The last two years have been quite a ride for legaltech. Work-from-home mandates, the great resignation, and now what many have deemed a pending recession. All eyes have turned toward driving efficiency and profitability. As we close out 2022, where are we headed next?
We polled legal leaders across the industry on the recent past and near future. Here’s what they said.
Ari Treuhaft, President & COO at Litify: The last few years have brought forth a reckoning in the legal markets. This once-laggard industry has pushed forward on new technology advancements and adoption since being mandated to work from home at the height of the pandemic back in 2020. And it’s not just the law firms and legal organizations themselves making strides, but also the service providers who are making concerted pushes into the cloud to offer a SaaS model to those customers.
This dynamic created significant opportunities and innovation has exploded, which means also increased value for the legal industry. However, many of these startups are now facing a weakening market and are looking to boost their GTM efforts by aligning themselves with more mature organizations. So I expect that we’ll continue to see acquisitions and consolidations through the rest of 2022 as companies hit that inflection point.
But the future is definitely bright for legaltech. With over $1 billion in funding invested in legal tech startups in 2021 alone, legal technology is advancing at a rate faster than ever before. I’m eager to see and do more in this space through the rest of 2022 and in the coming years.
Jason Thomas, CIO at Cole, Scott & Kissane: Firms that did not embrace a remote or hybrid workplace saw a lot of attrition in 2021-2022. This is the new workforce standard and we will start to see more firms begrudgingly embrace it over the next year. We have also been seeing a slowdown in the tech sector. While I am not concerned with legaltech jobs at law firms, I do think we will see a lot of startups desperate for funding or eventually go out of business.
Léo Murgel, SVP & COO, Legal and Corporate Affairs, Salesforce: There are two pressures unfolding across the industry. The first is that GCs are increasingly being seen as business leaders. They not only have a role to contribute to the business in a positive and proactive way, but they're also being asked to run a business that's more efficient. We're also seeing increasing fragmentation of the regulatory space, which makes business more complicated — especially in a global setting like Salesforce. So legal teams have pressures to be proactive, pressures to show up to the business in a new way, pressures to be efficient, and meanwhile the block and tackle of understanding the regulations, commitments, and obligations of the company are getting more complicated. All of that really sets the tone for a need to transform how you do business, so that you create the space to show up in a whole new way.
Mark Stewart, Chair of Ballard Spahr, said in a recent ALM article with Litify: Our Executive Director role was rebranded as Chief Operating Officer to reflect the increasing importance of business professionals in the success of law firms, from everything including cybersecurity to delivering greater client value. That position at our firm has evolved in response, and the title “Chief Operating Officer” is an acknowledgement of the breadth and depth of that role. As we move even further in the direction of a strong partnership with our business professionals, we’re fortunate to have a COO who knows intimately the operations of a large firm and can coordinate these important responsibilities while protecting our culture.
Josh Lazar, CIO at Eighteenth Judicial Circuit Court of Florida: Our fiscal year isn’t tied to a calendar year, so our budget and personnel needs for 22/23 are already approved. For those who are still working to get budget dollars and personnel approved for a 2023 calendar budget, that will be an interesting negotiation. I believe the best investments start with your staff, either with salary increases, training/education investments, or both. Going forward, I also think we’ll see a correlation in the next 3-5 years between those who continued to invest in their staff and overall technology budgets in the coming years and increased internal and external stakeholder satisfaction.
Terry Dohrmann, Co-Founder at Litify: There’s more recognition today that firms need to invest in technology, not just to keep pace with competitors but also to unlock the potential that exists within their own firm. Young lawyers and the teams that work with them are increasingly of the demographic that has literally grown up with easy access to data, utilization of tools, and real-time collaboration with peers. Doing it the "same old way" is a sure fire way to have your firm left in the dust.
For corporate legal teams, they’re recognizing that the need to be more connected to the rest of the business is more pronounced now than ever. Legal can no longer be a black hole, so sharing of data, faster response times, driving better outcomes (faster and together) is taking on new forms each day. Enterprise platforms are a must in these scenarios.
And in the firm-client relationship, clients across the board (corporate, commercial, government) are demanding performance from the firms that support them. The firms that can demonstrate why they’re different and provide real-time reporting and relevance are winning business — period. There’s also a burning need to review processes and procedures that may be slowing legal teams and law firms down. It’s a “spring cleaning” of sorts, and societal shifts — such as those prompted by COVID, when remote work was mandated — are exposing antiquated processes that are ripe with opportunity for change.
Debbie Foster, Managing Partner at Affinity Consulting: I have a lot of empathy for people trying to navigate this landscape. I myself can barely keep with what’s happening in legal technology in 2022. It’s like a merry-go-round of who owns who and what’s doing what, and new features are being developed so much faster. But I believe that talking to people, to colleagues you know at firms around your size, and asking them what they’re using, what they’re loving or not loving, can help you start to navigate where to begin.
Chad Dudley, Founding Partner at Dudley DeBosier: People often have this misconception that if they have systems or technology in place, it’s going to be constraining or take away the feel-good dynamic with the client — and I disagree. When you have a cloud-based platform in place, it allows you to focus on the relationship with your client. It allows you to be a better attorney for your clients and deliver better service, better communication, and ultimately better outcomes.
Dan Safran, President & CEO, Unbiased Consulting: In recent years, law firms have seen unparalleled profitability — which is great news, but will it be sustainable? Just prior to this boom, the law firm market was struggling because supply was greater than demand. While everyone was working from home, there was a greater realization of the need to evaluate the investments in technology and into our people. And as you might expect, it uncovered plenty of opportunities to increase efficiency, productivity, and time-savings.
One outcome I’ve seen is a focus on re-engineering how administrative teams operate. Legal assistants are increasingly adopting a team or pod structure to become a more cost-efficient resource. Second, we’ve seen folks really drilling down to measure productivity and looking into the numbers behind their clients. How are we servicing our clients, and how can we become more efficient and productive in doing so? Teams are taking a harder look at profits on a matter level and a client level to understand how they can positively impact profitability in this area.
'Evolution is the single greatest force in the universe; it is the only thing that is permanent and it drives everything.” Looking back over the past two years and what lies ahead with new market changes, that quote from Ray Dalio is quite applicable.
COVID challenged law firms to take a deep dive into their current processes and evaluate the gaps in how their teams performed. As a result, leaders are incorporating new technologies to strengthen team performance and client relationships. As we face a new challenge ahead in market conditions, that doesn’t change the undeniable benefits legal technology offers for any vertical in the industry. Though many are just starting to warm up to the idea of automating their repetitive tasks (shocking, I know), the benefits extend far beyond that. The future is bright for advancements in legaltech, and I’ve found in my personal experience that firms and companies are often more bought into the idea of new technology when they understand how it can benefit them in a multitude of ways — and in the long run. Companies like Litify that are able to deliver that for this ecosystem will be the ones that last.