Gartner Predicts the Global Legal Tech Market Will Reach $50 Billion by 2027 as a Result of GenAI

The global legal technology market has grown significantly in recent years and generative AI (GenAI) will accelerate this growth, meaning the market will reach $50 billion in value by 2027, according to Gartner, Inc.

“GenAI has huge potential for bringing more automation to the legal space,” said Chris Audet, Chief of Research in the Gartner for Legal, Risk & Compliance Leaders practice. “Rapid GenAI developments, and the widespread availability of consumer tools such as OpenAI’s ChatGPT and Google’s Bard, will quickly increase the number of established legal technology use cases, in turn creating growing market conditions for an increasing number of legal-focused tools.”

There has been significant growth in spend management, e-billing, contract lifecycle management, legal matter management and legal document management as legal departments increasingly seek technology-led efficiencies. Incorporating GenAI into these applications will only accelerate purchasing and adoption.

Recommendations for Legal Departments
Legal leaders must at least consider the adoption of developing legal technologies to meet business demands and avoid future budgetary pressures. “As various business functions pursue automation, legal leaders may find themselves facing some tough questions from senior leadership if they haven’t evaluated its potential in the legal department,” Audet said.

It will be just as important that lawyers understand the limitations and risks of using GenAI as well as its potential. It is essential to check the output of GenAI. It is not a suitable technology at this stage to complete tasks without review.

GenAI has the potential to force legal department and pay structure to adapt. For example, it may be hard to keep track on “billable hours” when legal documents are partly AI-generated. Moreover, the portfolio of legal services needed to get work done, the ratio of in-house and outside counsel expenses, the ratio of generalists and specialist lawyers, and talent needs in-house may all require significant change to ensure GenAI platforms are successfully implemented.

“New technologies can fundamentally change the way legal organizations do business, and GenAI has enormous potential to do this,” said Audet. “While at first technology can promise more than it delivers, that can be as much to do with adapting to new ways of working as it is to do with flaws in the technology.”