Investors and tech industry insiders have seen the potential of legal tech for some time. Recently, however, legal tech seems poised for a breakthrough. According to Bloomberg Law, Silicon Valley investment in legal tech grew to $1.7 billion in 2018. That’s up from $233 million in 2017. And that trend shows no sign of slowing in 2019.
Since everyone from Big Law to solo practitioners use legal tech for help with time and billing, checking for conflicts, and case management, among other things, investor optimism seems well-placed.
Perhaps the most lucrative existing business in legal tech is e-discovery software. Artificial intelligence as it currently exists is ideally suited to parsing through large volumes of information to find relevant information, which is why e-discovery has seen such growth over the last several years. And there’s still significant potential in the market.
Tech executives also appear to like the direction the market is heading. Mike Gamson, a senior vice president of LinkedIn, recently left for Relativity, an e-discovery company. There is unconfirmed speculation an IPO may be coming within a few years, or sooner. There have also been several large mergers and acquisitions between e-discovery software companies since 2018. This shouldn’t surprise anyone who has been paying attention, and it appears e-discovery is maintaining is momentum through 2019.
Related software for contract review and analytics also show promise. Investors appear to be betting there is plenty of room for more AI-based computing services in legal tech.
Silicon Valley loves an untapped market, and about 40% of consumers look first to DIY online forms and/or take the pro se route, according to data from Thomson Reuters (disclosure: FindLaw is part of Thomson Reuters). In addition to software aimed at lawyers, apps and online services that take advantage of the legal consumer market are going to get a good look from Silicon Valley insiders.
In part, this may be helped by changing definitions of the practice of law. In California, for example, a state bar task force recently recommended that some tech could be used to provide activities related to the practice of law, and that non-lawyers could have ownership in this type of software.
In a crowded legal market that pressures law firms to be efficient and cost-effective, legal tech that makes it easier for lawyers to do their jobs will find wide interest. Apps and online services that increase accessibility for consumers will have a market. As these companies expand, so too will the interest of tech executives, investors, and software developers.