from an easy way to get new clients.

Tech replacing law firms

These legal tech companies work in consumer, retail, and small business niches. Precedents, documents, and simple legal assistance are all examples of automated services. They have fully produced a group of legal services— forms to deal with employment law problems, how to set up a small business, wills, etc.

According to Clayton Christensen’s theory of disruptive technologies, this entrance into the low end of the market is where all new arrivals start. They do this as they pass from the bottom to the top.

We are working to dominate the untapped market and thrive and conquer part of the $1 trillion legal market. Our website provides primarily legal education. We then move the “lead” to do research about lawyers using our website.

The client ends up finding the right lawyer. And of course, the lawyer potentially gains a new client. If you want to learn more about legal technology companies, reach out to a few of them.

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Will legal tech replace law firms?