Challenges and Opportunity of Lawtechs for Legal Services

There is a growth of startups that offer solutions to increase the efficiency of services delivered by law firms and improvement in the public sector.

It is not new that the legal profession is going through a challenging moment. The innovations are multiple, different types of demands appear more and more quickly, therefore, adaptation and entrepreneurial posture are required. In addition to this scenario, there is a growth in startups that offer solutions to increase the efficiency of services delivered by law firms and improve the public sector.

Evidence of these changes was found in a report published this year by Thomson Reuters and Georgetown University (“2020 Report on the State of the Legal Market”). The directions for these changes refer to new customer requirements (more efficiency and lower cost), growth of non-legal competitors (companies that carry out legal research, compliance services, regulatory risk, document review, e-discovery) and increased innovation in law firms.

This last element is revealed, according to the results of the report, in the hiring of specialized professionals; initiatives aimed at improving efficiency in delivering demands; service outsourcing; and expanded use of technology in order to improve the work done through the development of software, introduction of consultancy in the creation of solutions in legal technology and online services to support clients.

It is, therefore, at the intersection between the needs of adaptation, innovation and improvement that lawtechs find fertile ground for their expansion. In Brazil, in particular, where there is a significant amount of legal data available in public access, there are many solutions aimed at reducing the time dedicated to repetitive tasks. Therefore, we talk about predictive analysis, document automation, organization of assertive insights for decision making and risk management, data monitoring, Online Dispute Resolution.

Stanford University’s “CodeX” points to an international ecosystem consisting of 1346 lawtechs. In Brazil, AB2L, an industry association, registers 162 legal startups. There are multiple categories in which the provision of services takes place, such as analytics, document automation, compliance, education, e-discovery, office and department management, jurimetry, marketplace, legal research, professional networks, public sector, conflict resolution online.

Without a doubt, this is an expanding segment. In the United Kingdom, for example, investments of more than £ 290 million are estimated. In that country, a “lawtech sandbox” was created, a Research & Development environment to innovate, test and learn, harboring initiatives that intend to reinvent the way legal services are delivered. The space is divided into three units: regulatory response (formulation of public policies and drafting of regulations as challenges arise); business (technical and operational information and relevant data set); ethics (information on applied ethics).

In Brazil, a study carried out by CESA and AB2L, in April 2020, with 649 law firms, located in all Brazilian geographic regions, brought indicators regarding the lawtechs. The results showed that 22% of the offices use the services of these startups, which maintained, in most cases, the level of demands despite the effects of the pandemic, with an increase in specific groups.

All the changes and challenges previously exposed underline the urgency of the regulatory debate and the potential for profound changes. It is necessary, therefore, to find negotiated and collectively, with the participation of the actors involved and the affected parties, a balance between private advocacy activities and innovation.

By: Wilson Sales Belchior