The global legal tech industry is a growing and diverse market, comprising heterogeneous regions at different stages of development, according to the results of a year-long comprehensive study into the sector.
Produced by the Australian Legal Technology Association and Alpha Creates, with the support of research partners, Macquarie, KPMG, the Law Society of England and Wales, Baker McKenzie and Toro Digital the study explored the health, composition and strategies adopted by the legal tech companies across eight regions, culminating in the global report released in December.
“If data is the new oil, we hope we’re able to fuel the advancement of legal technology and the industry it serves in a profound way, with the ultimate goal of making the law more efficient and more accessible,” the report’s Global Director, board director of the Australian Legal Technology Association and CEO of Legaler, Stevie Ghiassi said.
“We’re very excited to build upon this data year after year, and to track how this rapidly evolving industry is changing through our insights.”
In an unprecedented global collaboration, the research effort was supported by legal tech associations around the world, with 387 legal tech companies from 56 countries sharing data on their technology, resourcing mix, business models, pricing strategies, growth aspirations and financial performance.
“Through this world’s first initiative, we were able to shed a light on the business of Legal Tech across Africa, Asia, Australia, Europe, Latin America, New Zealand, North America and the UK,” report co-producer and Alpha Creates principal, Eric Chin said.
“We were able to dive deeper into major themes in the Legal Tech market like impact of COVID-19, gender diversity, artificial intelligence as underlying technology and integrated versus point solution providers”, he said.
The impact of COVID-19
The COVID-19 pandemic is the top revenue challenge for Legal Tech companies across the globe, other than in Australia where the research was in the field between December 2019 and January 2020, before the global pandemic was declared.
“The COVID-19 pandemic has demonstrated the need for law firms and in-house teams to innovate further and find different ways of delivering excellent services,” research partner and Law Society of England and Wales President David Greene said.
“There is significant opportunity in this field and we encourage entrepreneurs to establish their start-ups in England and Wales using our guide, which provides helpful and insightful information for LawTech businesses on how to protect their ideas and inventions, how to be data protection compliant and where to find support to grow their company.”
“2020 is nearly at an end, but the pandemic has proved that necessity is the mother of invention and LawTech and tech have played a vital part in keeping the legal profession moving,” he said
Female-founded vs Male-founded Legal Tech companies
Only 29% of legal tech companies around the world were founded by women, according to the study.
Africa has the highest proportion of Legal Tech companies with female co-founders, while Europe has the lowest proportion of Legal Tech companies with female co-founders.
Interestingly, the size of Legal Tech companies by gender of founders varies across the globe. It is positive to see that there are regions like Asia, Latin America and New Zealand, where female-founded Legal Tech companies have scaled successfully, relative to their male-founded Legal Tech counterparts.
The study also explored whether there were differences in funding received for female-founded versus male founded Legal Tech companies through this research.
AI vs non-AI Legal Tech companies
AI has dominated the headlines of legal media and the minds of legal leaders. The research reveals 41% of Legal Tech respondent companies across the globe have identified AI (in all its different branches) as an engine that drives their technology. Asia and Latin America were the only regions where more than half of the respondents use AI in their product.
“Over the next decade we will likely see seismic developments in AI and the power it can bring not only to the Legal Sectors but all aspects of our lives and business, Alistair Griffin, Legal Operation Transformation Services (LOTS at KPMG said.
“With only an estimated 7% of Law firms adopting some form of AI based Legal Technology within their organisation* we have a long way to go before we realise the massive efficiencies that AI can bring to various aspects of Legal work, from eDiscovery; NLP document review; through to self-executing ‘Smart’ contracts.”
With the benefits, robust and powerful AI will likely bring, it is fantastic to see the level of investment demonstrated in the responses to the Global Legal Tech Report,” he said.
The research reveals that the size of developer teams at AI Legal Tech companies is larger than at non-AI Legal Tech companies for most regions across the regions other than in Africa.
Integrated vs point solutions
Globally, 56% of respondent Legal Tech companies are integrated providers and another 34% are point solution providers.
Europe and the UK are the only regions where less than half of the respondent Legal Tech companies are integrated solution providers.
Integrated solutions providers in Asia, Australia, Europe and the UK have a greater client retention outlooks than their point solution counterparts. Conversely, more point solution providers in Africa, New Zealand and North America have a great client retention outlook than integrated solution providers.
Paul Evans, Managing Director of legal marketing specialists Toro Digital said that despite the massive wave of technological solutions becoming available in the legal market, organisations around the world are still open to exploring their ideal combination of integrated and point solutions.
“Anecdotally, organisations prefer adopting integrated solutions in the majority of circumstances. However, the research indicates that the number of legal tech companies around the globe is virtually an even split down the middle between point and integrated solutions”.
“In the coming years, I foresee point solution businesses building new partnerships and introducing integrations to meet the demand from legal tech buyers,” he said.
The Global Legal Tech Reports can be purchased from https://www.globallegaltechreport.com/
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