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LegalTech: How Modern Technology Transforming the Legal World?

We have written on the blog several times about the challenges that the latest advances in Artificial Intelligence (AI) pose for lawmakers, as well as the details of many of the technologies that are now shaping our lives in one way or another. Less has been said, however, about the impact of computer software in the past, and now mainly of artificial intelligence, on the everyday work of lawyers. This area of research and development, i.e. software that processes legal texts and assists lawyers in their work, is so prominent that it is usually referred to as Legal Technologies (LegalTech).

Source: DALL E 3.

If you follow the news, you will see that almost every year, there are news reports that foresee a radical and dramatic reorganization of the labor market in connection with some kind of new technology. The reality (even in the case of Generative AI – GAI) is much more nuanced than that, and the direction of progress is much more organic. Right from the emergence of the early AI-based software, it is true that for most professions we have witnessed a kind of gradual evolution. The adaptation of most technological innovations does not bring leapfrog changes, but rather the standardization and systematization of routine activities and the streamlining of business operations.

In fact, in many industries and disciplines, the convergent development of three global trends is currently driving innovation.

  • Thanks to digitization, more and more data is becoming available in a form that can be easily processed by computers.
  • The drive for automation is an inherent need in most workflows, especially in processes that require little creativity, can be standardized, and/or are repetitive. Behind this lies mainly the need to continuously increase efficiency.
  • Finally, AI includes the two in a unified framework. Today’s machine-learning algorithms have huge data requirements, but they can be used to replace human labor for an increasing number and level of processes.

These trends are so pervasive in the world economy that almost no sector is immune to their effects. Not surprisingly, the legal profession is no exception.

Thanks to the technological advances already mentioned, we are now surrounded by a wealth of digital data in the legal domain, which also affects the production and management of legal texts. Word processing tools and digital information have become easily accessible, which facilitates the production of large volumes of text with professional content. In addition, there are now applications that can generate professional texts based on certain attributes. All this, as a kind of self-exciting process, is creating new challenges for professionals to keep up to date with changes in their field, often also leading to the use of semi- or fully automated solutions for day-to-day work. These changes are particularly marked in the case of law, where lawyers need to be familiar with the full body of legislation and case law in the area they represent. If an important piece of information is overlooked, it can easily be to the detriment of the client.

To put it briefly, LegalTech in its original form was born precisely out of the need to organize the vast body of law more quickly and to search more efficiently between legal documents.   As the first pioneer of legal technology, the Lexis development of the “UBIQ” terminal, introduced in 1973, is worth mentioning. It was the first modern tool to make contemporary case law digitally searchable. It was a breakthrough, speeding up work that had previously taken weeks to complete on paper alone to days or even hours. Soon after, it became possible to edit documents digitally, and less than 6 years later, many large law firms had already started using the new technologies.

An indication of how widespread this application is that in the US alone, the LegalTech sector is estimated to generate tens of billions of dollars in revenues in 2022 alone. But what technologies are we talking about exactly?

In its paper, Stanford Law School identifies three main areas into which law-related automation, decision support, or even search services can be divided. In this system, we can distinguish between developments in the areas of legal Information Retrieval (IR), legal infrastructure, and computational law. Of these, legal IR includes technologies that help to find legally relevant information more efficiently (e.g. semantic-based search as opposed to traditional character-based search). Legal infrastructure technologies are systems and platforms that help connect parties interacting in the legal system more efficiently. Computational law technologies are perhaps the most extensive system, as they include software designed to interpret legal texts, automate processes, or support decision-making of a legal nature.

Of course, this is just a classification of sorts, we must remember that LegalTech is about as complex a concept as AI. The latter is also an umbrella term under which many different trends and specific technological solutions can be classified. Similarly, in the case of LegalTech, the technologies listed so far have been mainly those that facilitate the practice of law for lawyers. However, technologies that help consumers access legal expertise or access to justice are just as important, given that the core of the legal profession is to serve the interests of clients. They aim to expand Access to Justice for disadvantaged people who are too often excluded from the traditional legal service model.

In a broad sense, the latter could include procedures such as making the texts of the legal domain more accessible by means of software. Since the advent of the Plain Language Movement in the 1970s, such work has been largely manual, involving experts. In recent years, however, there has been a slow but steady development of tools to support plain language drafting. There are now several tools available (even free of charge) that can support the work of experts with automated drafting suggestions (e.g. Hemingway editor, Grammarly). But research is also underway on how machine learning algorithms, possibly Large Language Models (LLMs), can be used effectively for this purpose.

It can be seen, therefore, that LegalTech is more a name for a way of thinking about the management of legal data and texts than a specific technological trend. This is all truer since the processes and tools (databases, Machine Learning, etc.) are commonplace. What is key here is in fact the necessary domain adaptation, which means applying solutions used elsewhere to legal data. This involves both assessing the needs of the legal profession, or indeed of lay people who meet the law, and analyzing the specific nature of legal data and developing software to meet them.

In our next post, we will therefore try to shed some light on the practical applications at the intersection of IT, AI, and law that are already available today to facilitate the work of legal practitioners.

István ÜVEGES is a researcher in Computer Linguistics at MONTANA Knowledge Management Ltd. and a researcher at the Centre for Social Sciences, Political and Legal Text Mining and Artificial Intelligence Laboratory (poltextLAB). His main interests include practical applications of Automation, Artificial Intelligence (Machine Learning), Legal Language (legalese) studies and the Plain Language Movement.

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