The introduction of artificial intelligence in the forensic field, with the establishment of numerous startups in the Legal Tech sector, is having an impact on the lawyer profession: let’s see which are the main companies and the impacts on the organization of law firms
Technology has brought about many transformations in the legal profession but for some years now, the introduction of artificial intelligence, with the establishment in effect of a sector called Legal Tech in the world of digital startups , things seem destined to completely upset the organization of law firms and the profession of lawyer as we have known it up to now. Let’s see how
The growth of Legal Tech startups
To get a precise idea, the Legal Tech sector has seen the birth of around 4,000 Startups around the world between 2010 and today . At the moment, 75 Exits have been registered, which total about 330 million dollars. 46 occurred in the United States, 7 in the UK, 5 in Germany, 4 in Canada, 3 in Denmark. 394 Startups have received investments totaling approximately 1 billion dollars.
The very large part of the Startups of the Legal Tech sector, equal to 3145 units, did not receive investments. Of the approximately 4,000 Startups , born in the decade, approximately 1,600 have sprouted in the United States. In Europe, the country with the most startups is Germany where there are 170, the city in the world where the most have been born is London which has 271 initiatives.
What are the Legal Tech Companies
The Legal Tech Companies are essentially Startup that provide:
- software services and technologies for the legal sector (law firms, legal departments and new market operators)
- technology based legal services for companies and consumers.
The types of services and products that are developed and offered by Startups in the Legal Tech sector can be segmented into the following categories:
- practice management and business support , technological tools that help law firms manage their practices are particularly useful for case management and business support;
- services and technology products that assist lawyers in the basic services of a law firm;
- corporate legal management tools that help the legal department in managing internal legal processes and external legal issues.
The Startup creating digital services and products to assist, sometimes replacing, Lawyers, we can divide them even better through the kind of problem that solve or help solve faster:
- The due diligence and legal research;
- The ability to analyze background and data in general, effectively increasing the ability to generate better solutions by providing insights quickly;
- Automate parts of the lawyer’s creative process, including the writing of deeds, opinions or letters.
Due diligence and legal research
Let’s dwell on the Startups that have received greater approval from investors and the market by focusing on one of the activities that the lawyer carries out most frequently for clients: in simple words, the confirmation of facts or figures and the in-depth assessment of a legal situation that can take place only through the analysis of a copious amount of documentation. This process is necessary for the lawyer to be able to appropriately direct clients on the options in the field and on what actions must be taken .
Lawyers must therefore conduct a complete investigation to obtain significant results but they can make mistakes and inaccuracies when they carry out sample checks of the documentation or when they find themselves having to analyze a huge amount of documentation in a short period of time, as typically happens in the two diligence in extraordinary transactions such as those of M&A. Without claiming to be able to provide an exhaustive list of the best and most successful Startups in the Legal Tech field, we propose below those that in our opinion have had the most significant impact and that will play a leading role in the transformation of profession of the lawyer:
- Kyra Systems : Noah Waisberg, a former M&A attorney, founded the software company Kira Systems in 2011, precisely to try to solve problems related to the due diligence activity carried out in times of greatest pressure related to M&A transactions. Kira Systems says its software is able to perform a more thorough review of contracts by searching, highlighting and extracting relevant content for documentation analysis. The Startup claims that its system can do this up to 40% faster than a lawyer when using it for the first time; subsequently it can lead to time savings of up to 90%. Kira Systems raised approximately $ 65 million in investment in a round A in September 2018.
- Luminance : the basic technology of Luminance, founded in 2015, allows the very fast knowledge of a document and the possibility of improving its accuracy and usefulness thanks to the interaction between lawyers and the platform’s learning algorithm. Luminance can automatically perform tasks such as document grouping, filtering, data extraction, suggestions for similar paragraphs / data, comparing clause / document templates, and anomaly detection. In February 2019, Luminance raised $ 10 million over the course of a series of Series B funding, bringing the combined total to $ 23 million.
- eBrevia : founded in 2012 by Ned Gannon and Adam Nguyen, when they were still working as junior associates, they built this Startup in collaboration with Columbia University with the intention of shortening the document review process. eBrevia uses its own algorithms to extract relevant textual data from contracts and other documents to support lawyers in analyzing the documentation, especially useful in due diligence activities. eBrevia claims it can analyze more than 50 documents in less than a minute, which is 10 percent more effective than a manual review process. eBrevia raised $ 4.3 million in investment and was acquired by Donnelley Financial Solutions in 2018.
- Everlaw : Founded in 2010, Everlaw uses its predictive coding feature to create forecast models based on at least 300 documents that were previously classified as relevant or irrelevant by the user. The AI examines the content and metadata of documents, using that information to classify other documents. Everlaw says the forecast model results can help users easily identify which documents are most relevant to the purpose of their search. Through the interaction between the user and the machine learning algorithm, the accuracy of the results improves significantly. Everlaw in the latest round, March 2020, raised $ 62 million. Overall, it has received investments of almost one hundred million dollars.
- LawGeek: founded in 2014, LawGeex, which basically deals with the contract review process, is able to read and validate the documentation that respects the standards that have been set. If the criteria are not met in the documentation examined, the AI provides suggestions for modifying them and subsequently approving them. LawGeex integrates a machine learning algorithm, text analysis, statistical parameters and legal knowledge of lawyers. Furthermore, they argue that thanks to their solution, law firms can reduce costs by 90% and contract review and approval times by 80%. These numbers, for the moment, do not seem to be supported by case studies. LawGeex in the latest round, March 2020, raised $ 20 million.