Jun 30th: Navigating Legal Tech Funding, AI Advancements, and Cyber Threats

Explore the evolving legal tech landscape, focusing on AI integration, cybersecurity, and data management challenges, while navigating ethical concerns and regulatory hurdles.

Jun 30th: Navigating Legal Tech Funding, AI Advancements, and Cyber Threats

Welcome to your Law Tech briefing for Jun 30th, covering what happened in legal tech recently.

We covered the Thompson Reuters x Casetext acquisition earlier this week - you can find an in-depth analysis here. We won't be covering that topic in this issue.

TLDR; Listen instead:

Have less than a 1 min? Three takeaways from yesterday

  1. Embrace AI but Stay Informed: AI tools like LexisNexis's Agreement Analysis and DraftWise's contract drafting platform are revolutionizing legal processes, making them more efficient and accurate. However, it's crucial to stay informed about the ethical and legal implications of AI use, especially concerning data privacy and consent.
  2. Prioritize Cybersecurity: The Cyber Threat Report by the NCSC underscores the importance of robust cybersecurity measures. As law firms increasingly rely on digital tools, they become more vulnerable to cyber threats. Investing in comprehensive cybersecurity strategies, including employee training and robust incident response plans, is no longer optional but a necessity.
  3. Implement Effective Data Management Strategies: Unnecessary data storage is costing law firms significantly. Implementing data retention and disposition policies and investing in technologies for effective data management can not only reduce costs but also decrease vulnerability to data breaches.


The legal technology landscape continues to evolve, with a focus on cybersecurity, AI integration, and data management. The UK's National Cyber Security Centre (NCSC) has released a Cyber Threat Report aimed at the legal sector, providing guidance on how to protect against cyber attacks. Meanwhile, LexisNexis has introduced an AI tool to simplify transactional agreements, and DraftWise has secured $5 million in funding to enhance its AI platform for contract drafting.


The integration of AI in legal technology is a growing trend. LexisNexis's new AI tool, Agreement Analysis, uses AI to extract and suggest alternate clause language from documents. Similarly, DraftWise uses AI to enable attorneys to draft and review contracts more efficiently. However, the use of AI has also raised concerns, as evidenced by a class-action lawsuit against OpenAI and Microsoft alleging copyright and privacy law violations.

Cybersecurity remains a key concern for the legal sector. The NCSC's Cyber Threat Report emphasizes the need for law firms to protect themselves against cyber attacks. Additionally, law firms are grappling with data management challenges, with unnecessary data storage costing UK law firms £3.7bn annually.


The legal sector's increasing reliance on technology presents a complex landscape of opportunities and challenges. The integration of AI tools in legal processes is a significant development that can streamline processes, improve efficiency, and potentially transform the practice of law. For instance, LexisNexis's new AI tool, Agreement Analysis, and DraftWise's AI platform for contract drafting are examples of how AI can automate and enhance traditionally manual and time-consuming tasks. This not only saves time but also reduces the risk of human error, leading to more accurate and reliable outcomes.

However, the use of AI also raises legal and ethical questions. The class-action lawsuit against OpenAI and Microsoft is a stark reminder of the potential pitfalls associated with AI. The lawsuit alleges that these companies used private information without consent to develop their AI technologies, highlighting the tension between technological advancement and privacy rights. This case underscores the need for clear guidelines and regulations around AI use, particularly in terms of data privacy and consent. It also raises questions about the accountability of AI developers and the need for robust mechanisms to ensure that AI technologies are developed and used responsibly.

Cybersecurity continues to be a critical issue for the legal sector. The release of the Cyber Threat Report by the NCSC underscores the importance of robust cybersecurity measures. As law firms increasingly rely on digital tools and platforms, they become more vulnerable to cyber threats. These threats are not just limited to external attacks but also include internal threats, such as data breaches due to employee negligence or insider threats. Therefore, law firms need to invest in comprehensive cybersecurity strategies that include employee training, regular system updates, and robust incident response plans.

Data management is another significant challenge for law firms. The report highlighting that unnecessary data storage is costing UK law firms £3.7bn annually underscores the need for effective data management strategies. Law firms often store vast amounts of data, some of which may be redundant, obsolete, or trivial. This not only leads to increased storage costs but also makes firms more vulnerable to data breaches. Therefore, law firms need to implement data retention and disposition policies and invest in technologies that can help them manage their data more effectively.

The legal sector is at a crossroads. On one hand, technological advancements offer unprecedented opportunities for efficiency and innovation. On the other hand, they present significant challenges in terms of privacy, security, and data management. The key to navigating this complex landscape lies in adopting a forward-thinking approach, prioritizing cybersecurity, ensuring the ethical use of AI, and implementing effective data management strategies.


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Key stories

DraftWise raises $5m and adds Orrick to its law firm investor base (Legal IT Insider)

US contract drafting startup DraftWise has raised $5M in funding, led by EarlyBird and with participation from strategic investors, including global law firm Orrick Herrington & Sutcliffe. The company, which graduated from Y Combinator in 2020 and joined MDR LAB's Improve program, provides a platform to help attorneys draft and review contracts faster using artificial intelligence. DraftWise integrates with document management systems and other knowledge management resources, allowing it to secure the application of private legal machine learning (LLM) to law firm data. With the new funding, DraftWise plans to develop its generative AI platform further, aiming to deliver better client outcomes and expand its reach among law firms.

New Law CLE Australian Legal Industry Report 2023: Legal Industry Optimistic Despite Recession Threats (Legal Technology News - Legal IT Professionals | Everything legal technology)

The New Law CLE Australian Legal Industry Report 2023 reveals that small and medium-sized law firms in Australia are optimistic about revenue growth, despite the threat of a recession and a slowdown in spending. Only 12% of respondents forecast a decline in revenue, while nearly a third expect growth of over 10%. The report also highlights the challenges faced by smaller legal practices, including lack of time, increased client expectations, and lack of staff and resources. Interestingly, marketing received the top vote as the investment priority for law firms in 2023, indicating a shift towards viewing themselves as traditional businesses that need to build their brand and generate leads. Moreover, the report indicates a shift away from billable hour pricing models, with more firms adopting fixed fee pricing. This is seen as a response to the commodification of legal services and the need to improve client retention. The report also highlights pricing trends in different areas of law, with corporate law and intellectual property law yielding the highest hourly rates and finance law remaining above average in profitability. It also emphasizes the role of legal technology in the industry, with respondents feeling that technology makes work more enjoyable and profitable. There is a belief that AI-enabled tools will make lawyers more valuable, although concerns remain about the impact on traditional billing structures and roles. Overall, the report provides insights into the current state of the Australian legal industry and its response to various challenges and opportunities.

Why law firms must conquer their data mountain - Part 1 (Legal Technology News - Legal IT Professionals | Everything legal technology)

Law firms are facing increasing risks due to the excessive amount of data they retain. A survey conducted in April 2023 found that 41% of the content stored by UK private sector IT leaders has no reason to be kept, resulting in an annual cost of £3.7 billion. This unnecessary expense is worsened by the current climate crisis and rising energy costs. The American Bar Association's cybersecurity survey in 2021 revealed that only 53% of respondents had a policy to manage data retention, indicating room for improvement in law firms' information governance. Additionally, the move to cloud-based data storage and rising storage costs further add to the financial burden. Law firms are also at a higher risk of cyberattacks due to their accumulation of excess data. Regulatory compliance is another concern, as storing data beyond the required retention period can lead to fines and reputational damage. Therefore, law firms must adopt a methodical and pragmatic approach, including identifying and building a committee, understanding the data they have, developing a retention and disposition policy, executing the policy, and making destruction decisions.

Lawsuit seeks to curb AI rush, hold OpenAI accountable for stolen data (Legal Dive - Latest News)

In a recent development, a California law firm has filed a lawsuit seeking an injunction against OpenAI and Microsoft for allegedly using scraped data from millions of internet users without their consent. The lawsuit highlights concerns about the unauthorized use of data by AI models and raises questions about the control that developers have over evolving software. The plaintiffs argue that OpenAI has been unlawfully collecting personal data to train its AI products, including ChatGPT. The charges draw parallels with similar allegations against Clearview AI, a facial-recognition company. The lawsuit lists multiple counts against OpenAI, Microsoft, and their alleged violations of various privacy and consumer protection laws. As the legal battle unfolds, the case may shed light on the ethical and legal considerations surrounding the use of personal data in AI applications.

Below are key stories from earlier in the week, which we didn't share as they would have been overshadowed by the TR-Casetext news.

The UK Cyber Threat Report – “If you only read one cyber report this year, read this one” (Legal IT Insider)

The National Cyber Security Centre (NCSC) has released a Cyber Threat Report focused on the UK Legal Sector. The report highlights the various threats faced by the sector, including ransomware attacks for financial gain and IP theft by nation-states. The 2023 version of the report includes input from NCSC and various industry partners, making it a comprehensive resource for raising awareness of cyber risks in law firms. Andrew Powell, CIO of Macfarlanes, emphasizes the importance of the report for law firms' executive teams and IT professionals. The report provides guidance on how to be more resilient against cyber attacks. This report is essential reading for anyone in the legal sector concerned about cyber threats.

Economics factor into litigation decisions, GCs say (Legal Dive - Latest News)

The survey by Ari Kaplan Advisors reveals that the general counsel (GC) expects a more aggressive litigation landscape in the coming years due to economic uncertainty. However, the pursuit of meritorious cases will depend on the company's cash position. GCs express a desire to work with law firms to mitigate costs and explore options such as litigation funding. The survey highlights that many law firms still adhere to the billable-hour model, posing a challenge to collaboration on alternative financing methods. Liquidity is identified as a key factor in pursuing claims, and GCs are inclined to involve outside law firms or third-party funders to share the risk and control the timing of recoveries. The survey also reveals a lack of quantitative modeling expertise among GCs and their outside counsel, hindering decision-making processes. Overall, GCs are seeking ways to transform their departments into profit centers and expect better communication from law firms regarding legal finance options.

Information sharing called key to GC-CFO relationship (Legal Dive - Latest News)

The relationship between the General Counsel (GC) and Chief Financial Officer (CFO) is crucial in driving effective decision-making within an organization, according to Eric Dutcher, CFO of MBO Partners. While the GC is expected to provide factual information, how it is presented plays a key role in how it is received by the CFO. When advocating for the adoption of legal technology, such as contract lifecycle management (CLM) software, demonstrating the time and resource savings it can generate is essential to gaining CFO buy-in. Dutcher suggests presenting CLM as a means of reducing future personnel spending or as a form of automation that saves staff time. The GC and CFO, both holding support roles, must work together closely in areas such as procurement, contract management, risk mitigation, and information curation. The evolution of these positions has led to increased collaboration and earlier involvement in decision-making processes, contributing to better risk management and business strategy. Dutcher emphasizes that presenting facts in a tailored manner to various audiences is crucial for effective communication, and both GCs and CFOs should go beyond merely answering questions to understand the underlying objectives behind them. By providing additional guidance and strategic input, they can help ensure that decisions are aligned with company goals. Ultimately, the GC and CFO serve as sources of truth, business advisors, and risk mitigators, supporting the overall success of the organization.

All stories

What Law Firms Need To Know About Building A Modern and Secure Data Infrastructure (LawSites)

Law firms are facing challenges in protecting and utilizing their data due to a lack of knowledge and infrastructure. However, Unicourt, a legal data and analytics company, suggests practical frameworks for managing data and building a modern data infrastructure. Jeff Cox, the director of content at Unicourt, provides insights on where law firms should start and how to modernize their infrastructure in his article. The article also discusses topics such as data strategy, cleaning house, cloud advantages, data lakes and APIs, and the importance of hiring the right people.

In the Boston Area? Join Us July 18 For The Inaugural LegalTech Boston Panel Discussion with Three GCs (LawSites)

LegalTech Boston will be holding its first event on July 18, featuring a panel discussion among three chief legal officers from technology companies. The discussion will focus on Boston's distinctive role in the legal tech industry. Margaret Minister from Evisort, Mo Cowan from Devoted Health, and Matt Rowe from Parallel Wireless will be part of the panel. The event is sponsored by Gunderson Dettmer and SkillBurst Interactive, and while it is free to attend, registration is essential due to limited space.

Building Confidence in the Quality of Your Services (Attorney at Work)

The article explores the difficulty clients face in assessing the quality of legal services due to the hidden nature of lawyers' work. It highlights five factors that clients use to evaluate service quality: reliability, responsiveness, assurance, empathy, and tangibles. The article suggests ways for lawyers to shape clients' perceptions, including setting expectations, being responsive, demonstrating expertise, showing empathy, and paying attention to details. It emphasizes the significance of perception and how tangible aspects contribute to clients' perception of quality.

You’ve Got Skeletons In Your Closet (Of Contracts) (Technology Archives - Above the Law)

Legal tech company Catylex has released a new version of its software called Essentials, designed to reduce the time and expense associated with contract analysis. The solution utilizes Contract AI to provide instant comprehension of legal concepts and enables users to search their contract portfolio using a combination of AI concepts and keywords. Catylex's software also includes the ability to create customized tags and automatically tag issues as contracts are uploaded. The company is offering a free trial allowing users to load up to 60 contracts at no cost, with pricing plans starting at $400 per month.

Chambers USA Honors eDiscovery Leader HaystackID in Its Litigation Support Guide for 6th Consecutive Year (Legal Technology News - Legal IT Professionals | Everything legal technology)

HaystackID, a leading eDiscovery services provider, has been praised for its expertise in the 2023 Chambers Litigation Support Guide. The guide recognizes HaystackID's ability to offer innovative solutions to eDiscovery challenges, awarding the company a Band 3 rating. Additionally, Ashish Prasad, the Vice President and General Counsel of HaystackID, received recognition with a Band 2 rating. This marks the sixth consecutive year that both HaystackID and Ashish Prasad have been acknowledged by Chambers. The guide evaluates organizations and lawyers based on their technical legal ability, professional conduct, client service, and other qualities.

Epiq Recognized As 2023 Microsoft Compliance Partner of the Year (Legal Technology News - Legal IT Professionals | Everything legal technology)

Epiq, a legal solutions company, has been named the 2023 Microsoft Compliance Partner of the Year. The award recognizes Epiq's success in developing and implementing customer solutions using Microsoft technology. Epiq's expertise in eDiscovery, legal, and compliance services, along with their commitment to meeting client needs, solidifies their reputation as a trusted advisor in the legal industry. The Microsoft Partner of the Year Awards honor partners who have delivered exceptional Microsoft-based applications, services, and devices. Epiq was specifically recognized for their outstanding compliance solutions and services, helping clients effectively manage their data in the digital era.

Is AI a friend or foe for legal teams? (Legal Dive - Latest News)

Artificial intelligence (AI) is gaining traction in the legal industry, specifically with generative AI tools like ChatGPT. Although there are concerns about potential risks, such as the creation of fabricated cases, AI can be highly beneficial for legal professionals. It can boost efficiency in contract management and ediscovery, offer valuable insights through data analysis, and enhance legal research. To address these risks, legal professionals should embrace a growth mindset, prioritize AI adoption, establish an AI governance framework, start with small AI implementations, and thoroughly review AI-generated work.

Pre-merger review burden to skyrocket under FTC, DOJ proposal (Legal Dive - Latest News)

The Federal Trade Commission (FTC) and the Department of Justice are proposing changes to the Hart-Scott-Rodino form, which would require companies to provide more information during the pre-merger antitrust review process. The updated form would include details such as transaction rationale, investment vehicles, corporate relationships, previous acquisitions, private equity involvement, and labor issues. This change is expected to increase the time needed to complete the form and result in an additional $350 million in legal fees and executive compensation. The aim is to provide the FTC with better information within the 30-day window to determine if further review is necessary.

OpenAI and Microsoft face class action lawsuit for allegedly violating copyright and privacy laws (Legal IT Insider)

OpenAI and Microsoft are being sued in a class action lawsuit by the Clarkson Law Firm, which accuses them of copyright and privacy law violations. The lawsuit alleges that the companies used "stolen private information" from millions of users, including children, without their consent to develop their AI technologies. It also claims that the defendants released the products to the market without adequate safeguards, posing risks to society. The plaintiffs are seeking injunctive relief and compensation. OpenAI and Microsoft have not responded to the lawsuit.

How Generative AI Works (Part II) (Technology Archives - Above the Law)

This article emphasizes the significance of lawyers familiarizing themselves with Generative AI tools like ChatGPT. It highlights the comparison between full-text search engines and the index in a book, explaining how incorporating structure and intelligence in search indexes enhances results. The concept of "type ahead" on smartphones is also discussed in relation to ChatGPT's content generation. The article explores the utilization of Large Language Models (LLMs) to extract intelligence and word relationships. It concludes by highlighting ChatGPT's unique training aspect, setting it apart from other Generative AI solutions.

Helm360 Introduces New Service Solution to Help Law Firms Tackle Billing Backlog (Legal Technology News - Legal IT Professionals | Everything legal technology)

Helm360, a leading provider of modular chatbot and enterprise software solutions for law firms, has introduced a new Billing Support Service to help law firms tackle the billing backlog. The service aims to minimize stress and maximize billing capacity by providing a solution that simplifies workflows and enables firms to focus on high-quality legal work. The Billing Support Service team possesses expertise in legal-sector billing practices and utilizes the Thomas Reuters 3E product suite, which leads to improved efficiency and accuracy compared to relying on temporary administration staff. The service operates on a 24/7 delivery model with a global support team, ensuring billing tasks are completed efficiently regardless of the time zone. Implementing this comprehensive support solution offers law firms various benefits.