Legal’s Tech Maturity Isn’ t (Yet) Meeting the Moment

Each week, the Law.com Barometer newsletter, powered by the ALM Global Newsroom and Legalweek brings you the trends, disruptions, and shifts our reporters and editors are tracking through coverage spanning every beat and region across the ALM Global Newsroom. The micro-topic coverage will not only help you navigate the changing legal landscape but also prepare you to discuss these shifts with thousands of legal leaders at Legalweek 2024, taking place from January 29 to February 1, 2024, in New York City. Learn more and register today:

The Shift: Legal’s Tech Maturity Isn’t (Yet) Meeting the Moment

For many law firms and legal departments, next year will bring even greater pressure to leverage generative AI to their competitive and operational advantage. But while legal professionals want to waste no time harnessing this novel technology to automate more tasks from contract review to document drafting, it’s not as simple as buying new legal tech products or integrating generative AI models into their software or processes.

While legal teams became far more tech savvy during the pandemic, for many, tech maturity hasn’t yet leapfrogged to meet the moment, and there’s still a fair amount of catching up to do.

Many are still struggling to organize and manage the data they hold, bring their tech procurement processes and budgets in line with demand, and hire the right talent to foster internal tech skills and capabilities. Without addressing these shortcomings first, legal professionals will be hamstrung in their ability to tap into generative AI.

The Conversation

Before turning to new technologies, some legal teams need to first account for the tech they already have. Many law firms, for instance, rushed to onboard new tech products during the height of the pandemic, with little forethought on its impact on their data governance or compliance needs.

Collaboration tool Microsoft Teams is a prime example of this—having gone from a relative rarity to a common staple in many, if not most, U.S. firms over the past few years. The 2023 ILTA Tech Survey of over 500 U.S. firms found that 76% are using the platform as of this year. But despite its ubiquity, Teams is causing some headaches at firms, many of whom still have trouble tracking or locating data on the platform, among other issues.

“What’s happening is people have learned that their governance models need to be expanded a little bit for the reality of cloud-based, broader adoption [of Teams],” said Joy Heath Rush, CEO at the International Legal Tech Association (ITLA). “That’s what happens when applications come into the wild.” Rush added that for firms, “rolling back certain aspects” of the software could be helpful.

But even when legal teams get a handle on pandemic-era tech, it’s no sure bet they’ll be able to quickly turn their full attention to new AI tools just yet. Many, after all, also lack internal processes to support effective tech procurement. A recent Wolters Kluwer survey of 700 lawyers in law firms, corporate legal departments, and business services firms across the U.S. and Europe found that, for 44% of respondents, the biggest barrier to tech investment was organizational.

What’s more, for those looking to tap into technology to gain a vital competitive edge, getting up to speed on recent innovations is also a significant hurdle. In the Wolters Kluwer survey, 36% of respondents cited a lack of skills and knowledge as a barrier to technology adoption. This comes against the backdrop of growing recognition in the legal market that in-depth tech knowledge isn’t just the purview of IT specialists anymore. “I can’t appropriately supervise the technologists if I don’t understand the technology,” said Day Pitney e-discovery counsel Ashley Picker Dubin.

The Significance

While law firms and legal departments can make relatively fast progress bolstering their tech knowledge, revamping internal processes and reining in pandemic-era tech, addressing other technology challenges will likely be more difficult and time consuming.

Take, for instance, the cost of legal technology products, which has become more expensive this year than during the peak inflation period during 2022. While keeping a tight rein on tech costs was once seen as the mark of a business-savvy law firm, as more begin to see technology as a vital competitive advantage, stagnant or decreasing tech spend can quickly become a red flag.

“When they see a firm that is spending less on technology than other peer firms, they no longer consider that a good sign,” said Greenberg Traurig Chief Information Officer Jay Nogle. “There was a time that anything that you kept a tab on expenditure-wise was a good sign of a healthy law firm, and now they’re pointing out … your peers are spending more on the technology than you are.”

Spending more on technology, however, isn’t always easy. It may take significant time for the impact of technology to prove its financial value—especially when it comes to new innovations such as generative AI. For law firms and legal departments who require a clear and fast ROI before making investments, and rely on traditional metrics such as the billable hours, this could mean a change in business models. And that’s not likely to be a simple, or quick, endeavor.

“Whichever firm is the first to really figure out what exactly the right mix is of human intervention and technology and then figures out how to price it, that will be a very lucrative solution,” Rush said. “Because it’s not one or the other. It’s not people or tech, it’s what’s the right mix? …And everyone’s in uncharted waters here.”

Law firms' and legal departments' ability to leverage technology will also come down to whether they have the right internal talent to deploy or develop the tools they need. But while legal tech offerings are growing exponentially, technologists, IT specialists and data scientists are in short supply. ”Of course the vendor is always [saying,] ‘you should buy all the products,’ but the reality is you should only buy as many products as you have people to deploy,” said PacerPro co-founder Anna McGrane.

The Information

Want to know more? Here's what we've discovered in the ALM Global Newsroom:

The Forecast

Setting a law firm or legal department up to effectively procure, use and budget for technology will be pivotal for those looking to tap into its potential. But those that get it right will likely be using similar, if not the same, legal tech products and underlying technologies. So is the future just a level playing field of more tech-savvy players?

Not exactly. One factor that will likely prove one of the biggest differentiators in the market especially when it comes to generative AI—will be getting the right talent in place to deploy and develop technology.

“So we may all have the same tools. But we may not have the same talent working with the tool. … What differentiates you? It is how you’re using this tool, who is using this tool, how you’re putting the tools back together. … It’s also how you’re able to attract talent, how you’re able to keep talent, how well your talent can perform,” said Orrick chief innovation officer Wendy Curtis.

Getting the right talent may be far more challenging than addressing all the other challenges on the road to tech maturity. Those that already have such talent, or have the resources to be competitive in a market where technologists, IT specialists, and data scientists are in low supply and high demand, will inevitably have a head start.

It’s likely that these players, which encompass Big Law firms and well-resourced legal departments, will pave the way in showing just how, and how much, the industry can and should leverage technology, including emerging innovations such as generative AI.

Stephanie Wilkins is the Editor-in-Chief of Legaltech News. Contact her at swilkins@alm.com and follow her on LinkedIn.