In 2024, the legal industry is experiencing a massive digital transformation with the emergence of cutting-edge technologies and innovative solutions. Legaltech is revolutionizing the way legal professionals practice law and deliver their services. In this article, we will explore 5 key legaltech trends that are shaping the industry in 2024.
Significant impact of generative AI on legaltech operations
The integration and use of generative AI technologies within the legal industry is growing rapidly. Legal operations often involve managing and analyzing large volumes of data. This can include legal documents, case files, contracts, and more. Generative AI can assist in-house legal teams by automating the processing and analysis of these vast data sets.
Many companies are utilizing automation tools that allow them to quickly sort through thousands of documents to find relevant information for a case or project and by doing so significantly reducing the time and effort required by human teams.
Complex algorithms and machine learning are having a major impact on transforming legal operations. These technologies enable AI systems to learn from data, improve over time, and make increasingly accurate predictions or decisions. In the context of legal operations, machine learning algorithms can be trained to recognize patterns in legal documents. Moreover, they could assist in predicting outcomes based on historical data, or suggest the most relevant precedents for a particular case.
According to a study by Gartner, for leaders in legaltech, compliance, and privacy, embracing generative AI (GenAI) has been the number one priority for the past two years. Legal teams are incorporating generative AI platforms from text generators to image creators into their regular operations.
Transitioning to Small-Scale Automation
In 2024, the legal industry is getting smarter about using automation. Instead of worrying that robots will take away jobs, people are seeing how they can help. Automation is taking over the boring, repetitive stuff that nobody really likes doing. This means lawyers and other legal pros can spend more time on important things that need their expertise.
The key is wisely selecting the repetitive tasks that can be left to automation tools to take care of. A survey from 2019 by Gartner, shows that when you automate the tasks that happen a lot but don’t add much value, everyone benefits. Work gets done faster, there are fewer mistakes, and the people working feel better about their jobs.
Imagine, how much smoother things could run in a law firm if handling contracts or chasing down payments was automated. These are the kinds of tasks that can be streamlined with small-scale automation, making the whole operation more efficient. So, it’s not just about cutting costs or reducing staff; it’s about making the legal department work better as a whole.
Alternative Fee Arrangements Replacing Billable Hours
The billable hour, a longstanding default for law firm billing and lawyer performance measurement, is facing criticism for promoting inefficiency and misaligned incentives for lawyers. In 2024, the legal industry might largely move away from the traditional billable hour to alternative fee arrangements (AFAs). This signals a major shift towards cost efficiency and value. A Bloomberg report indicates that 81% of in-house teams are already using AFAs for cost savings. This trend is driven by criticisms of the billable hour model for encouraging inefficiencies and budget unpredictability, while AFAs promote streamlined work aligned with actual value.
Selecting an appropriate AFA requires consideration of the work’s nature, with clear communication to avoid misalignments in budgeting. In-house teams should audit tasks for potential outsourcing, focusing on automation and finding flexible third-party providers familiar with AFAs. This transition to AFAs suggests a strategic shift in legal billing, emphasizing efficiency, cost savings, and value alignment.
Streamlining Document Management
The push for DMS adoption in 2024 is driven by the need for greater efficiency and risk management in document handling. AI and automation are transforming the labor-intensive aspects of document review and management in the legal sector, significantly streamlining lawyers’ daily responsibilities. These innovations enable quicker, more precise document handling, greatly diminishing the time spent by lawyers on these tasks.
Automated document management systems leverage sophisticated algorithms to organize, tag, and index legal documents efficiently, enhancing the speed of document retrieval and reducing the chances of human error. AI-enhanced tools extend these capabilities with natural language processing, allowing them to analyze vast quantities of documents, pinpoint relevant details, and suggest modifications based on legal precedents and case laws. This not only expedites the review process but also improves document quality, which is vital in sectors where accuracy and promptness are key.
Furthermore, AI technologies play a crucial role in compliance and risk management by identifying potential compliance issues within documents. This capability is especially valuable in fields like corporate law, where strict regulatory adherence is crucial. As technology advances, we anticipate even more sophisticated AI integration into document management. This can eventually lead to more intuitive systems that further reduce lawyers’ workloads, enabling them to concentrate on the strategic elements of their practice.
Legaltech Freelancing on the rise
The integration of freelancers into the legaltech workforce is part of a broader strategy to improve workplace efficiency and adapt to the changing landscape of legal services. By embracing freelancing, the legal industry is moving towards a more flexible, efficient, and client-centered model.
Innovations in legaltech have made freelancing more accessible and efficient. Tools for remote communication, document management, and legal research enable lawyers to work from anywhere. These technologies facilitate seamless collaboration with clients and other legal professionals, making it easier for freelancers to offer their services directly to firms and clients without the need for traditional office infrastructure.
On the other hand, clients are increasingly budget-conscious and looking for more cost-effective legal services. Freelancers can often provide more competitive rates than traditional law firms due to lower overhead costs. This economic efficiency makes freelancers attractive to clients who still demand high-quality legal expertise but at a reduced cost.
Law firms and corporations are adapting to this trend by incorporating freelancers into their legal teams. Freelancers can provide specialized expertise on an as-needed basis without the commitment of a full-time salary and benefits. This model can lead to significant savings in operating costs for firms and provide them with the flexibility to scale their legal workforce up or down based on current needs. Additionally, it allows firms to offer a broader range of services by tapping into the diverse skill sets of freelancers.
