Lawyers arrive at a crossroads… is not how another lawyer joke starts. The emergence of LegalTech is a threat and also a tool to the legal profession. It only depends on the approach. In this post, it will be argued that the best way to handle this “danger” is adaptation.

Will the legal profession be lost or transformed in the future? Will the legal profession disappear, or will it just open up to new perspectives? Will there be a need for well-educated legal professionals in the age of advanced technology? Many similar questions arise when legal technology, LegalTech, LegalEngineering, and related fields are discussed these days. And among law students, the threat caused by the development of technology is increasingly dominant. The topicality of the questions is therefore clear, but the answers to them are not as simple, so in this post, I will try to clarify the concepts that are essential to answering these questions.

This blog post will therefore attempt to define the conceptual boundaries of LegalTech, and then examine how the field is developing. The aim is to demonstrate the potential impact these developments could have on future lawyers and the legal profession in the future. Rather than presenting LegalTech as a ruthless enemy that is robbing lawyers of their work, this post will argue that it represents an untapped resource that many of the practicing lawyers do not even think about.

What exactly is LegalTech?

At first glance, finding a definition for LegalTech might seem quite easy—it is technology that is used in the field of law. However, explaining the term by itself is far not the smartest way of describing something, so I would like to take a look at this wide field from two other angles: on the one hand, the tools of LegalTech and, on the other, its purposes.

Due to the diverse technological environment, it is rather difficult to determine which tools are suitable to serve the purposes of LegalTech, which will be described later. Different solutions are needed in the public sector where eGovernance is mainly dominated by e-administration software or case management software enabling the courts to operate electronically. In some states, online court procedures are not entirely strange to citizens mainly because of the Covid-19 pandemic. Other solutions are used by notary publics, where electronic ways of document authentication are most needed. By far the most innovative is the private sector, where law firms and smaller and larger companies use technologies, developed by start-ups or in-house. They can use everything from document automation software supported by artificial intelligence to databases that enable accurate legal searches. They furthermore have software that connects with and advises clients. “Smart contracts” are also available that are written in codes. The German Bar Association, however, does not support this unlimited use of software. It is also argued in court that the monopoly on legal advice is specifically reserved for lawyers and should not be appropriated by emerging LegalTech start-ups. Apart from these problems, it is difficult to categorize the newer and newer emerging technologies within their application fields and it would be impossible to list them altogether. Therefore, another aspect, namely the purpose of the legal technology, can help to navigate through this labyrinth-like mass of information.

The purpose of LegalTech is defined by a group of law firms as supporting and facilitating legal innovation in the areas of transaction optimization, better client-lawyer collaboration, efficiency in the organization and management of legal data, digitalization of law firm operations, and “out of the box” innovative thinking. The UK Ministry of Justice’s workgroup supporting LegalTech highlights the facilitative purpose, both in fields of the culture of legal innovation and the work in the legal sector. Elsewhere legal process automation is identified as part of the LegalTech definition. Overall, most of the LegalTech concepts define legal technology as technologies that specifically assist and support the law, lawyers, and legal services.

What has been described so far paints a complex picture of legal technologies. On the one side of the desired definition, we can see the versatile tools and techniques that are emerging, and on the other side, the support of legal work as the purpose of LegalTech. But we need to add the law to both sides since we are talking about legal technologies. In my opinion, agreeing with Zsolt Ződi among others, LegalTech covers all technologies that can be related to law and used in the field of law. So, in the end, we are back to the definition, which at the beginning of this post seemed flighty at first. It is important to explain that law, in this case, is not just a system of norms, but a parallel dimension consisting of a specific language, a logic, a set of specialists with specific knowledge, and a system of institutions. If we approach the term from this point of view, the technology used for law is legal technology, however simple and demagogic the definition may be. So, a database management software can be a legal technology if it is used to manage legal data, a simple office management program can be LegalTech if it is used by lawyers in their work, and a word processor can be a contract automation tool, a database manager a repository of operative law and decisions of court, and an artificial intelligence-based chatbot a legal assistant.

Evolution of LegalTech

Technology is developing all around us at an exponentially accelerating rate. In law, we had to wait centuries for the application of literacy, and later for printing. With the advent of electronic technologies, new techniques have developed at the rate of decades or even years. Nowadays, we are faced with new phenomena almost every day. This evolutionary curve is also present in the development of legal technologies.

In the age of the ancient oral contracts, stipulatios, writing and their use in law only began to emerge in the 4th century AD, making it possible to prove the content of an obligation by recording stipulatios in writing (i.e. not yet as a written contract), even after the culture of credibility had been destroyed by the barbarians. According to the definition of LegalTech writing, as a new technique used in law at the time, could also qualify as such a “technology”, although they were primitive. So they started the LegalTech 0.0 era, which has been going on for millennia and is still unbroken today. There is still a need for writing in contract law, and the Civil Code of Hungary requires contracts to be in writing in many cases (although in a technology-neutral way).

LegalTech 1.0, as classified by Oliver R. Goodenough, marks the era that began around the 1970s with the advent of office software, primitive electronic tools that assisted lawyers in their work, primarily in the form of office software. M. Ethan Katsh, in his book published in 1995, considers the printer as such a tool, which can also be considered a LegalTech tool, if we consider, for example, the document automation functions of scanning.

The next era of LegalTech, 2.0, coincided with the development of the internet, when software was created to completely replace the work of lawyers in some areas. Contracts can be concluded with a click of a mouse, online repositories of law and decisions of courts facilitate legal research, which no longer requires a dedicated person to do the work, as the workflow can be completed in a fraction of the time it took to search by using keyword searches.

Today, we live in the era of LegalTech 3.0, where more advanced, “high-tech” software solutions are replacing and supporting the work of lawyers, and where the emergence of artificial intelligence and its integration are opening up new perspectives for lawyers. By analysing complex contractual constructs and using large language models, it is now possible to draft legal texts in much less time, which used to take weeks for a team of lawyers. The recently adopted AI act, the EU regulation on artificial intelligence, may also influence future LegalTech innovation. (This topic is further explored in a following post.)

“Just” lawyers or lawyers with adaptable knowledge?

The sharply exponential technological evolution described above can also be seen in the evolution of the LegalTech eras, and although we cannot set a limit to it, we can react to its effects. From the point of view of the lawyers, the emergence of new technologies may have several important effects, which are by no means limited to the claim that they are taking away work.

However, before we completely “mourn” the legal profession, it is worth looking at slightly different aspects. Richard Susskind, for example, discusses the future of the legal profession in his book Tomorrow’s Lawyers. Susskind argues that legal work will be transformed by technology to such an extent that neither the current way of working nor the current legal profession can remain the same. At present, the structure of law firms requires that trainee lawyers/interns primarily do research, while their more experienced colleagues do the more creative, more thoughtful, more legal thinking part of the legal work, taking into account the complexity of their cases and the needs of their clients. Lawyers will have a more important role to play in communicating with clients, reviewing AI tools, and, not least, creating regulations around AI. And most importantly, legal thinking will continue to be the defining attribute of lawyers, which is part of the law, as already mentioned above. It would be an important task for the lawyers of the changing world to prepare now for the change that is visible in the above and to build skills that are not only oriented towards classical legal knowledge but also address certain other disciplines, for example, IT or other sciences. The knowledge of lawyers with this expertise will be the least replaceable by any means. The legal profession will need “men that are bridges between ages” who are able to stay in the labour market and make use of their multi-faceted skills, not only legal skills but also other skills, especially digital ones. As the Future Ready Lawyer 2023 research has shown, the labour market today is looking for “specialized skills.” And legal technologies can support, complement, or, as we have seen, replace paralegal and trainee roles. As the research cited above shows, 87% of lawyers say that legal technology already makes their work easier and more efficient.

Conclusion

Socrates thought that literacy would lead to the dumbing down of humanity, as there would be less need to remember so much and use so much of the brain’s capacity. He believed that only face-to-face communication is the way to transfer knowledge and learn. This may sound like a harsh example, but looking at our generation today, we can see that instead of dumbing down, there is rather a transformation of the way of thinking. Today we still use our brains, if not to memorise, then to interpret, analyse and apply what we read. This is what I think is important in digital challenges, that we face a lot nowadays, to adapt to the needs of a changing environment, to develop our digital skills, and to use the technologies available. In conclusion, legal technology is intended to help lawyers in their work, not to take it away. Although some elements of legal work may be moved to cyberspace in the future, some solutions will still be left to lawyers, and LegalTech tools will be available to help them. While it may sound like a bold statement, it could be accurate to talk about the last generation of what we consider to be the classic legal profession, but it would certainly not be right to bury the profession as such.

Bertalan Máté NAGY is a law student at the Faculty of Law at the Eötvös Lóránd University in Budapest and a scholarship student of the Aurum Foundation. In December 2023, he acquired a certificate at an IT academy for lawyers and gained experience in coding, IT law, and LegalTech. He is a member of the CapsLaw digital law working group of the university that deals with IT law and LegalTech problems.