This week I came across a blog post from ImpactMyBiz which compiled a list of great statistics, use cases and market data pertaining to the current state of technology in the legal sector.
In sum, there’s a lot of good progress but the sector is still subject to a lot of hype and extremely slow adoption when compared to other sectors. This is moreso in the B2B space with B2C innovation moving at a faster rate of adoption in improvement over time.
Perhaps the continued challenges presented by COVID around the world, increasing regulatory complexity, competitive pressures from alternative legal service providers (ALSP) and new entrants, remote working, client cost pressures, access to justice, and other key drivers will continue to move the needle forward.
25 legal tech stats to shed light on where where the industry is heading for in the new decade:
1. In 2018, legal tech investments broke the $1 billion mark. That figure was topped in 2019, with $1.23 billion in funding by the end of the third quarter alone.
2. With the help of AI, a contract can be reviewed in less than an hour, saving 20-90% of the time needed to perform this work manually without sacrificing accuracy.
3. AI legal technology offerings for businesses increased nearly two-thirds in 2020 compared to 2019.
4. JP Morgan launched their in-house program, COIN, which extracts 150 attributes from 12,000 commercial credit agreements and contracts in a few seconds. This is equivalent to 360,000 hours of legal work by lawyers and loan officers per year.
5. Cloud usage among firms is 58%, with smaller firms and solos leading the way.
6. Security measures are lacking, with no more than 35% of firms using precautionary cybersecurity measures to protect their businesses. A staggering 7% of firms have no security measures at all.
7. Despite some reservations, lawyers continue to use popular consumer cloud services like Google Apps, iCloud and Evernote at higher rates than dedicated legal cloud services. Clio and NetDocuments ranked the highest among the legal cloud services.
8. The percentage of the ABA 2019 Legal Technology Survey participants answering “Yes” to the basic question of whether they had used web-based software services or solutions grew slightly, from 55% to 58%. 31% said “No”, a small decrease.
9. When asked what prevented their law firms from adopting the cloud, 50% cited confidentiality/security concerns, 36% cited the loss of control and 19% cited the cost of switching.
10. 26% of respondents in a 2019 survey report that their law firms have experienced some sort of security breach
11. In 2018, just 25% of law firms reported having an incident response plan. In 2019, this figure had risen to 31%, and we expect the same for 2020.
12. Interest in cloud services from law firms is high, but expectations of adoption among them remain low, with just 8% of firms indicating they will replace existing legacy software with cloud tools.
13. Only one-third of lawyers (34%) believe their organizations are very prepared to keep up with technology changes in the legal market.
14. Firms described as “technology leading” fared better, with 50% prepared to meet digital technology demands in the industry.
15. 49% of law firms report that they are effectively using technology today, and 47% say they can improve technology adoption and plan to do so.
16. Over half (53%) of lawyers in the US and Europe say their organizations will increase technology investment over the next three years.
17. While over half of lawyers expect to see transformational change in their firms from technology like AI, big data and analytics, fewer than one quarter say they understand them.
18. The biggest trends cited by lawyers that are driving legal tech adoption are “Coping with increased volume and complexity of information” and “Emphasis on improved productivity and efficiency.”
19. It is estimated that 23% of work done by lawyers can be automated by existing technology.
20. 27% of the senior executives at firms believe that using digital transformation is not a choice, but a matter of survival.
21. The top challenges for corporate legal departments today include reducing and controlling outside legal costs; improving case and contract management; and automating routine tasks and leveraging technology in work processes.
22. 60% of lawyers believe their legal firm is ready to adopt new technology for routine tasks.
23. According to research conducted by Gartner, only 19% of law firms’ in-house teams are ready to move forward with enterprise-level digital strategies.
24. A recent study uncovered that 70% of consumers would rather use an automated online system or “lawbot” to handle their legal affairs instead of a human lawyer because of three important factors—cost, speed, and ease of use.
25. 70% of businesses indicated that “using tech to simplify workflow and manual processes” to cut costs was a top priority going forward.