Flash back to the year 1988 in Vancouver.
That was the year that Howard Shapray QC, one of British Columbia’s most well-known litigators, appeared in the Supreme Court of British Columbia to litigate a multiple pump-and-dump scheme known as United Services Funds vs. Carter & Ward before Madam Justice Mary Southin.
Shapray had an Apple desktop computer called the Fat Macx, which he lugged into court, all ?16 pounds of it, and set it up during the trial in order to cross- examine one of the defendants. On it, he had organized and processed almost all of his evidence in connection with the case, which included records of more than 2two million securities trades from the Vancouver Stock Exchange.
Shapray tells me that Madam Justice Southin, upon seeing a computer in her courtroom on the plaintiff counsel’s table, asked Shapray to explain what it was and then promptly ordered him to shut it down.
Later, however, in her reasons for decision in favour of Shapray’s client, she noted Shapray’s remarkable achievement in obtaining, collating and marshalling hundreds of thousands of pieces of evidence relating to 28 pump- and- dump schemes and bringing the case to trial expeditiously – an achievement, she wrote, that rivalled Cicero’s prosecution of Verres.
Cicero was a lawyer in Rome, who in 70 BC, published five voluminous tomes of evidence and legal arguments against the Sicilian governor Gaius Verras, which came to be known as “In Verrem.”
Shapray was a legal tech trailblazer. In 1988, he wasn’t merely the first lawyer to use a computer in a courtroom in British Columbia; he was one of the first anywhere to do so. Even as late as 2010, only 20% of lawyers surveyed by the American Bar Association were using a laptop in the courtroom.
Since 1988, the legal profession has continued to transform and evolve. Today, it is hard to conceive of litigating a case in court without a computer and the deployment of multiple other legal tech tools.
The growing prevalence of legal tech is part of a cultural revolution changing the delivery of legal services, bolstered by COVID-19. Three recent legal reports, including the Walters Kluwer 2021 Future Ready Lawyer Survey, evidence the way the law is being transformed by legal tech. And it’s easy to see why: the global market for legal tech is worth US$42 billion.
The Kluwer report surveyed law firms and their clients who reported that legal tech is seen as essential to law firm resilience and client services. Eight-two per cent of the largest firm clients said they look to hire law firms that have fully leveraged tech, including predictive analysis, and they’re prepared to outsource beyond law firms if they don’t get it. Global Market Insights Inc. reported that the market for such outsourcing will soon exceed US$30 billion.
If you consider just those two areas – legal tech and outsourcing legal to non-lawyers – the market is US$72 billion, equal to10% of the total annual global legal services spend. In other words, 10% of the market share of legal services now belongs to non-law providers and it’s growing.
Investment into legal tech startups is pouring in from the Big Four, VCs and private equity. For example, in the U.K., legal tech company UnitedLex received an investment of US$500 million; Rocket Lawyer raised US$223 million; and Austin’s DC Disco just announced an IPO under the ticker “LAW” and a US$100 million raise.
Larger legal techs like LegalZoom and Intapp recently filed their S-1s to IPO. LegalZoom aims to “democratize law” by making it accessible to everyone online, especially startup entrepreneurs. In 2020, 10% of new LLCs, 5% of new corporations and 6% of new trademark applications in the U.S. were formed using LegalZoom. The number of clients that represents makes LegalZoom the largest provider of legal services – and it’s a tech company.
Tech companies competing with law firms isn’t new, but the pace with which the Big Four have started buying up legal tech startups certainly is, and so is the pace with which law firms themselves are collaborating with and investing in legal techs.
Elite U.K. law firm Slaughter and May, invested in legal tech startup Luminance, now valued at US$100 million, and Cleary Gotttlieb has a 3% stake in legal tech startup 10BE5. Sprintlaw, one of the fastest growing legal tech firms with revenue growth of 387% in three years, has investors that include lawyers from various firms.
An interesting development in the legal tech space is the fact that many are founded by former big firm lawyers, who not only have domain expertise and understand the services model, but also have an understanding of how legal services could be automated or augmented with machine learning to improve outcomes, improve access to justice or be leveraged to complement, rather than compete with, the practice of law to safeguard clients.
Christine Duhaime is a financial crime expert with Fusion Intelligence.
