The advent of the legal tech directory has simplified the purchase of products in areas such as contract analysis. And businesses can also check that the environmental, social and corporate governance credentials of law firms match their own
The US legal tech scene is all about the money – or that was my first impression at New York’s biggest legal tech conference for two years. Whereas legal tech events are usually attended by law firms, tech vendors and start-ups, this one featured strong representation from venture capital (VC) investors. Conference press releases announced legal tech businesses bagging millions of dollars in funding, continuing the pattern of the last three years, which have seen major capital investment in the sector. Last year saw three initial public offerings (IPOs) and at least two legal tech ‘unicorns’, or companies that exceeded $1bn valuations. However, the slow pace of legal procurement remains a challenge. Michael Grupp, founder and CEO of no-code enterprise platform BRYTER, sees tech spend in law firm and in-house legal trailing behind other sectors and corporate departments.
This is despite the fact that law firms are earning more money than ever. The pandemic put pressure on in-house counsel, leading to more law firm instructions, and remote working reduced overheads and boosted margins. Firms are indeed investing in technology, but they are much more cautious than start-up investors and tend to focus on tech for efficiency and productivity, with emphasis on innovation.
'In the past, design was less important as most legal tech was used by the IT team, but now the technology is in lawyers’ hands, ease of use facilitates adoption'
Michael Grupp, BRYTER
Grupp moderated a session that highlighted the growing diversity of roles in the legal tech ecosystem, with firms bringing together hybrid teams that include legal engineers, legal technologists, and data scientists, who bring knowledge and experience from outside classic legal services.
‘The industry has become more productive,’ he commented. ‘Rather than focusing on broad goals like digital transformation, legal tech discussions are more grounded, clear and tactical. It feels like people have started to work, not just talk.’
Automation is still a hot topic, and while there are new self-service (and self-executing) tools and resources, many existing products have started to introduce automation capability to workflows, matter management and contract management, again enhancing productivity.
Grupp highlighted user-friendliness as a critical success factor, especially since the pandemic: ‘In the past, design was less important as most legal tech was used by the IT team, but now the technology is in lawyers’ hands, ease of use facilitates adoption.’
Legal tech: counting the ways
The boom in legal tech means buyers of legal tech in law firms and legal departments have an increasingly large and confusing choice of products and services, especially in popular areas like contract analysis and automation. This has led to the emergence in 2022 of a new kind of start-up: the legal tech directory.
There are already comparison sites for legal tech, but these tend to be quickly outdated. Most listings allow vendors to classify their own products, and their choice of category may be based on sales targets or target markets rather than what the product is or what it can do.
This led Nikki Shaver, who was managing director, innovation and knowledge at Paul Hastings LLP, and Chris Ford, who was chief marketing officer at Zero, to launch the Legaltech Hub as a passion project. In February 2022 they decided to commit to it full-time. Shaver deals with content and classification and Ford runs marketing. They were joined as co-founder by Jeroen Plink, former CEO of Clifford Chance Applied Solutions, who is responsible for the commercial side of the business.
The Legaltech Hub is free to access and covers the global legal tech scene. And it has already been recognised as a useful resource for researchers. In 2021, it provided data to Oxford University Saïd Business School research projects. Shaver explains that retaining ‘editorial control over which category each solution is listed in’, differentiates the Legaltech Hub from other legal tech comparison sites.
‘Rather than let them choose the category, we work with vendors to understand their offering,’ she says. ‘For example, if a contract lifecycle management (CLM) vendor includes e-signatures, it will be listed under CLM, not e-signatures because anyone looking for just e-signature capability will not be in the market for a comprehensive CLM tool.’ Another differentiator is that Shaver is an experienced law firm knowledge management leader, so her classifications are intuitive and designed for easy navigation.
NFTs for ukraine
Having written quite a lot about blockchain, smart contracts and NFTs (non-fungible tokens), I decided to walk the talk and buy an on-chain NFT.
Having seen a LinkedIn post by Yuliya Prokopyshyn, who is Ukrainian and a trainee solicitor at Stephenson Law, I bought three ‘Stand with Ukraine’ NFTs on Kyiv and Gothenburg digital platform Forza Ikonia. Ikonia is selling 43,287,512 NFTs at $10 each, one for each citizen of Ukraine.
The artist is Felipe Posada and 100% of the proceeds are being donated to three Ukrainian charities. Each time the NFT is resold, a 10% royalty fee also goes to the charity of your choice. The process is relatively easy, involving just a few more clicks than online shopping.
I haven’t done anything with them, but it is a start and for a good cause with no administration fee.
ESG? There’s an app to help firms walk the talk
But legal tech is not just about the money. The past few months have focused attention on the people elements around legal tech, perhaps because the pandemic limited human contact and law is a people business. Environmental, social, and corporate governance (ESG) has become increasingly important. And now there is an app for that.
Impactvise, founded in June 2021 by Adrian Peyer, former general counsel at Zurich Insurance, and Yannick Hausmann, senior adviser to Zurich’s group CEO, is the first global ESG analytics and advisory platform for the legal sector. Peyer explains that general counsel are in an ideal position to support their company’s ESG strategy in terms of sustainability, ethics and brand values because they are consulted at every decision point, including choosing external and panel law firms. ‘Matching your ESG strategy with your suppliers, including law firms, adds credibility to business relationships and enhances your organisation’s ESG impact,’ he says.
Impactvise has developed an algorithm that collects and analyses publicly available ESG data about law firms and maps them against World Economic Forum standards to create a dynamic snapshot of each firm’s ESG performance. Its current database includes 700 law firms globally.
Impactvise data can be used by GCs to support decision-making. For example, if they are looking to appoint a panel or firm that has particular focus on diversity and inclusion, sustainability, or reducing CO2 emissions. The data can also be used by lawyers and business professionals who are looking to work for a firm that reflects their environmental and social values. Impactvise is a publicly available resource for law firms, which could potentially use their ESG score to demonstrate that they are walking the talk when it comes to ESG, improve in particular areas, or tap into a new client base – companies that are specifically looking for a firm with ESG credentials.
While legal tech start-ups are attracting huge investors, two discussions flagged up the difficulties faced by entrepreneurs from diverse backgrounds, with Alcide Honoré, CEO and co-founder of e-billing company Billseye, memorably commenting that black founders remained ‘over-mentored and underfunded’.
Fortunately, Google are doing something about that here in the UK. Google for Startups is inviting UK-based, Black-led tech start-ups to apply for this year’s Black Founders Fund worth a total of $4m (approximately £3m), to help tackle inequality in venture capital (VC) funding.
The Black Founders Fund will be awarded to the most innovative Black-led tech start-ups across Europe with business plans for using technology to pioneer creative solutions. Two of last year’s 20 UK founders selected to receive funding lead legal tech start-ups: Nnamdi Emelifeonwu, of Define, which optimises contract drafting and reviewing, and Richard Robinson, of Robin AI, which uses AI to automate editing legal contracts.
Called out on social media
On International Women’s Day (IWD) social media, in the form of a Twitter bot, applied automation to call out organisations whose actions were not living up to their words about equality and diversity. The Gender Pay Gap Bot (@PayGapApp) automatically shared the tweets of all organisations using the IWD hashtag alongside their median hourly pay gap, which organisations with over 250 employees are required to publish and is available from the government’s Gender Pay Gap service website. The bot was created by copywriter Francesca Lawson and software developer Ali Fensome with the strapline ‘Deeds not words. Stop posting platitudes. Start fixing the problem’.
The bot quoted a selection of law firms which had posted IWD messages and reported gender pay gaps ranging from nothing or insignificant – a small gap could represent a discrepancy in gender balance and seniority rather than pay – to embarrassingly large.
This awkward piece of publicity served to demonstrate to law firms and other organisations that failing to live up to their stated values has become a reputational issue.