20 Legal Tech Stats for 2020 You Must Know
It won’t come as much of a surprise to those who work in the legal industry that law firms tend to be a little behind the times when it comes to investing in digital technology.
In fact, just one in five firms report being ready to move forward with enterprise-level digital strategies for their businesses.
The reasons that law firms frequently aren’t leveraging digital technology are varied, but it is clear that there is a general reluctance to begin implementing technology and replace older, more traditional methods and work processes.
Most are resistant to embracing new technologies, citing lack of technical knowledge, skills or understanding; problems with organizational handling of change; and financial issues including direct costs and unknown return on investment.
Related Post: Achieving Digital Transformation in Law Firms
With that being said, legal organizations are slowly changing their tune with regards to digital transformation, more frequently adopting solutions to better their operations.
Take a look at these 20 legal tech stats and discover where the industry is headed for in the new decade.
- 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.
- 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.
- AI technology offerings for businesses have increased nearly two-thirds this year from 2019.
- 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.
- Cloud usage among firms is 58%, with smaller firms and solos leading the way.
- 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.
- 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.
- 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.
- 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.
- 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.
- Only one-third of lawyers (34%) believe their organizations are very prepared to keep up with technology changes in the legal market.
- Firms described as “technology leading” fared better, with 50% prepared to meet digital technology demands in the industry.
- 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.
- Over half (53%) of lawyers in the US and Europe say their organizations will increase technology investment over the next three years.
- 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.
- 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.”
- It is estimated that 23% of work done by lawyers can be automated by existing technology.
- 27% of the senior executives at firms believe that using digital transformation is not a choice, but a matter of survival.
- 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.
- 60% of lawyers believe their legal firm is ready to adopt new technology for routine tasks.
The Future of Digital Transformation in Law
Despite the reticence of legal firms to fully embrace digital transformation from the outset, it’s clear that all the trends are pointing towards increased adoption in 2020.
While many firms are undoubtedly lagging behind, the greater volume of legal tech tools and the explosion of investment in related technologies show that firms are keen and confident in future ambitions for tech adoption.
The biggest obstacles to this will be the culture of law firms on an individual basis—many of which are more traditional in their approach. As lawyers continue to uncover the benefits of introducing the wide range of technology at their disposal into their workplaces, the incentive to adopt more will become stronger.
Legal tech has a lot of catching up to do to reach the levels of adoption of other industries, but it’s clearly making its way there—if a little more slowly.
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