The rapid emergence of LegalTech is one of the most striking developments in the legal sphere. Legal professionals, who until recently had very few digital tools adapted to their profession, can now count on these startups to speed up procedures.
Legal startups on the rise
The LegalTech sector is booming. In 2018, investments in legal technology platforms exceeded $1 billion. By the end of the third quarter of 2019, these had reached $1.23 billion, an amount that shows the sector is in a growth phase.
Faced with rising operating costs and the threat of disruption posed by non-traditional models, legal professionals can no longer ignore change and innovation. LegalTechs are attempting to respond to their issues by focusing primarily on information sharing, particularly via marketplaces dedicated to lawyers, and on the production of legal services. Decision-support services are gradually gaining ground, benefiting from growing interest from practitioners and investors alike. These mainly concern the analysis of past decisions (articles of law, doctrine, case law) and their statistical processing.
The new tools deployed by LegalTech, while not leading to the disappearance of lawyers, are likely to redraw the contours of their profession. They are even giving rise to new professions (legaltech project manager, legal marketer, data lawyer, privacy lawyer, etc.), enabling us to measure the scale of the transformation of this sector.
Regulatory and cultural obstacles
Although the LegalTech market has shown signs of maturity in recent years, it is still in its infancy. A great deal of progress still needs to be made, particularly in the fields of Artificial Intelligence and legal data lakes, which will only have an impact in the long term.
What's more, while the commercial target of these players has diversified considerably over the past 5 years, the structure of the French legal market doesn't function like a classic capital-intensive market and doesn't encourage innovation. According to a 2018 study by Maddyness, more than a third of start-ups surveyed say they are hindered in their development by regulatory brakes. Legal information engine Doctrine, for example, which raised €10 million from Xavier Niel and Otium, has been hampered by the slow opening up of court rulings. In addition to delayed legislation, LegalTech has to contend with the Conseil National des Baraux, the national representative body for lawyers, which has stepped up its legal action to protect these professionals.
Despite these obstacles, a number of initiatives are underway (such as the annual LegalTech Village, or France Digitale, which has set up a group bringing together LegalTech nuggets) and should boost interest in legal technologies.