5 Legal Technology Trends Changing In-House Legal Departments

Gartner legal technology trends highlight key themes for the coming years, and show General Counsel where to capitalise on legal technology investments to deliver outcomes for the whole business, not just Legal.

In-house legal departments have long been resistant to technology, but the effects of the pandemic forced many to shift gears in 2020 and pursue — or at least actively consider — more extensive automation of certain legal activities. The challenge now is deciding which technologies to embrace to drive real business outcomes.

According to the latest Gartner research, legal departments will have automated 50% of legal work related to major corporate transactions by 2024, and will increase their spend on legal technology 3x by 2025.

Despite these broad shifts, the advisory firm predicts corporate legal departments will capture only 30% of the potential benefit of their contract life cycle management investments by that time.

Just because work can be automated doesn’t mean that it’s simple or easy to succeed, and it’s common for teams to pursue a legal technology roadmap without sufficient regard for business or end-user needs.

The five predictions can help legal leaders plan their legal technology investments and their broader transformation roadmap in 2021 and beyond.

Trend #1 Legal departments will increase their spend on legal tech threefold

Hiring plans have been halted, yet the pressure to do more legal work continues to grow. Legal functions (and their businesses) who aren’t looking to strategies outside of increasing headcount are in the minority.

To manage, Legal functions will start their legal technology journey (if they haven’t already) and businesses are on-board for the ride.

It will become easier than ever to secure C-Suite endorsement and budget for legal technology.

Trend #2 Legal functions will be more than just lawyers

The make-up of the standard Legal function is changing.

Legal is no longer just a place where lawyers give legal advice. In fact, Legal will no longer be a place where everyone needs a traditional legal education. Legal operations, legal project managers, and data scientists are just the tip of the iceberg for the Legal function of tomorrow, with Gartner reporting legal departments will replace 20% of generalist lawyers with non-lawyer staff by 2024.

Trend #3 Almost 50% of legal work related to major corporate transactions will be automated by 2024

With many companies finding their new ‘normal’ after the pandemic, demand for corporate transactional legal work has rebounded.

With the increase in workloads, Legal functions will realise that many contracts they work with are repetitive and with little variance. Leading Legal departments are reducing their reliance on external Law Firms to manage work overflow and finding legal technology partners, like Plexus, to automate increasing proportions of the contract workflow.

In a 2019 survey, Gartner found that 33% of Legal departments were already using legal automation. By 2024 this number is expected to grow to 55% of Legal departments.

Gartner advises, “The key to success is to first identify specific issues that can be solved with automation rather than deploying legal technology in search of a problem.”

Trend #4 By 2025, corporate Legal departments will capture only 30% of the potential benefit of their contract lifecycle management investments

In their article, Gartner warns that Legal functions who rush to introduce legal technology without properly consulting and training their business run the risk of under-utilising their investments. These Legal leaders will inevitably find themselves answering their CFO on why the business hasn’t seen the value Legal had pitched them.

Gartner warns that most legal departments plan poorly for huge projects like introducing legal technology. “A common mistake is to pursue a legal technology roadmap without sufficient regard for business or end-user needs.”

Legal functions should start their legal technology journey with tech that the whole business (not just Legal) will value - like contract lifecycle management.

Trend #5 Legal functions will spend more on non-specialist Legal technology providers

Although specialist Legal technology vendors have been perfecting in-house Legal platforms like matter management and contract management, Legal will also leverage transformation initiatives other functions have implemented.

Technology transformation initiatives are dominating all business functions. Naturally, these functions look towards transforming their legal compliance with platforms they are already familiar with. Platforms like Microsoft, SAP, Salesforce and ServiceNow will likely expand to incorporate Legal applications within their platforms.

Innovative startups are also joining the market with solutions to Legal’s productivity struggles.

Read Gartner’s full article here