What Is Legal Tech?

LegalTech🕑 Reading Time: 16 Minutes

The term “legal tech” means utilizing technology to enhance and simplify legal services. It includes various tools and software that support legal experts in enhancing their efficiency, precision, and productivity. Legal tech tools can be as basic as document management software or as advanced as artificial intelligence and blockchain technology.

Intro to Legal Tech

Although historically slow to adapt, the legal industry has seen a recent surge in the popularity of legal tech. This is due to an increased demand for more cost-efficient and streamlined legal services. Legal tech is versatile and can be used by both law firms and in-house legal departments to automate repetitive tasks, manage documents effectively, improve research capabilities, and streamline legal workflows.

The legal tech space encompasses various technologies such as document automation, contract management, legal research platforms, and smart contracts. These tools help to minimize mistakes, save time, and enhance client satisfaction.

Legal technology not only enhances efficiency and client experience but also aids legal professionals in complying with regulatory changes, particularly in finance and healthcare. Its importance has risen during the COVID-19 pandemic as remote work has become the new norm. Remote access to documents, contract management, and e-signatures are essential tools for legal professionals.

Types of Legal Technology

Legal technology can be categorized into different types. A study by Bucerius Law School and Boston Consulting Group identifies three main types of legal technology: enabler technologies, support process solutions, and substantive law technology.

Enabler technologies are tools used by law firms to boost their overall performance and productivity. By using these technologies, legal professionals can work from remote locations, access training and resources, and easily collaborate with their colleagues. Examples of enabler technologies include cloud storage, video conferencing, and project management tools.

On the other hand, support process solutions aim to automate administrative tasks such as billing and document automation, allowing lawyers to focus on more important work.

Substantive legal technology is a type of legal technology that aims to minimize the time and energy spent on producing excellent legal work by utilizing tools such as legal research platforms, analytics, and document review software. Such tools help lawyers to access required information more swiftly and precisely.

The Stanford Legal Codex has nine categories of legal technology, which are:

  1. Marketplace
  2. Document automation
  3. Practice management
  4. Legal research
  5. Legal education
  6. Online dispute resolution
  7. E-discovery
  8. Analytics
  9. Compliance

These categories offer various solutions for many legal jobs, including managing legal documents, researching relevant laws and regulations, and ensuring compliance.

Zoe Andreae has categorized legal tech startups into five different types, which shed more light on the variety of legal technology offerings in the market. These categories are: commoditized law solutions, electronic legal marketplaces, high-tech tools designed for specific legal services, disruptive platforms, and legal artificial intelligence (AI) systems.

Commoditized law solutions refer to standard legal documents and support services that are offered at affordable rates. Electronic legal marketplaces facilitate communication between clients and legal professionals. High-tech tools are designed specifically for certain legal services, like monitoring for intellectual property violations. Disruptive platforms offer new and innovative solutions to traditional legal structures. Legal A.I. systems use artificial intelligence to provide legal services that are more efficient and precise.


Benefits of Legal Technology

The legal industry has undergone a transformation with the introduction of legal technology, which has brought advantages for legal professionals and their clients. This technology category has enhanced the efficiency and productivity of legal workers by reducing their time spent on administrative duties and enabling them to concentrate on more intricate legal tasks. As a result, law firms are now able to offer quicker and more reasonably priced services to their clients.

Legal technology provides better transparency for clients by allowing them to access real-time information about their cases. This has enhanced communication between legal professionals and clients, as sharing documents and information is now more efficient.

Legal tech has enabled better use of resources, both human and technological. Through the use of document automation tools, legal professionals are able to streamline document creation and management processes, reducing the amount of time spent on repetitive and mundane tasks. Legal research platforms allow legal professionals to quickly find and analyze relevant case law and statutes, saving time and improving accuracy. Online dispute resolution platforms, such as ADR Notable, have allowed for faster and more efficient resolution of disputes, reducing the amount of time and resources spent on traditional litigation.

Smart contracts are a form of legal technology that offer several advantages. One of these is the ability to automate contract execution and enforcement, resulting in faster processing times and better time management. Additionally, using smart contracts reduces the risk of errors and allows parties to concentrate on the agreement’s substance. These contracts are more secure and transparent, which also helps with risk management and reduces the chance of disagreements.

Law firms are now able to reach more clients and expand their market size by using legal technology. Cloud-based software and online platforms allow these firms to offer services to clients all over the world, without needing physical offices in every location. This has made it more efficient and cost-effective for law firms to serve clients in new markets.

Artificial Intelligence in the Legal Industry

The legal industry has been transformed by Artificial Intelligence, which has altered the approach of legal professionals to their work. By introducing AI-powered solutions, tasks such as document review, contract analysis, and legal research, which usually take up a lot of time, could be streamlined, freeing lawyers up to concentrate on more critical tasks. The article will discuss how AI can assist legal professionals by rapidly analyzing large volumes of data, identifying patterns and insights, and becoming an essential tool in legal tech. We’ll examine the present state of AI in the legal sector and its potential for the future.

AI and Law Firms
Improving Efficiency and Reducing Costs with Legal Tech

As the legal industry continues to face challenges around achieving efficiency and reducing costs, law firms are turning to AI-powered legal tech solutions for help. AI, or artificial intelligence, refers to the ability of machines to learn and perform tasks that would typically require human intelligence. In the legal industry, applications of AI are being used to automate mundane tasks, increase accuracy, speed up processing, and improve overall efficiency.

AI can help law firms by improving accuracy and reducing errors. Human lawyers sometimes make mistakes during document review, which can negatively impact legal cases. In contrast, AI-powered document automation is designed to be error-free and can quickly process large volumes of documents. This saves lawyers time and allows them to concentrate on more complex legal tasks.

AI offers cost-saving benefits for law firms by automating routine tasks and reducing the need for human intervention, leading to a decrease in labor costs. Additionally, AI solutions optimize time management by reducing the time spent on administrative tasks. This enables lawyers to concentrate on high-value tasks such as client relationship management and legal research.

Law firms are utilizing AI in a range of applications, such as document automation, contract management, and legal research. Document automation leverages AI to automatically create and manage legal documents like contracts and forms. Law firms are extensively using AI in contract management to monitor and manage contract lifecycle processes such as contract review, negotiation, and execution. Additionally, legal research platforms powered by AI are gaining popularity, allowing lawyers to swiftly research and analyze legal cases and precedents.

Smart contracts are a new use of AI in the legal industry. They are contracts that enforce themselves, without human intervention. Smart contracts can automate many legal processes like insurance claims, property transfers and financial transactions.

AI-powered legal tech solutions offer significant benefits to law firms, including increased efficiency, reduced costs, and improved accuracy. As AI continues to evolve, it will play an increasingly important role in optimizing legal services and delivering value to law firms and their clients.

AI and the Practice of Law

AI is also transforming the way law firms operate by simplifying procedures, cutting expenses, enhancing productivity, and improving client experiences.

AI technologies can aid law firms in legal research by automating the process of gathering and analyzing information. AI-based legal research platforms offer lawyers the opportunity to quickly locate pertinent cases and statutes, saving valuable time on research. Additionally, these platforms can furnish comprehensive analyses of legal cases, enabling attorneys to detect arguments that might not be immediately clear.

Another area where AI is helping law firms is document management. An AI-powered document automation software can assist with the creation and management of multiple legal documents, saving lawyers time and effort. This software also helps in reducing the risk of errors and inconsistencies that can occur when documents are manually drafted.

The use of AI technology can also involve reviewing contracts by analyzing vast amounts of data to detect possible problems or irregularities. An AI-based system for managing contracts could be beneficial in the process of negotiating and reviewing contracts, since it can assist lawyers in pinpointing clauses that might require additional examination.

AI technology is expanding accessibility for clients by enabling the creation of new levels of access. For example, chatbots can use natural language processing to provide legal advice, and interactive online portals allow clients to access their legal information and documents.

AI and Automation of Documents

AI is now being used by the legal industry to automate the process of document drafting. This task is typically time-consuming for legal professionals, but AI-powered tools have made the process faster and more efficient. These tools can understand legal language and identify relevant clauses and precedents without requiring human intervention.

Legal document drafting time can be significantly reduced by using AI-based document automation tools. They are able to recognize patterns and extract important information from legal documents. For instance, standard clauses in a contract template can be automatically identified by AI, and relevant details can be filled in the blanks according to a client’s requirements. This enhances the efficiency of drafting repetitive documents like lease agreements or NDAs.

Companies like Legal Robot and Bigle Legal use AI-powered document automation services to streamline the process of creating legal documents. They assemble documents from templates and offer fill-in-blank options, allowing legal departments to save time and clients to easily create simple legal documents.

AI has introduced a new approach called predictive contracting, which involves analyzing legal language to detect potential risks. By integrating predictive analytics, this technique identifies statistical patterns in legal language to assess the probability of certain clauses in a contract leading to litigation. This tool can be useful for legal experts to recognize the parts of a contract that pose high risks and to make necessary changes to avoid possible conflicts.

AI and Document Management Systems

The area of document management within the legal industry is experiencing a transformation with the integration of AI. Law firms need document management systems to handle numerous legal documents, which can be difficult and time-consuming. AI technology is being implemented in these systems to streamline tasks such as organization, version control, and security.

AI technology can enhance organization in document management systems. This is achieved through the quick and accurate categorization of documents, aiding legal professionals to save time and effort. Version control is also simplified using AI, with the most recent version identified to prevent conflicts. Furthermore, AI increases security measures for sensitive information by enabling users to set access controls and permissions for individual documents, reducing unauthorized access risks.

AI technology has already been integrated into various document management platforms such as iManage and NetDocuments. The AI is used to perform tasks such as document organization and categorization automatically.

AI is also utilized by newer platforms to improve document management capabilities. An instance is Kira Systems, which utilizes machine learning to extract and assess crucial data from contracts and various documents. Luminance’s AI platform allows legal professionals to easily identify potential legal risks and opportunities.

Artificial intelligence can automate tasks such as sorting and organizing documents. This allows legal professionals to concentrate on more intricate duties that require their expertise. AI algorithms are capable of detecting patterns in vast amounts of data, making it easier to locate pertinent information swiftly. Legal experts can train AI to recognize specific clauses in contracts that relate to a certain problem.

AI and Smart Contracts

Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. Smart contracts facilitate transactions and agreements directly between parties, eliminating the need for intermediaries like lawyers or banks. Advancements in AI technology now allow for its incorporation into smart contracts, enhancing their efficiency and effectiveness.

AI can help with smart contracts by automatically executing contract terms when public, verifiable, and available information indicates that a specific event has occurred. To illustrate, an insurance company’s smart contract can be programmed to use satellite data to verify the occurrence of a natural disaster such as a hurricane or earthquake. If such an event is confirmed, the smart contract can automatically pay out a settlement to the policyholder without requiring time-consuming and costly manual verification processes.

Using AI in smart contracts can bring multiple advantages, such as faster and cheaper contract execution, and reduced enforcement costs. It can enhance contract compliance, minimizing disputes and legal expenses. Furthermore, AI can provide useful information on contract performance, enabling continuous optimization and improvement of the contracting process.

Using AI in smart contracts can be challenging due to concerns about transparency and accountability. One concern is that AI-based smart contracts may be difficult to comprehend, making it hard for parties to know if their contractual rights have been respected. Additionally, it’s unclear who would be held responsible in case of an error or malfunction of the AI technology.

Technological Developments in the Legal Field

With the rise of legal tech, technological developments are transforming the way legal services are delivered. From document automation to smart contracts, there are a wide range of tools and solutions that are driving the legal field forward.

Types of Technologies Used by Law Firms

Law firms are using technology more and more to improve their operations and provide better service to their clients. New technologies have emerged that are changing the way legal professionals work and helping them work more efficiently while cutting costs. In this article, we’ll explore some of the types of technology that law firms commonly use.

Basic Technologies

Law firms rely on various essential technologies to facilitate their daily operations. These include word processors, databases, presentation tools, electronic filing systems, and cloud technology.

Every day, legal professionals use word processors like Microsoft Word to create legal documents like briefs, memos, and contracts. Additionally, databases are commonly used in law firms to store and manage client information and case files.

In law firms, presentation tools such as PowerPoint are essential for creating visual aids that enhance the effectiveness of lawyers’ case presentations. Also, electronic filing systems and cloud technology enable secure document storage, retrieval, and sharing from anywhere with internet access.

Advanced Technologies

Law firms also use advanced technologies such as document review and e-discovery, legal practice management, Intellectual Property (IP) asset management, legal contract management, and legal research analytics to make their operations more efficient.

Lawyers can use document review and e-discovery technologies to review documents quickly and efficiently, which speeds up the process and reduces costs. Legal practice management technologies assist law firms in managing operations by facilitating client relationships, tracking billable hours, and simplifying billing.

Law firms can also benefit from using IP asset management technologies, which assist in managing a wide range of patents, trademarks, and copyrights. Legal contract management technologies offer an easier way to manage legal contracts and reduce time spent on document management. Additionally, legal research analytics tools can help legal professionals find relevant cases more efficiently and make informed decisions.

Technological Developments in Legal Departments

According to Gartner, legal departments are increasingly relying on technology, especially during the pandemic, to adapt to changes in work practices. In particular, there has been a threefold increase in legal departments’ spending on technology to address challenges related to remote work, cybersecurity risks, and compliance regulations.

Gartner has made five predictions that corporate legal leaders can use to plan their legal technology investments and transformation efforts. These predictions include the increasing use of artificial intelligence in legal departments, the importance of investing in data analytics, the growing significance of digital skills for legal professionals, the emergence of new legal technology management roles, and the need for better collaboration between legal and IT departments.

The use of technology has affected the legal and compliance goals of corporations. It brings opportunities for efficiency, but it also poses challenges such as compliance risks and complexity. Thus, corporate legal departments need to weigh the advantages of legal technology against the potential risks and complexities that they bring.

Impact of Covid-19 on the Legal Tech Industry

The Covid-19 pandemic has had a major impact on the legal tech industry, including changes in how legal professionals work and an increased need for remote solutions. The pandemic has caused a massive shift towards remote work, and law firms have been adapting to this new reality in order to provide the same level of service to their clients. Fortunately, legal professionals have been able to rely on legal tech solutions to aid them through these uncertain times.

The pandemic has led to an increase in the use of new technologies, including virtual meeting platforms, document automation tools, and e-signature software. Legal professionals are using these tools to work remotely and collaborate with clients despite physical distance. Legal tech companies are focusing on enhancing or developing software solutions that cater to the unique needs of remote work in the industry. For instance, Rocket Lawyer introduced a new platform for remote document signings in response to the current situation.

Challenges for the Future of Legal Tech Solutions

The legal industry is changing rapidly with the adoption of new technologies, but as with any new market, the legal tech industry faces its own set of challenges. These challenges revolve around scalability, security, and reliability of legal tech solutions. Here are a few of the challenges facing the future of legal tech solutions and how they can be addressed.


Law firms that are adopting new technologies face significant challenges, which include regulatory issues such as complying with data protection laws, privacy regulations, and legal ethics rules governing the use of technology. In addition, they also face economic pressures like fierce competition, financial constraints, and an urgent need for delivering services more quickly and efficiently. These factors push law firms to adopt new technologies that can help them stay competitive in the marketplace while facing these economic pressures and regulatory hurdles.


Legal tech startups often face the challenge of scaling their solutions to meet the growing demands of the market. It can be difficult for these companies to scale their solutions quickly enough to keep up with increasing demand. Even larger industry players may struggle with adapting to changes in the market due to the complexity of their solutions.


Data security is a major concern for all legal tech companies because lawyers must ensure that client data is kept confidential at all times. This means that legal tech companies must invest in robust security measures to safeguard sensitive data while providing user-friendly solutions.


Reliability is another challenge for legal tech companies. To build trust with their clients, these companies must provide a dependable service that is available 24/7, with minimal downtime. Any interruption in service may have significant consequences for clients, so legal tech companies must be able to provide reliable solutions at all times.

Key Takeaways

Overall, the legal tech industry is facing several challenges that must be addressed in order to meet the demands of the market and provide sustainable solutions that can withstand regulatory, economic, and technological hurdles.

Legal tech startups must be able to scale their solutions rapidly while maintaining security, reliability, and a high level of user experience. Large industry players must be able to adapt quickly to changes in the market and new regulatory requirements while delivering reliable and secure services to their clients.

By addressing these challenges head-on, the legal tech industry can continue to grow and evolve, providing innovative solutions that can help law firms deliver better services for their clients.