The legal sector is constantly developing and adapting to the social, political and commercial climate. The Covid-19 pandemic has had a huge impact on the legal sector, which is known to be reluctant to new ways of working and large-scale digital adoption in previous years. There has been a call for innovation across the profession enabling law firms to stay competitive during unpredictable circumstances by adopting hybrid working models, integrating legal technology into business operations and focusing more on employee mental health and well-being.

Similar trends are expected to be seen in the next year as law firms are giving more importance to investing in office resources to provide excellent client service and balancing the interests of their employees. Gartner, a technology research and consulting company, has predicted that by 2025, legal departments will have increased their spending on legal technology threefold [1] and that legal departments will automate almost 50% of legal labour used for commercial and business transactions [2].

Do these figures mean that the demand for legal technology is increasing? Will the automation of legal functions reduce the number of lawyers being hired? Will lawyers need to build their technical expertise? This article breaks down the most important trends, changes and challenges facing the legal sector lawyers look out for in the next year.

Growing Legal Technology Budgets

The Gartner survey of legal leaders predicts that the proportion of legal budgets spent on technology will drastically increase by 2025 [3]. Widespread economic and business disruption has forced law firms and legal departments to prioritize legal technology and automation to drive efficiency and manage their increased workload [4].

It is more valuable and sustainable for law firms to invest in and develop a comprehensive, multiyear technology strategy that can adapt to changes in the corporate environment and advancements in the technology market instead of integrating ad hoc legal technology tools that are not as efficient [5]. Shifting risk exposures brought by the pandemic have also driven investment in third-party risk management technologies. Law firms have allocated and increased their legal technology budgets to integrate such solutions, preventing any risks that would be far more costly than the investment itself.

The explosion of legal technology start-ups and providers have also given law firms an overwhelming plethora of choice among new innovative technologies and software to choose from [6]. Therefore, it is extremely crucial for a law firm to carefully map out its legal technology strategy, ensure that it is within its budget and then, find the right legal technology provider to cater to the firm’s interests and priorities.

Increase in Non-Lawyer Staff Being Hired

The changing role of a lawyer alongside increased use of legal technology has resulted in the need for law firms to hire business professionals such as legal technologists, legal operations associates, legal engineers, technology analysts, data analysts, legal project managers and business consultants to assist in the management, operations and technology side of the firm.

Law firms such as Pinsent Masons, Addleshaw Goddard and CMS UK have developed their own legal technology and are keen to hire people with different academic and professional backgrounds and not simply solicitors. Many law firms have also introduced specialised graduate schemes for non-lawyer roles which indicate that this trend will continue to grow as hiring non-lawyer staff on a permanent basis is being taken seriously. This trend applies to both in-house and private practice. Gartner has predicted that by 2024, in-house legal departments will replace 20% of generalist lawyers with non-lawyer staff [7]. Roles such as legal operations manager, legal technologist and legal engineers that were never heard of are now slowly gaining popularity and are being seen outside technology and financial services firms.

The prevalence of these roles also tends to increase along with the law firm’s size. This trend is also more common with large international law firms than smaller niche firms as they tend to have the resources to hire such professionals alongside the need to make workflow more efficient and effectively distribute responsibilities across the firm. This ensures that lawyers stick to providing legal expertise and do not get caught up in administrative and operational tasks or get stuck attempting to navigate and manage the firm’s IT system [8].

Increased Automation

Although corporate and commercial legal departments have been traditionally resistant to the adoption of technology, the effects of the pandemic have forced many law firms to change their views and actively consider automation and the integration of legal technology [9]. The use of automation, artificial intelligence and smart contracts has significantly decreased the time taken to execute an M&A deal. It has been predicted by 64% of EMEA dealmakers that the due diligence process within M&A transactions, which takes one to three months today, will take less than one month by 2025 due to the integration of new technologies [10]. The opportunities and ways to automate legal functions have significantly grown as the underlying technologies, including artificial intelligence, machine learning, data analytics and natural language processing, continue to advance.

The coming years are expected to push the boundaries of automation and legal technology integration. The legal fees charged to clients through the billable hour system have come under scrutiny, demanding more value for money. Automating legal functions through the use of artificial intelligence, particularly within corporate and commercial transactions, can significantly reduce cost, protect revenue, optimise headcount and reduce risk. Moreover, as technologies continue to evolve to include a range of different file and data types as they are created, traditional ways of operating will be challenged.

Automation is disrupting the legal market and changing the nature of a lawyer’s role. Deloitte’s legal technology insight report has predicted that nearly 100,000 jobs are likely to be automated by 2036 [11]. The use of legal technology that is readily available now also allows lawyers to reduce their working hours by 13% [12]. Additionally, a study conducted at the McKinsey Global Institute found that 23% of a lawyer’s work can be automated [13]. These statistics highlight that automation is already becoming popular within the legal sector. The importance of automation will continue to grow as law firms recognise its impact on boosting efficiency and reducing expenses.

Alternative Legal Service Providers

The market for alternative legal services providers (ALSPs) continues to grow and is becoming an important aspect of the legal sector. Alternate legal service providers are essentially legal services businesses that provide one or more services that traditional law firms offer but at a comparatively lower cost and greater flexibility [14]. They also include smaller, niche companies that specialise in providing more cost-effective high-demand legal services. These services include contract lifecycle management, due diligence, legal entity management, document review, litigation support, intellectual property management, investigation support and legal research [15]. Alternative legal services providers have often specialised in a particular legal function and offer more tech-savvy solutions and a much lower cost than traditional law firms. This is a huge benefit for clients as it allows them to outsource time-consuming administrative tasks such as document reviews and management, allowing them to focus on higher priority work that specifically requires their expertise [16].

The rise of ALSPs has made the legal market even more competitive and has encouraged traditional law firms to grow more technologically advanced in order to offer more innovative and streamlined solutions to their clients. A survey conducted by EY Law practices and Thomson Reuters Legal Managed Services revealed that the ALSPs interviewed are expected to grow an average of 24% each year [17]. The success of ALSPs such as Big Four, United Lex, and Axiom Law has paved the way for more legal service businesses to be established and increased the client demand for the services they provide.

Hybrid & Flexible Working Models

The global pandemic, social distancing rules and the need to work remotely made it crucial for the legal sector to reevaluate its working practices. Only 37% of lawyers preferred remote working pre-pandemic compared to now, where nearly three out of four lawyers prefer to work from home [18]. This rise in preference suggests that within the next few years, more law firms may incorporate hybrid and flexible working models to accommodate the interests of their employees.

Another reason why hybrid and flexible working models are expected to become the norm in the next few years is because they are simply more operationally cost-efficient. This is especially the case for small to medium-sized law firms who no longer have to worry about expanding their premises to increase their workload or hire more people. While law firm offices will not completely shut down, law firms will still be cutting costs by saving electricity and in-person office resources. Additionally, the rise in digital technologies in recent years facilitated this transition for many firms. The availability of e-signatures, practice management systems and video conferencing software-enabled lawyers to work from come while maintaining the same, if not higher, level of productivity. For some law firms that had already integrated technology into their legal functions, the pandemic merely accentuated their use of legal technology and confirmed that they had made the right investment [19].

Greater Focus on Mental Health & Well-Being

The stereotypical over-achieving and competitive work environment within the legal sector are known to cause a great deal of stress and significantly impact a lawyer’s mental health and wellbeing. This issue has already been prevalent pre-pandemic and has only gained more significance during the pandemic with social distancing rules, increased pressure and the risk of being cut off.

The International Bar Association published a report evaluating the wellbeing of the legal profession on a global level which covered more than 3,000 individuals and 180 legal organizations ranging from law societies, law firms, legal departments and bar associations [20]. The report concluded that 41% of respondents believed they could not discuss their mental health and wellbeing with their employer without worrying that it would damage their career or livelihoods [21]. Another finding was that while employers believe wellbeing is a priority, it is not reflected in practice as 75% of respondents believed that their employers need to do more in this area [22].

The pandemic has changed attitudes surrounding mental health and has made discussions surrounding one’s wellbeing a regular practice. Leading law firms have taken a step to tackle this issue by introducing wellbeing and support programs, staff mental health training and regularly having discussions surrounding mental health to remove the stigma attached to it. For example, US-based law firm Baker McKenzie has trained its Partners and managers to spot the signs of mental health difficulties among staff and strongly encourage discussions on striking a healthy work-life balance [23]. Law firm Dechert LLP has also introduced ‘Mental Health Champions’ and ‘Mental Health First Aiders’, where an employee-led group undergoes mental health training with St John’s Ambulance, enabling them to support employees struggling with mental illness health issues [24].

Employee mental health will continue to be a strong focus in the coming years, not only because it is the right thing to do but also because a positive work environment and law firm culture contribute to its success.

Final Words

The Covid-19 pandemic has had a huge impact on the legal sector and has reinforced the need to integrate legal technology to streamline legal service delivery. The next few years will not only re-shape the way legal services are provided but also transform the role of a lawyer and introduce additional non-lawyer roles that are essential to the success of a law firm.

References

[1] ‘Gartner’s Top 2021 Legal Technology Predictions’, Gartner 2021 Legal Technology Trend Report at https://www.gartner.com/en/legal-compliance/trends/legal-tech-trends

[2] Rob van der Meulen, ‘5 Legal Technology Trends Changing In-House Legal Practice’, Gartner (2021) at https://www.gartner.com/smarterwithgartner/5-legal-technology-trends-changing-in-house-legal-departments

[3] Ibid

[4] Ibid (1)

[5] Rob van der Meulen, ‘Gartner predicts Legal Technology Budgets Will Increase Threefold By 2025’, Garner NewsRoom (2021) at https://www.gartner.com/en/newsroom/press-releases/2020-02-10-gartner-predicts-legal-technology-budgets-will-increase-threefold-by-2025

[6] Ibid (2)

[7] Ibid

[8] Ibid

[9] Nitin Kumar, ‘Legal AI: An Automated Versus Autonomous Future’, Forbes Technology Council (2021) at https://www.forbes.com/sites/forbestechcouncil/2021/07/27/legal-ai-an-automated-versus-autonomous-future/?sh=69132a972cd9

[10] Merlin Piscitelli, ‘How Can Technology Transform M&A Due DIligence?’, Lawyer Monthly (2021) at https://www.lawyer-monthly.com/2021/10/how-can-technology-transform-ma-due-diligence/

[11] ‘New Report Predicts Over 100,000 Jobs Will Be Lost To Automation’, Futurism (2021) at https://futurism.com/new-report-predicts-over-100000-legal-jobs-would-be-lost-to-technological-automation

[12] D. Remus, Frank S. Levy, ‘Can Robots Be Lawyers? Computers, Lawyers and the Practice of Law’ at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2701092

[13] Abigail Johnson Hess, ‘Experts Say 23% of Lawyers’ Work Can Be Automated – Law Schools Are Trying To Stay Ahead Of The Curve’ CNBC (2020) at https://www.cnbc.com/2020/02/06/technology-is-changing-the-legal-profession-and-law-schools.html

[14] ‘Paralegals Benefit From the Rise of Alternative Legal Service Prover (ALSP) Companies’, Paralegal EDU Org at https://www.paralegaledu.org/alternative-legal-service-providers/

[15] Ibid

[16] ‘Growing ALSP Market Becoming Less ‘Alternative’ Says New Report’, Thomson Reuters (2021) at https://www.thomsonreuters.com/en-us/posts/legal/alsp-report-2021/

[17] Cornelius Grossmann, ‘Why Alternative Legal Services Providers Are On The Rise’, EY (2021) at https://www.ey.com/en_uk/tax/why-alternative-legal-service-providers-are-on-the-rise

[18] Julie Sobowale, ‘LegalTech To The Rescue’, National Magazine (2021) at https://www.nationalmagazine.ca/en-ca/articles/legal-market/legal-tech/2021/legal-tech-to-the-rescue

[19] Legal Futures Associate Flex Legal, ‘The Future of Work: What Hybrid Means For The Legal Industry’, Legal Futures (2021) at https://www.legalfutures.co.uk/associate-news/the-future-of-work-what-hybrid-means-for-the-legal-industry

[20] ‘IBA Releases Interim Survey Results On Wellbeing In The Legal Profession’, International Bar Association (2021) at https://www.ibanet.org/article/09C3DA0E-723F-4E21-9A7E-AA0DFF1FB627

[21] Ibid

[22] Ibid

[23] Lily Russell-Jones, ‘Law Firms Offer Wellbeing Support To Burnt out Employees’, City AM (2021) at https://www.cityam.com/law-firms-offer-wellbeing-support-to-burnt-out-staff/

[24] ‘Mental Health: Top Law Firms Commit To New Working Practices To Support Employees’, Thomson Reuters Legal Insights Europe (2021) at https://www.cityam.com/law-firms-offer-wellbeing-support-to-burnt-out-staff/