• Traditionally, law firms have been wary of adopting technologies that could compromise data privacy and legal accuracy; however, attitudes are changing
• Despite concerns about technology replacing humans in the legal sector, legaltech is more likely to augment the legal profession than replace it entirely
• Generative AI will accelerate digital transformation in the legal sector

Legaltech refers to the use of technology to deliver legal services and support various functions within the legal industry. Factors such as remote working, high inflation rates, changing client demands, and developments in technologies like artificial intelligence (AI) have added greater pressure on law firms and legal departments to invest in technologies that could help them reduce costs, improve operational efficiency, and remain competitive. There are concerns about technology replacing humans in the legal sector. However, legaltech is more likely to augment the legal profession than replace it entirely, according to GlobalData, a leading data and analytics company.

GlobalData’s latest Strategic Intelligence report, “Legaltech,” reveals that generative AI will play a key role in accelerating digital transformation in the legal sector. From document automation to AI-driven legal research and predictive analytics, generative AI could unlock a wave of innovative applications in the legal sector that promise greater efficiency and accuracy in routine tasks.

Beyza Karakoy, Analyst, Strategic Intelligence team at GlobalData, comments: ‘‘The stakes are too high in the legal sector to rely completely on technology to get the work done. The human element is, therefore, still essential in ensuring accuracy and reliability. Legaltech aims to increase efficiency by addressing important but low-value or high-volume tasks, allowing lawyers to focus on more complex and highly-skilled work.”

Karakoy continues: “Legaltech has become a significant investment area for traditional law firms, alternative legal service providers (ALSPs), and in-house legal teams. However, it is also being used by non-legal professionals to source affordable legal solutions, enabling small and medium-sized enterprises (SMEs) to automate routine legal tasks, access contract templates, and navigate regulatory compliance, which significantly reduces their legal costs.”

In 2023, generative AI emerged as a potentially game-changing AI technology, and it is already making a notable impact in the legal industry. This is evident from the growing attention legaltech companies like Harvey and Robin AI are receiving.

Karakoy concludes: “The technology has many potential use cases for lawyers, from virtual assistants to automated contract reviews. However, it comes with risks, including the potential for hallucinations, which professionals must carefully evaluate before adopting generative AI. Another key concern is data privacy, given the sensitivity of client information and the need to process confidential data when using the technology.”