Expect a whole lot of AI at ILTACON
AI transforming legal processes, Cloud Software's ShareFile for Legal launched, SEC's new cybersecurity rule creating waves, and startups Definely and Clearbrief using AI for efficiency.
Welcome to your Law Tech briefing for Aug 16th, 2023, covering what happened in legal tech recently.
TLDR; Listen instead:
Have less than a 1 min? Three takeaways from yesterday
- The AI trend continues with an increasing number of legal tech providers unveiling AI-enabled features. This trend will continue and intensify with a large legal technology conference being held next week.
- Given the SEC's new cybersecurity disclosure rule, legal professionals are urged to evaluate their firm's cybersecurity measures to avoid potential legal implications. Furthermore, the rising legal service rates indicate that a firm's decisions on service costing and consequent market positioning should factor in client demand.
- The increasing emphasis of legaltech companies on user-oriented product design suggests a shift in the industry. Legal knowledge workers should align themselves with this trend by ensuring their services not only incorporate cutting-edge technologies but also prioritize user accessibility, ethical standards, and the overall client experience.
Briefing
Here's what happened in legal tech recently...
The launch of ShareFile for Legal by Cloud Software Group's business unit, targeted at improving client experience in law firms made headlines. Startups like Definely and Clearbrief were in the spotlight for their innovative use of AI in enhancing efficiency in legal workflows and legal writing, respectively. The SEC's new cybersecurity disclosure rule also garnered attention for its potential impact on shareholder lawsuits.
Trends
Data-driven predictive approaches are gaining popularity, changing the skillset required for legal executives. AI-driven technologies like natural language processing and machine learning are on the rise, with companies like Definely using these to aid contract management. Concerns around data privacy, intellectual property, and cybersecurity related to the use of Generative AI tools like ChatGPT were noted following a recent survey by Gartner. Legaltech companies are increasingly collaborating with management platforms; the partnership between LiquidText and iManage Work is a case in point. Companies are leveraging AI for more than just analysis- Litera's addition of AI-powered smart summaries to its contract review software Kira is an example. Meanwhile, the trend of restructuring support staff in law firms also came to light following a study by BigHand.
Analysis
AI is reshaping the legal industry, enabling more efficient process management and decision-making. AI's potential extends beyond cost and time efficiency, enhancing the value of legal professionals within businesses. However, the swift adoption of AI also brings challenges, such as data and cybersecurity risks, reinforcing the need for tackling these issues head-on through robust controls and diverse teams in risk management. The SEC's new cybersecurity disclosure rule should compel companies to maintain rigid cybersecurity measures, considering the potential legal implications. Additionally, the rise in legal service rates, as reported by the Thomson Reuters Institute, suggests client demand could steer future market behaviors. Finally, companies emphasizing a user-oriented approach in their product design, like Definely and Agiloft, signal an important shift in the industry's approach, balancing cutting-edge technology with user accessibility and ethical standards. Overall, it was an eventful day, marked by innovative collaborations, technological advances, and noteworthy industry trends.
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Key stories
The shifting landscape of the legal sector, characterized by declining client demand, is driving many law firms to reevaluate their support staff structures for cost-cutting and efficiency, according to BigHand's comprehensive research. Recent findings demonstrate 93% of law firms have made structural changes in the past two years, and 63% plan to hike their secretary-to-lawyer ratios in the next two years. Many are moving towards a more centralized, team-oriented model, and are investing in workflow technology to enable this transition. This approach aids in managing staff attrition and reducing costs associated with lawyer-administered tasks, while preserving service quality. The research signals a definite shift away from traditional support staff structures towards more flexible, technology-enabled models.
Rate hikes, demand growth boosted law firm profits in Q2 (Legal Dive - Latest News)
The Thomson Reuters Institute reports that in Q2, law firms raised their worked rates by an average of 5.9% compared to the same period last year, aiding profitability. This growth outstripped Q1's rise of 5.5%; at the time the largest quarterly increase since the 2008-09 financial crisis. Demand for legal services also rose, up 1.5% YoY, driven by countercyclical areas such as bankruptcy and labor and employment. For instance, Q2's demand for bankruptcy law surged by 5.7% YoY. Litigation demand increased by 4% YoY, marking the second-highest quarterly rise since 2010. These results indicate a potential full-year positive market in 2023. However, law firms will have to balance headcount, expenses, and shifting practice area growth to maintain profitability.
All stories
Hugo Seymour's article discusses the use of artificial intelligence (AI) in enhancing operations in legal departments. AI helps legal professionals handle cases more efficiently and transforms their interaction with legal documents. Seymour highlights the significance of a data-driven approach, shifting from reactive to predictive, which can boost their value in a business. The evolving legal operations landscape is also altering the skillset needed for Chief Legal Officers and General Counsels.
The American Association of Law Libraries' annual conference was criticized for disorganization and lack of clear purpose, partly due to a scattered layout. The main issue, however, was the uncertainty caused by the rapid rise of AI in the legal profession. Despite these challenges, the author underlined the crucial role of law librarians in the AI era.
Your Legal Skills Can Enhance AI-Generated Outcomes (Technology Archives - Above the Law)
The article highlights the role experienced lawyers can play in improving the quality and validity of AI-generated content. It argues that by employing their legal skills such as asking direct questions, understanding context, identifying illogical details, cross-examining AI outputs, and guiding AI with legal precedents, lawyers can ensure AI content meets legal standards. The integration of these skills with critical thinking could revolutionize law practice and enhance lawyers' productivity.
Unlocking Innovation: Definely’s Blueprint for Disrupting Contract Workflows (Fringe Legal)
Definely, a legal tech startup backed by Microsoft, is leveraging natural language processing and machine learning to improve contract drafting, reviewing, and negotiation. The startup, founded by ex-lawyers, aims to enhance efficiency and accessibility in legal workflows. Definely's approach includes launching a minimum viable product, refining design based on user feedback, and cautiously integrating emerging technologies like AI, while upholding ethical standards.
Cloud Software Group's business unit, ShareFile, has launched ShareFile for Legal, a secure platform designed to improve client experience in law firms. The solution aims to speed up client onboarding, manage document-heavy workflows, and boost security for personal identifiable information. It includes features for task management, security alerts, and integration with QuickBooks and Salesforce. The platform is intended to streamline non-client-facing billable work, which takes up 20 hours or more weekly for 75% of legal professionals.
Document analysis platform, LiquidText, has partnered with iManage Work, a management platform for legal firms. The collaboration aims to enhance reading, document analysis, annotation capabilities, and document and email management for users, thereby increasing efficiency and productivity. The integration will allow effortless import from iManage and automatic saving of document annotations. It will be compatible with Windows, Mac, and iPad devices.
Generative AI quickly rises ranks among leading enterprise risks (Legal Dive - Latest News)
Enterprise risk executives are increasingly concerned about risks posed by Generative AI tools such as ChatGPT, including data privacy, intellectual property, and cybersecurity, according to a Gartner survey. The survey suggests legal leaders should implement controls on high-risk AI tools, involve diverse teams in risk management, and conduct early privacy impact assessments. The survey also identified third-party viability and financial planning uncertainty as top emerging risks.
SEC cyber rule opening can of worms over insurance coverage (Legal Dive - Latest News)
The new cybersecurity disclosure rule from the SEC could lead to more shareholder lawsuits following security breaches, with potential gaps in coverage from D&O and cybersecurity insurance policies. The rule mandates companies to report breaches within four days and periodically update on their security measures. However, many D&O policies do not cover cyber incidents and vice versa. With cyber insurance premiums having already doubled since 2019, companies may encounter higher costs or additional policy exclusions.
The National Labor Relations Board (NLRB) has found Starbucks Corporation guilty of violating labor law by improperly using its civility rule, according to a ruling published on August 9. The decision, which follows worker complaints about anti-union behavior, represents a breach of employment rights and may have serious consequences for the company.
Level Legal acquires PC Forensics (Legal IT Insider)
Dallas legal services firm, Level Legal, has acquired digital evidence consultation company, PC Forensics. This acquisition will allow Level Legal to expand its services to include data collection, culling, and document preparation for legal reviews. PC Forensics founder, David Greetham, who has previously consulted for the White House and Harvard University, will head Level Legal's forensics team.
Agiloft has introduced AI Trainer, a tool that enables non-technical users to personalize their contract review process using artificial intelligence (AI). The tool provides a no-code platform for users to build their own AI models to streamline contract review. Utilizing Agiloft's proprietary technology and Google’s BERT, AI Trainer allows users to mark specific clauses and train the AI to identify similar clauses in future documents, enhancing automation in contract analysis.
Litera unveils new gen AI capabilities in Kira, led by smart summaries (Legal IT Insider)
Litera has added new AI capabilities to its contract review software, Kira, to aid legal professionals in analyzing contract data. The updates, powered by GPT 3.5 in Azure, include smart summaries for efficient data analysis. In the future, Litera plans to enable natural language queries for contract information and project setup. The ultimate goal is to provide contract clause implications for clients and generate due diligence reports.
Legatics raises £4m to fuel growth, including expansion into the US (Legal IT Insider)
UK legal project management platform, Legatics, has secured £4m ($5.1m) in a post-Series A funding round led by FINTOP Capital. The funds will be used to expand into the US market. As part of the deal, representatives from FINTOP Capital and Gresham House will join the Legatics' board. The company's platform, Legatics 2, is used by firms such as Allen & Overy, Dentons, and DLA Piper.
Legal tech startup Clearbrief has launched two AI-driven features, Hyperlinked Timeline and Ask Your Docs, to enhance legal writing. The Hyperlinked Timeline uses AI to develop a case chronology with links to source documents. Ask Your Docs enables users to ask their document sets specific questions, with AI suggesting answers. These features, built on Microsoft’s Azure OpenAI and Clearbrief's proprietary technology, aim to improve accuracy and efficiency in legal work.
Legal tech company Litera is launching a new feature, Smart Summaries, for its AI-powered contract analysis tool, Kira. The feature uses generative AI to create contract summaries, assisting legal professionals in providing strategic advice. The release is planned for late August, with a demonstration at ILTACON. The introduction of Smart Summaries marks the start of Litera's increased emphasis on generative AI technology.
The article underlines the significance of vocabulary enhancement for effective legal communication, recommending word games like Wordle and Spelling Bee to learn new words and their meanings. These games, including those from Merriam-Webster, also reportedly boost cognitive function and serve as a stress-reliever. However, the article warns against overindulgence in these games.
What To Expect At ILTACON 2023 (Technology Archives - Above the Law)
The International Legal Technology Association (ILTA) is planning a landmark ILTACON23 conference, focusing on emerging legal technology, AI, automation, and cybersecurity in the legal sector. The event will offer educational sessions, networking opportunities, and product information, along with unique experiences like the Buddy program for new attendees. The conference aims to deliver innovative content to its members and sponsors.
Cybercriminals are increasingly targeting law firms, resulting in data breaches and reputational damage, says Oliver Patterson of VIPRE Security Group. He recommends proactive measures such as comprehensive email security solutions to prevent spear phishing and misaddressed emails. The solution should include configurable settings, scalable deployment, and a Data Loss Prevention module for sensitive data. Patterson stresses that protecting client information is not only a legal obligation but also a sign of professionalism and trust.
NetDocuments, a top cloud platform for legal professionals, has been listed in the Inc.5000 fastest-growing private companies in America for the second year in a row, advancing 476 places. The company credits its success to innovation, customer communication, and resilience. Despite challenges like inflation and hiring issues, NetDocuments has spurred economic growth through rapid revenue increases and investment in cloud and AI innovation.
Agiloft, a contract lifecycle management (CLM) leader, has introduced AI Trainer, a model training tool for non-technical users to customize contract review and analysis. The tool enables users to train AI to identify key terms and clauses, speeding up the contract review process and uncovering valuable contract data. AI Trainer provides a no-code environment for creating AI models, helping legal and contract teams enhance their contract automation process.
Maptician's 2023 Attorney Engagement Survey reveals the importance of 'presence' technology and hybrid seating strategies in boosting attorney engagement in law firms. The study also finds that 60% of firms have yet to adopt technology to support hybrid work, leading to underutilization of space, with unused real estate costing firms $74.5 million monthly.
Legaltech firm Legatics has secured an additional £1.1mn investment from Gresham House Ventures, as part of a £4mn funding round led by FINTOP Capital. The funds will be used to improve the AI functionality of Legatics 2, a second-generation platform, and to facilitate expansion into the US market. The initial £3mn investment in 2021 helped the company double its customer base and develop Legatics 2, which is used by leading law firms in over 60 countries.
UK law firm RWK Goodman has integrated Tiger Eye Send and Sign into its digital strategy to enhance efficiency. The tool, which integrates with iManage and DocuSign, allows legal teams to send documents for signature directly from iManage, automatically filing signed documents in the system. This aims to streamline contract workflows, improve user experience, and support the firm's 575+ staff across eight locations in delivering advice more efficiently.
