Legal Technology Trends to Watch in 2021
The legal sector’s committed resistance to advancing technology broke definitively in 2020. In essence, the thumb was removed from the dam as the response to the pandemic was almost exclusively digital. Previously, law firms might have suffered some sort of anaphylaxis with the concept of new technology but in 2021, it is becoming a race to the top.
Early technology adopters are vacuuming up underserved clients who are experiencing too much friction with their representation. The clients’ familiarity with online custom has instilled a high level of expectation for service delivery. Unfortunately, however, many law firms have not quite been able to live up to the seamless expectations and have been put in a tailspin. As some firms hemorrhage clients whilst scrambling to adapt to the digital world, the legal sector has become volatile in response to the digital infusion.
Operating in a state of flux is a challenge levied at the entire industry but many of the trends to expect are predictable. This is what you can look out for in the coming year.
1) Digital Transformations Complete
Digital offices were the only method of legal service delivery for long enough to become a staple for clients. 2021 will almost certainly see the early resistors cave to the digital model if they want to keep their practices. With the average age of the population decreasing and millennials and Gen Z preferring tech solutions, the digital transformation will have visited all practices by 2021’s end. Physical locations will remain but the legal sector is unlikely to ever put the toothpaste back in the tube for digital offices.
The fallout to expect should be the down-sizing of physical spaces and increased offerings through digital means. This will lead to decentralized offices, increased reliance on the shared cloud and a mutual navigation between client and attorney on best practice delivery.
2) Virtual Court Services
Federal and State court services are certainly not immune to digital transformation. How much will change in 2021 is partly up to how ready the new administration is to ensure social distancing and non-contact means and partly up to the readiness of the courts to adopt.
The courts could see the further adaptation of virtual hearings, especially for high-risk or immune-compromised defendants. The obvious and intuitive next step would also be to adapt a cloud-based evidence management approach to enhance security, transparency and accountability. This would mean issues with evidence being buried could be rectified with the proper procedural guidelines.
Finally, while it is unlikely to happen in 2021, the role of the stenographer is under threat. Transcription software is certainly catching up to stenography which dates back to 1830. It may take another year or two but watch this space.
3) Full Cloud Immersion
Law firms had been apprehensively dipping their toe in the cloud in recent history. However, 2021 is going to be the exact opposite. Firms will look to move everything safely to the cloud where possible. This is due to the superior accessibility, shared space and multi-functional uses. The introduction of cloud and case management platforms such as Clio, Leap and Digital War Room will provide the foundations for most.
Where some firms will revert to type is in how brave their cloud adoption will be. What we are seeing now is smaller or eagerly growing firms using shared drives to carefully liaise, share and communicate with clients while more high-profile firms keep the cloud in-house only. Allowing cloud usage for both sides of the attorney-client relationship is yielding huge benefits but draws concern from hesitant adopters.
4) CIO Hiring Frenzy
Admittedly recruitment might not be a technology-specific trend but it is related as the industry rushes to achieve competitive advantages wherever possible. The tech boom in the sector is encouraging aggressive recruitment of elite Chief Information Officers and anyone in the software procurement space. Naturally, where demand exceeds supply, the price will increase meaning many firms will overpay for their hires.
The reliance on platforms such as Olive, Capterra and G2 will increase as market comparison sites can offer quick access to solutions.
5) Cybersecurity Demands Increasing
High-profile clients, extremely sensitive information and public interest make the legal sector a prime target for cyber attacks. In addition, the disruptive migration to digital creates ideal conditions for cyber-breaches as IBM studies find human error responsible for 95% of cybersecurity failures. Many firms will invest in training and cybersecurity but with the increased use of personal technology devices, breaches are expected.
In response to venturing digital, the legal sector will proactively or reactively improve electronic record policy keeping. Governance of digital information might have been lagging but with malpractice insurance fees driving a policy shift, updating electronic security procedures will pay dividends. Firms are already beginning to focus far more on data privacy, IP protection, NDAs and more.
This shift will also trickle down to digital service providing clients. Countless clients are encountering e-commerce, digital information exchange and data protection compliance measures for the first time. With privacy under the microscope and dispersed workforces, the market for electronic and digital compliance should expect heightened activity.
6) FinTech, Cryptocurrency and Digital Product Compliance Updating
Compliance and technological innovations have always been subjected to approval at the American Bar Association and at times, the Federal level. With the rapid widening of digital product usage including Blockchain and the growing influence of cryptocurrency, the whole legal sector will see stricter regulatory frameworks going forward.
The previously slow uptake in software in the industry had meant that the ABA was under less scrutiny for overall governance and compliance but as of February 5th, 2021 change has begun. Closer attention is now being paid to FinTech, Digital Assets, Stablecoins and business tech law as we speak.
7) Automation will Explode
In 2020, we reluctantly embraced legal technology. However, 2021 will be the year where we see what this thing can do. Automation will be a big part of what separates the early from late adopters and it will make all the difference.
Basic administration, data entry and repetition tasks are already lined up for replacement by innovative digital products while more complex software are augmenting human abilities. The digital version of Murphy’s Law is that anything that can automate, will automate and it too has already begun.
ROSS Intelligence is undercutting the archaic research methods while Loio and LawPay are fixing egregiously traditional practices. Document creation, contract management, billing, valuation, information gathering and more are vulnerable to the wave. Eradicating inefficiencies wherever they can be found is where competition will fixate. Finally, the industry will see the promise of hyper-automation come to fruition.
8) Artificial Intelligence and Digi-Sales Become Necessity
The sales experience and norms prior to the pandemic were almost uniform across all law firms. In non-criminal cases, one would Google or call an office, set up a meeting and discuss their needs. It has been the tried and accepted method for decades until 2020.
Now clients have alternate demands. Digital services are the least that is expected as online shopping has conditioned us all to anticipate instant responses. The increased impatience and intolerance of delay is introducing the need for artificial intelligence and machine learning to support the sales funnel. Everything from automated drip campaigns and chatbots to automated RFP responses will be leveraged for the busiest firms.
Information gathering will get smarter using tools like Google Forms and Hoowla. While it may currently feel like these changes are put upon the industry, the efficiency improvements possible are mind-boggling. Firms who can install a savvy response system stand to offer 24-hour service which is at least three times what the telephone/in-person exchanges are capable of.
9) Internet of Behaviors will Inform Marketing
The Internet of Behaviors is murky territory at best in the legal sector. Trust and data protection are the baselines of the relationship between attorney and client so this is not suggested with any naivety. However, with the influx of AI, automation and machine learning, law firms will inevitably begin to apply user-generated insights in marketing communications.
It may take longer than a year but with data capture, compilation and analysis far exceeding the insights garnered from face-to-face meetings, marketing is changing. Optimal service offerings, locations and demands will shape the future of the industry as it already has in others.
10) The Demand for Transparency Grows
The biggest issue with being a late adapter to the digital world means that the legal industry is on the back foot from the off. Client impatience and expectation are formed from their experiences of how streamlined other industries operate. While law firms had an air of prestige and a lack of transparency previously, this no longer suffices in today’s world.
Online reviews were normalized by the likes of Uber, AirBnB, Yelp and more. The legal industry will have little choice but to subscribe to online approval metrics for the sake of search engine rankings and public opinion.
Furthermore, tolerance for inaccuracies, slowed responses and overcharging will continue to plummet for better or worse. Clients expect firms to have the most updated software to speed up procedures and reduce pricing. The economic downturn will add to the intolerance as the law firms face scrutiny, especially from high-paying clients.
11) Law Firms will Begin to Call Their Shots and Venture Capital May Grow
The vast majority of digi-tech products for the legal sector have been manufacturer-driven. Innovations are submitted for ABA approval in the hope that the industry will adapt later. The resistance has meant that uptake remained slow and steady with a drip-feeding approach taken. 2020 and the pandemic introduced rocket fuel to the system. With that, we experienced a decade worth of digital innovations and technological growth in one year.
2021 shall see the relationship between innovators and adopters balance out. By the end of 2021, we will see the demand from the industry outstrip the supply of new digital products as law firms become more comfortable with change. The end-user is always the savviest in understanding what is needed most and lawyers, by nature are an opinionated group.
Expect to see the legal sector funding and commissioning new software specific to their firm as many search for competitive edges. Erasing the biggest offenders in time or cost efficiency will be the motivation. Inescapably, this will lead to seed and venture capital growth as the injection of finance into the industry will typically feed back into the innovation cycle.
Closing Arguments
The legal sector is late to the party in this digital revolution but have the most to gain without some of the teething issues of other industries. With so many outdated processes managing to survive long past their expiry dates and with other businesses doing much of the legwork for AI, ML and automation, the benefits are great but fraught with volatility.
Early adopters will see huge growth spurts, capturing a market share due to their alignment with client needs. Unfortunately, the inverse of this relationship is casualties. Firms that cannot afford to keep up or erroneously resist the infusion of tech enhancement will suffer and become obsolete. The entire industry will jostle for position as each player comes to terms with the market as it is now rather than as it always has been.
The rush to digital arms is already causing some chaos. Cybersecurity will likely be breached either publicly or privately which, in turn, engenders demand for tighter policing of digital information exchange. Compatibility from clumsy integrations will contribute to the urgency to hire CIOs and other guidance while the continued emergence and influence of Blockchain and Cryptocurrency will precipitate further regulations.
The resultant issues from an industry embracing disruptive change are a trend of their own as all firms grapple to find stability. The reality, however, is that stability and security are distant memories, at least for now.