Investments in legaltech are projected to rise threefold in the next three years, but lawyers suggest caution as technology still has a long way to go before it can compete with human analytical skills, which will continue to determine the quality of legal services.

“Complex transactions don’t just need analytical skills, but also the experience and ability to come out with out-of-the-box solutions to vexatious issues. What legaltech products may be able to do is to make life easier for the lawyers  by addressing the more rudimentary and rote parts of the work-flow,” said Anupam Shukla, partner at Pioneer Legal.  

Ajay Bhargava, partner at Khaitan and Co, says: “Legaltech hasn’t substituted the human analytical skills but has complemented it. Legaltech cannot substitute libraries, reading rooms and physical access to books, research material, etc.” Access to legal technology is one thing, to make the best use of it is another” he added.

“We are part of a highly competitive market, where quality work and the speed of service delivery are the top criteria for success. Even the hiring process for firms such as ours entails a lot of work and scrutiny where legal technology is a useful tool, Bhargava said.

Tech experts, however, insisted that now is the near-perfect time for law firms and lawyers to go in for legaltech investments. They cite reasons other than market-size or growth potential, and stress the importance of enterprise-wide solution (ELM).

Customer demand scenario is set to see an uptick after two very tough years of the pandemic. Given the hyper-competitive nature of most industrial or consumer markets, firms having the edge will be in a better situation to cash in and win customers” said Praveen Kulkarni, co-founder and director of PracticeLeague, a legaltech company.

Besides, the Indian markets are now well connected to global markets and trends, which domestic companies have to keep in step with their overseas partners as the entire ecosystem too is now moving towards automation, he added.

“Substantial reliance can be placed on legaltech solutions only much later. Further, it is always difficult to get the workforce to adapt to the new legaltech solutions. While the focus on cutting-edge tech solutions is good, the standard software products and services relied on by lawyers everywhere themselves would need to improve first,” said Shukla.

The barriers

There are many impediments to large-scale penetration of legaltech and this has been witnessed globally.  

“We have a functional approach towards technology and use it whenever we feel that its actual usage will be of advantage to us. There are in the offing many predictive technologies being worked on using artificial intelligence, but that is something which a firm will utilise only after it is tried and tested, as in matters of technology there is actually a second-mover advantage. Technology, according to me, should be utilised only after it has been tried, tested, and validated by one’s peers,” said Raian N Karanjawala, managing partner of Karanjawala & Company.

Komal Gupta, chief innovation officer at Cyril Amarchand Mangaldas (CAM), listed out three certain areas of concern  — change management, proof of concept and choice.  She noted that for years lawyers have been comfortable working in a certain way and introduction to tech could make them  uncomfortable.

Secondly, success stories from counterparts would only enhance the interest in legaltech and validate its outcome. Thirdly, since the market is flooded with products providing similar solutions, choosing the right one for your firm needs utmost care during the evaluation phase.

Legal experts feel that finding the right talent in the innovation and legaltech space is a big challenge for law firms. “Since this is a very slow and difficult journey and achieving tangible results takes time, it is important for the talent to be self-motivated, resilient, creative, dynamic, and having a never-give-up attitude,” said Bishwajit Dubey, partner at CAM.

“At the top is the lack of adequate understanding and knowledge of legaltech space which includes awareness of the available automation tools and their impact on business and productivity. Secondly, it’s often incorrectly assumed that the legaltech solutions are expensive and difficult to implement, which may have been the case with the traditional systems as some were complex to install  and required frequent customisation. However, there is a conscious effort to change that with ready and off-the-shelf solutions which are quick to implement and can even be adopted by small to mid-sized companies without breaking the bank,” said Kulkarni.

And finally, there are challenges associated with budgetary constraint as only around 5% of the total corporate budgets are expected to be allocated to legal teams in the future, up from the current level of 3.9%, Praveen added. However, big firms don’t seem to worry about economic viability of the tech as its benefits outweigh costs.

Of course, a law firm may not need to implement every type of legal technology. They can choose the tools which are going to have a net positive impact on the activities they undertake more regularly or services they usually render.

“Costs can be managed this way. And, ultimately if the tool helps save man-hours which can be better deployed elsewhere, the economic viability of such technology solutions will be evident,” said Shukla.