10 Legal Tech Trends for 2018 (Part 1)

Predictions are not an exact science and always embedded into overarching trends. Trends in 2018 will be the same trends that were shaping the practice of law in 2017, and they’ll still be shaping the practice of law in 2019. Predicting the time scale is always challenging. However, there will be some key trends that will take up speed in 2018 most likely. These trends won’t disappear after 2018 but this year might give the initial impetus to kick-off a broader acceptance of certain technologies, products and developments.

1. Focus on Procedures and Processes

A lot of lawyers realized that spending too much time focusing on certain “trendy” technologies like AI and blockchain can be harmful to digital transformation. Digital transformation requires a holistic approach. Digital transformation might be defined as: “Digital transformation is the profound transformation of business and organizational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies.” Thus it is important to also focus on the less sexy parts of digital transformation: processes and procedures. Once the dust of Legal Tech has settled, law firms and legal departments will and have to concentrate and bundle their efforts to analyze internal processes to identify room for improvement in 2018. This might not be extremely exciting and appealing but a necessary step forward.

This could be a good advice for 2018: “… stop digitizing shit processes, stop waiting for precious developer resources and stop spending a fortune on bloated business platforms that will simply become tomorrow’s legacy… Start putting the customer first and let them help you optimise their experience – we’ve fallen head-over-heels for Design Thinking for this. Remove all the spreadsheets and manual workarounds that are choking the gaps between your legacy systems.”

2. Legal Chatbots

It was reported at the FutureLaw 2017 Conference of CodeX that founders of various chatbots have already raised over $170 million in VC funding combined. This gold rush will soak into the legal market and will hit in 2018.

Chatbots have emerged as useful Legal Tech tools in collecting information and advancing legal solutions in a variety of areas (e.g., immigration, passenger rights or traffic tickets) in the last two years. Bots are an intuitive and automated way of delivering the FAQs in sophisticated ways. So far, these chatbots are mainly known in the customer support sector. We will see that chatbots will leave the pure customer service sector and give advice in many different life situations. The scope of chatbots will most likely cover two quite different areas:

  • Access to Justice: Chatbots will help citizens who haven’t had acceptable access to justice in the past. Particularly in areas where a high number of relatively similar cases with low economic value occur.
  • Law firms and alternative service providers will deploy chatbots to their clients to improve the communication and to offer fast and uncomplicated legal assessments. Automated services have already brought convenience and access benefits and thereby changed the way lawyers transact with their clients.

3. Broad Acceptance of Cloud Computing

There is no doubt, cloud technology will cause major disruption for many industries including the legal industry (Why The Cloud Just Might Be The Most Disruptive Technology Ever). However, the legal industry – at least in Germany – is still very reluctant even though the advantage of the cloud technology is apparent: Elasticity. Firms and legal departments no longer have to build their IT infrastructure to handle peak need and then double that for disaster recovery and business continuity purposes.

In 2018, cloud computing used by lawyers will increase now that the technology and the legal cloud computing providers are becoming increasingly familiar in other business areas. The legal industry is not on the forefront of cloud computing (and will most likely never be) but will start to use it more broadly: Cloud computing will be used for some aspects of running a law firm or legal department. Some will use it for billing, others for time tracking or document storage, and others will use it for all of those functions by using a full-fledged, web-based law practice management software system.

In Germany, the new § 203 StGB (German Criminal Code) should also accelerate the acceptance and use of cloud computing.

4. Legal Tech & Innovation Hubs

In recent years, we saw a growing trend of law firms launching venture arms and legal tech incubation and acceleration efforts. That trend parallels increased attention and investment in the legal technology sector by the large corporate players in the industry such as Lexis and Thompson Reuters. Just to name a few:

  • May 2015, Dentons launches NextLaw Labs, a global collaborative innovation platform focused on developing, deploying, and investing in new technologies and processes to transform the practice of law around the world
  • October 2016: Slaughter and May announces its Fintech Fast Forward program, an incubator for UK-based entrepreneurs and companies in Fin Tech and similar fields, including Insur Tech, Reg Tech,  Data Tech and blockchain/distributed ledger technology.
  • January 2017: Mishcon de Reya partners with L Marks to launch MDR Lab, a technology incubator programme for tech startups in the legal space
  • March 2017: Allen & Overy launches Fuse, a tech innovation space for Legal Tech, Reg Tech and Deal Tech challenges, and the chair of the project acknowledges that the firm may invest in specific solutions that have real relevance to its business

In continental Europe we have not seen such efforts efforts as of yet. It seems, however, very likely that several Legal Tech hubs will spring up in Germany, France, Spain or elsewhere to bundle money and execution competence in a physical location to foster a mindset change as well as to implement new digital ideas, procedures, processes and products.

5. Investment in Digital Transformation

In 2018, more and more players in the legal industry will realize that simply hiring more people to grow their revenue and manage the new client complexities is not enough. To embark on a digital transformation investments in products as well as expertise is necessary. Without substantial investments, Legal Tech will be merely window-dressing. As PwC puts it: “The digital transformation required, however, is complex, time-consuming, and expensive, and it affects every aspect of the enterprise.” As Legal Tech spending goes up in 2018, it is also important to measure digital ROI, both quantitatively and qualitatively, in six areas: customers, employees, operations, safety and soundness and infrastructure. The digital ROI needs to be linked to the company’s overall strategy and goals.