TILBURG LAW SCHOOL

LLM INTERNATIONAL BUSINESS LAW

THE IMPACT OF LEGAL TECH ON LAW

FIRMS BUSINESS MODEL
Master Thesis L.L.M. International Business Law

ELENA CATALINA DOBRE

(ANR. 589678)

Supervisors:
Omololu I. Bajulaiye (TLS Department Business Law)

August 2019
Tilburg, The Netherlands
 ABSTRACT

The concept of Legal Tech and its impact on the law system is more debated in the
legal industry than never. The advantages and disadvantages of the new technologies
developments represent an actively discussed topic by legal scholars and legal
professionals.
Even though this concept is still young, worldwide, the business model of law firms
has experienced changes, starting from the billable hours and timesheet system, and
ending with a new business structure. In this context, Legal Tech can bring a range of
solutions, being an attractive system.
On the other hand, the growth of Legal Tech solutions brings pressure on the
traditional law firms business model and constrains the law firms to restructure this
model.
This paper presents the positive changes that Legal Tech brings, as well as the
challenges that the legal system and legal professionals are facing once with the
progress of technology.
Based on the quick development of technology, this research focuses on the relevant
aspects of Legal Tech, which will remain unchanged for some time.
The purpose of this thesis is to describe the fundamental features of Legal Tech and
the transformation of law firms based on digitalisation.
It shows the improvements in the legal system and professions that Legal Tech can
bring, but also the changes that these entities have to implement in order to achieve
efficiency and profitability.
Finally, after perusing this paper, the reader has a solid overview of what Legal Tech
is and how it works and is able to understand the practical aspects of this phenomenon,
in order to adapt the new technology in his daily business.

Tilburg, 18 August 2019

Elena Catalina Dobre

KEYWORDS: Legal Tech ∙ future law firms ∙ business model ∙ future lawyers ∙
artificial intelligence ∙ digitalisation.

2
 ACKNOWLEDGEMENT

I want to thank my thesis supervisor, Omololu I. Bajulaiye, for his expert advice and
guidance throughout the learning process of this project, as well as for the useful
comments, remarks, and feedback.
Additionally, thank you to Professor Erik P.M. Vermeulen, who introduced me to the
legal technology world, and whose enthusiasm for the ‘future challenges regarding
technology’ had lasting effects.
Finally, I must express my very profound gratitude to my family and loved ones for
their unfailing support and continuous encouragement in the last year of studies. Thank
you.

Elena Catalina Dobre

3
 TABLE OF CONTENTS

1. INTRODUCTION ................................................................................................... 6

1.1 About Legal Tech ............................................................................................... 6

1.1.1 New Challenges for Law Firms ................................................................... 9

1.2 Research Questions .......................................................................................... 10

1.3 Thesis Structure ................................................................................................ 11

1.4 Methodology .................................................................................................... 11

1.5 Literature Review ............................................................................................. 12

1.6. Intended Outcome ........................................................................................... 13

2. THE TRANSFORMATION OF THE LEGAL SYSTEM .................................... 15

2.1. The Traditional Law Firm Business Model .................................................... 16

2.2. Billable Hour and Timesheet System .............................................................. 20

2.3. Access to Legal Information and Value Proposition....................................... 21

2.4. New Changes in the Legal System .................................................................. 23

3. MAPPING THE LEGAL TECH LANDSCAPE................................................... 31

3.1. Legal Tech as a Tool and as a Service ............................................................ 31

3.2. Artificial Intelligence in Law Industry ............................................................ 35

3.3. Legal Automation or how to build a Robot Lawyer ....................................... 40

3.4. Document Automation and Smart Contracts for Future Lawyers ................... 43

3.4.1. Document Automation Software .............................................................. 44

3.4.2. Smart Contracts and Blockchain Technology .......................................... 46

4. A NEW BUSINESS MODEL PROPOSAL .......................................................... 51

4.1. Improving Access to the Legal System through Technology ......................... 51

4.1.1. A New Business Model ............................................................................ 53

4.1.2. An Innovative Business Structure............................................................. 55

4
 4.2. The New Client’s Relationship ....................................................................... 57

4.3. The Law Firm and Lawyer of the Future ........................................................ 58

4.4. The Challenge of Adaptation and Keeping Up ............................................... 61

CONCLUSION .......................................................................................................... 65

ABBREVIATIONS ................................................................................................... 67

TABLES AND FIGURES ......................................................................................... 68

BIBLIOGRAPHY ...................................................................................................... 69

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 1. INTRODUCTION

Digital transformation is the redesign of businesses models in the digital age and
represents the process of using digital technologies to create, or modify, business
processes, culture, and clients experiences to meet market requirements.1
Based on this definition, digital transformation is a multidimensional process, which
involves the use of technology solutions.
Digitisation is the process of converting information from analogue to digital, while
digitalisation is the use of digitised data to make efficient ways of working.2
Whereas digital transformation creates new business models and products, it brings
additional competitive conditions for traditional industries, which is the ‘disruptive’
aspect of digital strategy.3
As a condition for a successful digital transformation, to be effective, a digital
strategy should aim to leverage the potentials and opportunities of digital technologies.4
Even though the digital transformation of the legal market is a young concept, it is a
reality that legal providers have to understand and implement, to keep their businesses
profitable. This research paper aims to provide an overview of what Legal Tech is and how
a traditional law firm can apply new technologies without losing its value and status.

1.1 About Legal Tech

Geoffrey Robertson, a human rights lawyer and legal author, considered law as a
system of rules created and enforced through social or governmental institutions to
regulate behaviour.5
The legal field is one of the oldest practices worldwide.
Right from the beginnings, the ancient civilisations knew that they need rules and
punishments to maintain a strict order in their societies.

1
'Getting Started With Digital Transformation: What Is Digital Transformation?' (Salesforce.com, 2019)
<https://www.salesforce.com/products/platform/what-is-digital-transformation/> accessed 30 May 2019.
2
ibid.
3
Micha M. Bues, Digital Transformation: Success Factors in M. Hartung, M.M. Bues and G. Halbleib
(eds), Legal Tech: How Technology is Changing the Legal World, A Practitioner’s Guide (C.H. Beck,
2018).
4
ibid.
5
Jeffrey I. Ross, Book Review: Crimes Against Humanity: The Struggle For Global Justice (International
Criminal Justice Review 2001) 130-133 <https://doi.org/10.1177/105756770101100112>.

6
 However, the era of digital transformation brings new demands from the traditional
legal system regarding the costs and value of the legal services and the way that legal
advice is delivered.
The impact of digital transformation on the legal services also has effects on the legal
professions and, has the ability to transform the legal landscape into an automated
system, but still depending on human engagement and supervision.
The Legal Services Consumer Panel (LSCP) predicts in the 2020 Legal Services
Report that by 2020 will there be ‘less involvement by lawyers in many of the tasks that
until now have made up their staple diet’.6
The Panel also considers that ’in place of lawyers will be greater self-lawyering,
online services, entry by unregulated businesses, and also by regulated providers, such
as accountants and banks’ tasks that until now have made up their staple diet’.7
In the past few years, more Legal Tech startups have been under the spotlight, slowly
disrupting the practice of law, by giving people online access to software and programs
meant to reduce or even eliminate the need of legal counselling.
But not all the startups are related to the replacement of the lawyers in the legal
industry; some Legal Tech solutions aim to help the law firms by providing practise
management, document storage and automation, legal research, electronic discovery and
even accounting tools, as discussed in chapter three of this paper.
Legal Tech or Legal Technology represents the use of technology, advanced
technology and software to provide legal services.
In the last decade, various programs designed by Legal Tech companies were
developed and made available to such as contract generators, legal research software, or
programs which provide tools to assist with the immigration documents. In this context,
when the imagination and capability of the software engineers have reached the climax,
the legal industry has to be prepared for any significant challenge that profoundly
impacts the traditional law system.
Digital transformation means the implementation of technology and advanced
technology in a firm daily work to perform faster and more productive services.

6
Legal Services Consumer Panel, 2020 Legal Services: How Regulators Should Prepare For The Future
(Legal Services Consumer Panel 2014)
<https://www.legalservicesconsumerpanel.org.uk/publications/research_and_reports/documents/2020con
sumerchallenge.pdf> accessed 29 April 2019.
7
ibid.

7
 Scholar and lecturer Richard Susskind predicted in 2016 that ‘artificial intelligence in
law will take off in the 2020s’.8
In addition, he added that ‘Artificial Intelligence and other technologies are enabling
machines to take on many of the tasks that many used to think required human lawyers,
and that’s not plateauing. It seems to be happening at quite a rate’.9
The developments of technology in legal practice, based on the use of artificial
intelligence, can be categorised in the following main applications, the third chapter
approaching some of these fields, as the author considered relevant for this research:10

Main Applications Benefits

Drafting tools
Allow lawyers to review contracts and create
Contract Management
documents with fewer errors and in a shorter time.
Contract Review

Legal Analytics Provide trends and patterns based on past case laws.
Generates results based on the analysis of some
Prediction Technology
patterns that forecast litigation outcome.
Uses electronic data as evidence in civil or criminal
eDiscovery
cases.
Stores a range amount of data that will help lawyers to
Legal Research study legislation, case laws and different practice
areas
Lawyers can perform due diligence easier and faster
Contract Due Diligence
by using a combination of artificial intelligence tools.
Designed to automate highly cognitive behaviours and
Expertise Automation
tasks.11
This tool automates the traditional billable hours'
eBilling
system.
Analyses sizeable intellectual property portfolios to
Intellectual Property
help lawyers to draw insights from the content.

Table 1: Main application of Legal Tech tools in legal practice12

8
Edgar A. Rayo, 'AI In Law And Legal Practice – A Comprehensive View Of 35 Current Applications |
Emerj' (Emerj, 20 May 2019) <https://emerj.com/ai-sector-overviews/ai-in-law-legal-practice-current-
applications/> accessed 22 May 2019.
9
ibid.
10
ibid.
11
'What Is Expert Automation And Augmentation Software (EAAS)? - Definition From Techopedia'
(Techopedia.com) <https://www.techopedia.com/definition/33235/expert-automation-and-augmentation-
software-eaas> accessed 6 June 2019.

8
 It is clear that for the new law firms, the process of digitalisation is a simple path due to
the possibility to build the business model on an independent, efficiency-driven structure.
When it comes to the already existing traditional law firms, the transition to
digitalisation appears to be a massive challenge because they have to deal first with the
common mindsets and patterns.

1.1.1 New Challenges for Law Firms

Legal Tech is a market that improves daily and raises new challenges for law firms
and lawyers. The traditional law firms have two choices: either to comply with the
digital transformation, either to continue the conventional path that the industry
encounters today.
In order to make a decision, they have to consider all the external factors that will
impact their business, such as the increase of competitiveness between the law firms
that implemented the technologies and the traditional law firms, and the increasing
number of active clients that demands a new relationship between lawyer and clients
adapted to the technology developments.
Table 2 below shows a cost-benefit comparison between Legal Tech firms and
traditional law firms from the perspective of modern clients:

Traditional Law Firms Legal Tech Firms

High time Low time
Cost High energy Low energy
High monetary Low monetary
Bespoke Bespoke and innovative
Drive to the office Easily accessible

Benefits Billable hour Alternative billing

Standardised Commoditised
High availability and
Low access to information
access to information

Table 2: Cost-benefits comparison between Legal Tech firms and traditional firms13

12
Adapted from Qian Hongdao and others, 'Legal Technologies In Action: The Future Of The Legal
Market In Light Of Disruptive Innovations' (2019) 11 Sustainability.
13
ibid.

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 Also, another issue that appears to be significant for the legal professionals and their
future represents the new set of skills that they need to embrace.
Back in 2014, the legal scholars John O. McGinnis and Russell G. Pearce stated:

Mixing in human intelligence may assure the best possible result. (…)
Therefore, the disruptive effect of machine intelligence will trigger the end
of lawyers’ monopoly and provide a benefit to society and clients as legal
services become more transparent and affordable to consumers, and access
to justice thereby becomes more widely available.14

But, though all these disruptive changes are fundamentally impacting the legal
system, for the foreseeable future, machines will not be able to speak in court and create
necessary emotional bonds with clients.
Therefore, the automatization of the legal system, instead of being considered as the
end of the traditional legal professions, can be seen as a transition to new forms of work
which requires, first of all, the ability to adapt to technology solutions.

1.2 Research Questions

The American Bar Association voted in August 2012 the Model Rules of
Professional Conduct requiring the lawyers to take into account ‘the benefits and risks
associated with relevant technologies’.15
The increasing incentives for lawyers to become software engineers and for the law
firms to pass through digital transformation, together with the saturation of the market
which pushed significant corporations to adopt Legal Tech products, services and
solutions, is the motivation for the central research question:
• How the development of Legal Tech impacts law firms business model and legal
professions?
In order to provide an objective answer for the main question, the author will
examine a series of sub-questions approached in the sub-chapters of this paper.
• What is the traditional law firm business model, and what changes it will
encounter?

14
John O. McGinnis and Russell G. Pearce, 'The Great Disruption: How Machine Intelligence Will
Transform The Role Of Lawyers In The Delivery Of Legal Services' (2014) 82 Fordham Law Review
<https://ir.lawnet.fordham.edu/flr/vol82/iss6/16/> accessed 5 April 2019.
15
American Bar Associasion, 'Model Rules Of Professional Conduct' (Americanbar.org, 11 June 2019)
<https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professio
nal_conduct/> accessed 5 April 2019.

10
 • What are the leading drivers for change regarding law firms business model?
• What is Legal Tech, and what solutions can it provide for the legal system?
• What are the main legal issues when it comes to the use of technology?
• What are the future perspectives of legal professions?
• What does a future business model proposal look?
The purpose of the sub-questions is to offer a clear overview of the primary matter:
the digital transformation and its influence on prospective legal businesses.

1.3 Thesis Structure

This thesis will be structured into three chapters and will focus on the main research
question and the sub-questions.
In the second chapter, this paper will focus on the traditional law firms business
model and convenient access to legal information.
The author will discuss the conventional mindset of the legal professionals, as well
as the disruption of the legal system regarding the billable hour, timesheet model, and
the firms business model.
In the third chapter, the research and discussion will go through the Legal Tech as a
product, as a service, and as a skill, including explanations of how the technology works
in the law industry and what types of technology can the legal businesses implement in
their structure.
In the last chapter, the paper will cover the benefits of Legal Tech implementation,
together with the legal issues that this new transformation brings to the legal industry.
In the end, the author will provide a collection of solutions for the future legal
businesses models which the traditional law firms can implement to keep up with the
current challenges.

1.4 Methodology
The way the main research question will be answered is by looking first at the
traditional legal system and how law firms are structured.
In order to do that, the author will use the doctrinal method, searching through legal
publication in textbooks and articles, international implemented legislation and

11
practices, making a comprehensive understanding of how the Legal Tech works and
how it impacts the legal system.
Using the same research method, the author will approach the possible solutions and
schemes for digital transformation and will provide a range of outcomes for the law
firms that will want to change to a new business model.
This paper will be treated as a guide that will cover both the advantages and
disadvantages of the use of technology in the law industry, as well as the possible issues
that may occur in practice.
Every sub-question of this research will be answered in the sub-chapters of this paper
by using the same research structure and legal literature, offering a full perspective of
Legal Tech solutions.
As well, some already existing Legal Tech tools will be mentioned in order to
provide examples which will highlight the use of technology in the legal industry.
Also, the paper will provide a variety of data that will sustain the evolution of Legal
Tech worldwide and the growth of the market in the last decade.

1.5 Literature Review

Many recent articles and studies have focused on the impact of Legal Tech on the
future of the legal industry and legal professions.
In support of this research, the author often referred to Markus Hartung, Micha-
Manuel Bues and Gernot Halbleib book on Legal Tech from 2018, How Technology is
Changing the Legal World, A Practitioner’s Guide.
This book is used as the main source and covers different aspects of the Legal Tech
system, starting from the transformation of the legal business industry, including the
historical background and the evolution of the legal system, technology developments,
and concluding with scenarios regarding the future overview of the law firms and legal
professions.
As a secondary source, the research refers to the study conducted by the Boston
Consulting Group and Bucerius Centre on the Legal Professions from 2016, How Legal
Technology Will Change the Business of Law, where the authors explore the
consequences of digitalisation in the legal industry.

12
 Also, the article Legal Technology in Action: The Future of the Legal Market in
Light of Disruptive Innovations from 2019, edited by a team of law professors such as
Qian Hongdao, Sughra Bibi, Asif Khan, Lorenzo Ardito, and Muhhammad B.
Khaskheli is considered in this research.
The article represents a secondary source used by the author in order to provide a
complete overview regarding the drivers for change of legal industry, the market
segmentation, and the demands of the modern clients in terms of cost and legal services
delivery.
Another secondary source represents Legal Tech, Smart Contracts and Blockchain,
Perspectives in Law, Business and Innovation from 2019, edited by Marcelo Corrales,
Mark Fenwick, and Helena Haapio, a collection that brings together legal practitioners
and scholars and provides a global perspective on the use of Blockchain and technology
in the legal industry.
Additional, this research is grounded in various legal articles such as:
• Thrive: A New Lawyer’s Guide to Law Firm Practice by Desiree Moore,
published in 2012 helped the author to deliver in this research a modern outlook
for future lawyers regarding the development of a new mindset and set of skills
adapted to the Legal Tech landscape.
• 2020 Legal Services, How regulators should prepare for the future is a study
conducted by the Legal Services Consumer Panel in 2014 and is used in this
research to underline the impact of technological developments on the consumers
of legal services.
• The Changing Business Model of Law Firms, published in 2017 by Alan Hodgart,
Alan and Rob Ashing, represents the base for a new perspective on law firms
business model and the need for adaptation and keeping up.

1.6. Intended Outcome

Technology is a complex concept that involves not only an ability to comprehend it
but also the capacity to adapt it in daily tasks and responsibilities. It is an integral part of
the present and a substantial part of the future, which makes the digital transformation a
sensitive, but still an important topic.

13
 This paper aims to offer more confidence and trust in digitalisation and gives an
innovative perspective over the Legal Tech industry.
It has the purpose to become a blueprint for future applications of technology in the
law firms’ business model, as well as a simplified guide for future lawyers who accept
the changes in the system and want to adapt to them.
The author is not focused on concluding that Legal Tech is the crucial answer to the
future legal industry, rather focusing on assessing the impact that technology has on the
traditional legal system, with both advantages and disadvantages, and how the
practitioners can overcome these changes in a straightforward manner.
After reading this paper, the reader will understand what technology and Legal Tech
solutions are and what benefits they bring to the legal system and for future lawyers.

14
 2. THE TRANSFORMATION OF THE LEGAL SYSTEM

‘The practice of law’ and ‘the business of law’ are facing massive changes
nowadays; the development of new technologies, a fast-growing market, and the
improved access to data have influenced the way that clients access legal services and,
the way the professionals are delivering these services.
The Figure 1 below shows the growth of the investment in the Legal Tech industry
worldwide in the last four years, at the same time, the market expects an outstanding
increase in value for the next years.

$1.663,00

$400,00
$224,00 $233,00

2016 2017 2018 2019 (Q1)

Figure 1: Investment in Legal Tech worldwide ($M)16

The traditional law firms’ structure has to deal with global competition, alternative
fees arrangements, new regulatory requirements, and new client demands.17
These changes and their continuous development have a significant impact on the
legal market allowing the law firms and legal professionals to increase productivity,
ease the legal services delivery through technology and provide innovative solutions for
their clients while applying fair costs.18

16
Adapted from '713% Growth: Legal Tech Set An Investment Record In 2018' (Forbes.com, 2019)
<https://www.forbes.com/sites/valentinpivovarov/2019/01/15/legaltechinvestment2018/#4df94e337c2b>
accessed 20 July 2019.
17
Investec, ‘Legaltech & Newlaw Q219 Update’ (Investec 2019)
<https://www.investec.com/content/dam/united-kingdom/cib/legaltech/legaltech-newlaw-update.pdf>
accessed 20 July 2019.
18
Hongdao and others (n12) 3-10.

15
 Even though in the last decade law firms have tried to neglect the use of technology
by following a traditional mindset, with the globalization and digitalization of the legal
sector, the understanding and use of technology should become a priority for the law
firms, as well as the reconsideration of an innovative business model and a new billing
structure.
According to the Boston Consulting Group and Bucerius Law School report, the
digital revolution has an essential impact on the law firms’ business model regarding
three main areas:19
• The Structure of the Law Firm;
• Fee Arrangements;
• Value Proposition.
This chapter will provide an overview of the traditional legal structure and mindset,
to understand the changes and transformations of the legal industry in a digitalised
world where Legal Tech has become a necessity.
Also, this chapter will analyse all three main areas that will suffer the technology
developments by underlining the drivers of change for this new market.
Finally, it will provide an overview of the worldwide Legal Tech progress by
continents.

2.1. The Traditional Law Firm Business Model

The concept of ‘legal culture’ has a significant influence on the traditional legal
mindset of law firms and legal professionals. Legal culture establishes some patterns of
legally oriented social behaviour and attitudes, which constitutes the role and the rule of
law within every society.20
Legal culture is about what and how the judicial system is.21
However, the new risk factors such as globalisation, financial crisis, and
technological advances have changed the ‘how to buy and sell legal services’
dynamic.22

19
The Boston Consulting Group and Bucerius Law School, 'How Legal Technology Will Change The
Business Of Law' (The Boston Consulting Group and Bucerius Law School 2016)
<https://docs.wixstatic.com/ugd/b30d31_7b407b2c8c6b44d697957b7fa5db48c8.pdf> accessed 17 May
2019.
20
David Nelken, 'Using The Concept Of Legal Culture' (2004) 29 Australian Journal of Legal Philosophy
<https://www.aslp.org.au/journal>.
21
ibid.

16
 The need for legal services has significantly increased in the last years, creating new
pressure for the law firms, either from the market due to the increased competition,
either from the clients due to their expectation to ‘deliver more at less cost’ and higher
quality of the services23.
The last few years have been a period of change for law firms and the legal industry.
As shown in Figure 2, many law firms have grown in both size and revenue while
becoming international in scope, but their business model always remained the same.

$968,00 $1.011,00
$886,00 $925,00
$815,00 $849,00

2016 2017 2018 2019 2020 2021

Figure 2: Growth predictions of the global legal market ($B)24

A law firm represents a business entity formed by one or more lawyers for the
purpose to engage in the practice of law, having as its leading service the guidance of
clients regarding their legal rights and responsibilities and the representation of them in
the matters where legal assistance is required.25
Over time, the legal services have been delivered to clients by law firms, wholly-
owned and controlled by lawyers.

22
Mark A. Cohen, 'Clients Need Legal Services But Not Necessarily Lawyers' (Forbes.com, 2019)
<https://www.forbes.com/sites/markcohen1/2019/02/19/clients-need-legal-services-but-not-necessarily-
lawyers/#3a5c00bd702d> accessed 20 July 2019.
23
ibid.
24
Adapted from Hongdao and others (n12).
25
'Law Firm Law And Legal Definition' (Definitions.uslegal.com) <https://definitions.uslegal.com/l/law-
firm/> accessed 5 April 2019.

17
 The business model of a law firm describes the way it operates and determines how
the firm creates value by generating revenue, and is based on two pillars: Competitive
Strategy and Creating Value.26
It represents a collection of processes and systems meant to make the firm
competitive and bring profit.27
The competitive strategy defines the fields where the firms want to compete, as well
as the existing conditions in that market adequate for firms to achieve their purpose.28
For a firm to generate profit, the business model must create value for its clients,
which means to understand what its clients expect from the way that the legal aid is
delivered, and how can it improve those services to comply with market requirements.29
Even though globally, law firms are organised and structured in different forms,
based on the jurisdiction in which they practice, the concept of ‘partnership’ is the most
common type of organisation.
In a partnership, the partners are joint owners and directors of the company, the
associates are employees with the perspectives of becoming partners, and the paralegals
are the ones providing substantive legal work for partners and associates.
A traditional partnership represents a small firm structure, where partners are
working together with the associates, offering them the possibility to become partners
through good work and productivity.30
Big law firms are, in general, integrated into limited liability partnerships, and have
a strict hierarchy, based on junior associates, senior associates, and partners.31
In some cases, the law firm can hire contract associates, for a particular project, and
contract partners, under a specific employment contract.32
Regarding the position of each legal professional in the firm, the author describes
the following hierarchy:

26
Alan Hodgart and Rob Ashing, 'The Changing Business Model Of Law Firms | Hong Kong Lawyer'
(Hk-lawyer.org, January 2017) <http://www.hk-lawyer.org/content/changing-business-model-law-firms>
accessed 6 May 2019.
27
ibid.
28
ibid.
29
ibid.
30
Desiree Moore, Thrive: A New Lawyer’s Guide to Law Firm Practice (American Bar Association
2013).
31
Josh Richman, 'Lockstep Vs ‘Eat What You Kill’: Firms’ Partnership Structures Explained'
(LawCareers.Net, 30 April 2019) <https://www.lawcareers.net/Information/Features/30042019-Lockstep-
vs-eat-what-you-kill-firms-partnership-structures-explained> accessed 6 May 2019.
32
ibid (n 30).

18
 Partners
The joint owners of
the law firm and
business directors

Senior associates
Experienced lawyers,
aiming to become
partners

Mid-level associates Junior associates

Entry-level lawyers
Lawyers able to
who need supervision
handle substantive
in their tasks

Figure 3: The hierarchy in traditional law firms (author-generated)

In the conventional system, from the business structure point of view, law firms are
based on a pyramid shape, as depicted in Figure 4, where a top-down chain of control is
displayed, with a high ratio of junior lawyers per partner.33

Partners

Senior
Associates
Outsourcing

Junior
Associates
Outsourcing Automation

Figure 4: The pyramidal structure of the traditional law firm business model34
33
Jorg, 'The Impact Of The Digital Revolution On The Business Model Of Law Firms: From Pyramid To
Rocket - At The 11Th Billable Hour' (At the 11th Billable Hour, 9 January 2019)
<https://eleventhbillablehour.com/2019/01/09/the-impact-of-the-digital-revolution-on-the-business-
model-of-law-firms-from-pyramid-to-rocket/> accessed 21 July 2019.

19
 The associates are bringing value to the company as well as significant profits, and
for their proper work and an excessive amount of hours, they can advance as partners.
They are often responsible for generating half of the firm’s revenue, even though their
fees are not as high as partners ones.

2.2. Billable Hour and Timesheet System

As their first source of revenue, the traditional law firms are focusing on billing by
the hour, which translates into the billable hour and timesheet system.
Reginald Heber Smith was the first person using the idea of the billable hour and
timesheet model when he became the chief counsel of the Boston Legal Aid Society in
1914.35
Smith, convinced that time means money and the customers should buy hours,
started to use a timesheet to track efficiency and performing cost and profitable
accounting.36
Smith applied for the first time the timesheet as a cost accounting tool, but he has the
credit for creating the billable hour system in the law industry.37
Ronald J. Baker states that billing per hour has encouraged the law firms to focus on
the wrong direction, which has caused unfavourable consequences.38
In time lawyers got accustomed to filling in the daily timesheet, and it became the
lawyer’s inventory.
According to a survey from 2014 conducted by the Legal Services Consumer Panel,
more than 45% of the subjects request fixed fees as a billing method by comparison
with less than 10% of them agreeing with hourly rates as a paying system.39
The billable hour model was considered an effective pricing policy during the last
decades, but once with the technological developments, it appears to be a suboptimal
system due to the full range of disadvantages compared with its advantages.40

34
Adapted from The Boston Consulting Group and Bucerius Law School (n 19) accessed 17 May 2019.
35
Ronald J Baker, Implementing Value Pricing: A Radical Business Model For Professional Firms (John
Wiley & Sons 2011) 115.
36
ibid 115-117.
37
ibid.
38
ibid.
39
Legal Services Consumer Panel, 'Tracker Survey 2014 Briefing Note: A Changing Market' (2014)
<https://www.legalservicesconsumerpanel.org.uk/ourwork/CWI/documents/2014%20Tracker%20Briefin
g%201_Changingmarket.pdf> accessed 29 April 2019.

20
 As a first advantage, the billing hour method represents an easy and efficient way to
help the legal professionals to focus on customer relations by using appropriate time and
billing software and transforming the pricing function into an administrative task.41
Hourly billing provides stability and predictability on the market for the customers
that are familiar with this system, as well as fair competitiveness.
Another advantage of this method is that in some litigations time recording is a
necessity due to legal precedents and ethical rules.42
The first disadvantage of this method appears to be the gap between the legal
professional’s interest and customer’s one. An increase in the firm’s revenue will
translate into an increase in its costs, that does not comply with clients requirement of
‘good enough actions’ rather than optimal actions.43
Also, the billing hour system is based on justifying the prices concerning the hours
spent for every legal case, which will diminish a law firm’s goal to create value in its
clients' minds.44
A fixed price model is expected to reduce the risks attached to profitability because
risks cannot be priced by the hour, but a law firm can ask for premiums to provide a
risk-reduced service.45
Another disadvantage of billing hour method is considered to be its focus on effort,
and not on the result. It does not repay creativity and the final result; instead, this
method concentrates on a range amount of ineffective hours spent on legal research and
case review.46

2.3. Access to Legal Information and Value Proposition

Experiencing legal problems is a common feature of daily lives in modern society.

40
Ed Kless, 'Episode #132: The Deleterious Effects Of Hourly Billing — The Soul Of Enterprise' (The
Soul of Enterprise, 6 March 2017) <https://www.thesoulofenterprise.com/tsoe/deleterious> accessed 10
May 2019.
41
ibid.
42
ibid.
43
ibid.
44
ibid.
45
ibid.
46
ibid.

21
 Access to legal information is the right of people to seek and obtain remedies for
their legal problems47.
It represents an essential component of the rule of law and modern society.
The primary sources that provide legal information are legislation and legal cases48,
but in traditional societies, access to legal information through a lawyer is a crucial
dimension of access to justice.49
The inadequate access to legal information is due to two reasons:
• Geographic: According to statistics,50 almost 45% of the world population is part
of the rural communities. Due to a lack of spread of the legal services outside the
urban areas, many of the rural inhabitants have poor access to legal advice.
• Cost: Even with all development, nowadays, legal services are still costly, which
makes their delivery inaccessible for many people. This subject is discussed in the
previous subchapter 2.2. Billable Hour and Timesheet System.
The European Union Agency for Fundamental Rights (FRA) research shows that
access to justice is problematic due to a lack of rights awareness and poor knowledge
about how to access legal information.51
Once with the growth of the legal market, many of the legal services carried out now
by lawyers may be delivered by non-lawyers and legal tech specialists, worldwide, at a
lower cost and with the same quality, improving access to legal information.52
But, law firms should think about their ability to improve access to legal information
by rethinking the value proposition.
A value proposition is the ability of the firms to offer a full package of services that
will make them attractive and, at the same time, will keep them as a point of contact for
their clients.

47
United Nations Development Programme, 'Access To Justice: Practice Note' (United Nations
Development Programme 2004)
<https://www.undp.org/content/dam/aplaws/publication/en/publications/democratic-governance/dg-
publications-for-website/access-to-justice-practice-note/Justice_PN_En.pdf> accessed 10 May 2019.
48
Marie-Francine Moens, 'Improving Access To Legal Information: How Drafting Systems Help' in Arno
R. Lodder, Anja Oskamp, Information Technology & Lawyers: Advanced Technology in the Legal
Domain, from Challenges to Daily Routine (Spring 2019) 131-150.
49
Richard Devlin and Ora Morison, 'Access To Justice And The Ethics And Politics Of Alternative
Business Structures' (2012) 91 The Candian Bar Review 483-553.
50
'Rural Population (% Of Total Population) Data' (Data.worldbank.org, 2018)
<https://data.worldbank.org/indicator/SP.RUR.TOTL.ZS> accessed 24 July 2019.
51
European Union Agency for Fundamental Rights, 'Access To Justice' (European Union Agency for
Fundamental Rights, 2019) <https://fra.europa.eu/en/theme/access-justice> accessed 21 May 2019.
52
Jorg (n 33) accessed 24 July 2019.

22
 By using technology law firms can develop their legal products and services, that
clients can use to solve legal issues and even create their documents, and provide legal
advice in exceptional cases when this is necessary.
In other words, lawyers should identify the services considered commoditised and let
them be carried out by Legal Tech tools, believing that increased efficiency will provide
value for the clients.53
For example, a law firm can implement Legal Tech products and solutions in its
portfolio or create its products for faster delivery, can use legal project managers to
keep track of the transactions, and can allow lawyers to focus on the services that need
their added value.54
Therefore, by providing Legal Tech products and services, a law firm will:
• Broaden its geographic area of legal services delivery;
• Enable a more accessible approach to legal information;
• Help lawyers to offer genuine added value for critical services;
• Assure value for its clients.

2.4. New Changes in the Legal System

In the last years, the advancements in technology and data science together with
disruptive innovations, including the deregulation of the practice of law, have been
changing the legal sector.55
Technology offers new possibilities for the legal industry to provide simplified
assistance that leads to a new relationship between law and technology.
The law firms worldwide have already started to feel the impact of these disruptions
and, some of them, already implemented technology tools and skills in their legal
services business model.
Figure 5 below shows the growth of the Legal Tech startups on every continent
compared to the growth of traditional law firms.

53
ibid.
54
ibid.
55
Deloitte, 'The Legal Department Of The Future: How Disruptive Trends Are Creating A New Business
Model For In-House Legal' (Deloitte 2017)
<https://www2.deloitte.com/content/dam/Deloitte/us/Documents/finance/us-advisory-legal-department-
of-the-future.pdf> accessed 20 July 2019.

23
 Law Legal Tech

1384

1109

330 299
242
92 114
31 36 55 21 45

North Europe Asia South Australia Africa

America America

Figure 5: Legal and Legal Tech companies worldwide starting with 201056

As of July 2019, a range of 1.048 Legal Tech Startups operates worldwide as shown
in Figure 6, with an average valuation amount of $ 4.5 million US, and a range of 600
investors in these companies.57

745
696
603

436 419
325
228
139
103 112

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Figure 6: Worldwide Legal Startups evolution starting with 2010

(companies number worldwide)58

56
Adapted from 'Legal Startups Charts - Legalcomplex' (Legalcomplex)
<https://www.legalcomplex.com/2015/12/29/legal-startups-charts/> accessed 21 July 2019.
57
'Legal Tech Startups' (angel.co, 2019) <https://angel.co/legal-tech-1> accessed 24 July 2019.
58
Adapted from 'Legal Startups Charts - Legalcomplex' (n 56).

24
 Even though in the last years, the development of technology has increased
significantly, the application of these tools in the legal services delivery has encountered
a slow and cumbersome implementation process.
Susskind considers that three main drivers of change have impacted the law industry
and the way the legal services are delivered: 59
• ‘More for less’
• Liberalisation
• Technology
More for less challenge represents the compliance of a law firm with the clients’
demand for ‘charging less’ by using alternative fees and collaborative strategies, which
leads to cost-efficiency.60
About this change, Susskind states that ‘I believe the more-for-less challenge, above
all others, will underpin and define the next decade of legal services. The more-for-less
challenge will, I expect, irreversibly change the way that lawyers work’. 61
Due to clients demands, the market has changed in the last years, from bespoke to
economisation and commodification. The new legal marketplace has evolved from a
general branding concept providing exclusivity to a new system where ‘lawyers are
decreasingly disinterested brokers in society and defenders of the public good, and
increasingly service firms at the cutting edge of the capitalist economy’62.
Figure 7 below illustrates the concept of ‘more for less’, and the recent transition of
the legal system.

59
Richard E Susskind, Tomorrow's Lawyers (Oxford University Press: Oxford 2017).
60
ibid.
61
ibid.
62
Salvatore Caserta and Mikael Madsen, 'The Legal Profession In The Era Of Digital Capitalism:
Disruption Or New Dawn?' (2019) iCourts Working Paper Series, No. 149, 2019
<https://ssrn.com/abstract=3310211> accessed 22 May 2019.

25
 Bespoke & Systemized &
Comoditized
Standardized Packaged

Hourly Billing Fixed Fees Comodity Pricing

(tend to zero)

Figure 7: The disruption process and new fees model63

The liberalisation of the legal market brings a new challenge for lawyers to adapt to a
new legal advice delivery system. Scholars contend that the restriction of who can
provide legal services and by rigid national legislation lead to an unjust monopoly on
the market and restrictive practices.64
To change this practice, for example, in the United Kingdom, the authorities adopted
the Legal Services Act from 2007, that introduced the concept of ‘alternative business
structures’, a new type of legal businesses.65
Within these structures, non-lawyers and paralegals have the right to own or run
legal businesses. Thus the market opens new opportunities for partnerships and Legal
Tech startups, such as e-disclosure, virtual courts, or online dispute resolution.66
Technology is the third drive for change. On the strength of technology, the legal
market is more transparent than before, more accessible and cost-effective. The latest
developments of Legal Technology tools have the chance to provide more value for the
clients, according to their needs and financial resources.
The scholars' agree that disruptive technologies are the key to a sustainable juridical
environment, and it brings reforms for legal practices.67

63
Adopted from Richard E Susskind, The End Of Lawyers? (Oxford University Press 2010).
64
Susskind (n 59).
65
Hongdao and others (n 12).
66
ibid.
67
ibid.

26
 Also, legal professionals have identified a combination of factors that contributes to
the success of Legal Tech’ startups:68
• Maturing ecosystem
Worldwide, there is a significant number of well-founded startups. Their profitability
provides further validation for the companies that are still trying to understand the new
changes in the system.69
• Increased transparency
The legal market is known for its lack of transparency when it comes to knowledge
and costs. The use of technology in this sector is meant to improve this asymmetry and
provide full legal information for clients.70
• Automation
The Legal Tech market has encountered in the last year a broad range of technology
solutions based on the use of large data sets for assisting the professionals with specific
repeatable tasks. The application of automation in the daily chores is expected to reduce
the time that a professional spends with repetitive responsibilities, and therefore to
reduce the costs.71
• Innovation
Starting from the automation process, some startups have succeeded to go beyond it
and provide additional solutions for more efficiency and cost reduction.72
• Generational shift
This factor refers to the new set of skills that future legal professionals posse, as well
as their ability to understand and use technology daily. For this purpose, some law
schools have already changed their curriculum by implementing, next to the traditional
law classes, business, legal technology, and program management classes.73
All these drivers and factors that contribute to the digital transformation of the legal
market are part of the concept of ‘digital business’.

68
Tom Wilson, 'Legal Tech - Mapping Disruption' (Medium, 12 July 2016)
<https://medium.com/@taw/legal-tech-mapping-disruption-3e6685fc4a5c#.rh7rnwydr> accessed 20 July
2019.
69
ibid.
70
ibid.
71
ibid.
72
ibid.
73
ibid.

27
 According to Gartner’s IT Glossary, digital transformation is ‘the use of digital
technologies to change a business model and provide new revenue and value-producing
opportunities; it is the process of moving to a digital business’.74
The digital business represents a new business design which involves the integration
of digital and physical methods to work in a connected and intelligent way.75
As an example of digital transformation and digital business, the company Deloitte
has started to transfer some parts of its traditional auditing services to software
programs and aims to automate 30% of its audits.76
In a report from 2017, Deloitte looks at two types of drivers that bring these changes:
external drivers and internal drivers, as described in Figures 8 and 9.77

The rising
cost of legal
services

Mergers and Globalisatio

acquisitions n
Legal
Industry

Increased Exponential
regulations technologies

Figure 8: The external drivers of change in the Legal Industry (author-generated)

74
'Digitalization - Gartner IT Glossary' (Gartner IT Glossary) <https://www.gartner.com/it-
glossary/digitalization> accessed 21 May 2019.
75
Jorge Lopez, 'Digital Business Is Everyone's Business' (Forbes.com, 7 May 2014)
<https://www.forbes.com/sites/gartnergroup/2014/05/07/digital-business-is-everyones-
business/#2cd2a65f7f82> accessed 27 May 2019.
76
Deloitte (n 55).
77
ibid.

28
 ‘Doing
more with
less’
Becoming a
Multiple
strategic
offices
business
worldwide Legal partner
Industry

New skills New risks

and and
knowledge exposure

Figure 9: The internal drivers of change in the Legal Industry (author-generated)

Artificial intelligence and different software programs are becoming more and more
present in the legal system, challenging the traditional law firms business model.
This technology is offering two solutions: either keeping the already existing
business model by caring on the conventional mindset without incorporating new
technologies or integrate new tools and services based on data science and technology
and compliance with the new clients' expectations and societies development.
For the first option, law corporations will have to maintain the same hierarchy
system presented in the previous sub-chapter, with a specialised lawyer in different
areas of practice and hourly billing policy.
For the second option, the new law firms will have to visualise innovation and
digitalisation as a business strategy which will help the employees to provide legal
solutions faster and easier for their clients.
More than this, the future automated law firms apply ethical rules based on
technology, which helps them to focus on client’s value and satisfaction.
As mentioned above, another reason for the digitalisation of the legal system is the
clients’ new demands and expectations.

29
 The modern clients want more value and efficiency in the legal advice delivery
process. The law firms should provide transparency of the services, lower prices and
increased satisfaction, by using technology and automation, to fulfil these demands.
The existing law firms are still mindset and structural resistance to innovation, but
some elements can bring greater receptivity to artificial intelligence tools applications,
such as:78
• The size growth of law firms requires a more capable operating system.
• The development of technology provides smooth and cheap access to online legal
tools.
• The adoption of different forms of value billing is producing price transparency
and improved productivity.
• ‘Billing for software’ replaces the billable hour system.
• Technology can increase work satisfaction, especially for millennials;
• The increasing amount of legal information demands more effort, and by using
technology tools, the lawyers can fulfil their tasks effortlessly.
• Both digitalisation and globalisation trends are demanding a ‘based on
technology’ business model.
Nevertheless, the new changes in the system are not perceived positively by the
entire legal industry.
Most of the legal professionals feel overwhelmed about these challenges and the new
demands. Lawyers are usually cautious and sceptical, seeing the Legal Tech market a
threat to the traditional job description.79
Indeed, Legal Tech puts pressure on the conventional business model of law firms,
forcing them to improve it, or even change it entirely.80
But the development of law firms is still challenging.
To enhance their legal advisory services delivery, the traditional law firms should
implement technologies and change their project management, process management and
inter-professional cooperation approaches.

78
Lauritsen (n 48) 185-196.
79
Markus Hartung, 'Thoughts On Legal Tech And Digitalization', in in M. Hartung, M. M. Bues, G.
Halbleib (eds) Legal Tech: How Technology is Changing the Legal World, A Practitioner’s Guide (CH
Beck 2018) 13-14.
80
ibid.

30
 3. MAPPING THE LEGAL TECH LANDSCAPE

Legal Tech is a brand-new concept in the law industry which has disrupted the
traditional functions and operations of the legal services. It is a massive enabler to
improve the legal market.
As this paper shows, the developments of the juridical system worldwide leads to
new opportunities for Legal Tech.
Nowadays, lawyers and software developers are working together to find new
solutions for clients satisfaction and law firms’ profitability.
The author considers crucial for a prosperous legal business to properly understand
what Legal Tech is and how it works, as well as the impact, both positive and negative,
of this technology on the juridical system.
This chapter will focus on the developments of the Legal Tech industry and will
outline the main characteristics of this transformation process, as well as the primary
legal issues that the industry encounters when using technology.

3.1. Legal Tech as a Tool and as a Service

Legal Technology or Legal Tech is a term that refers to the adoption of innovative
technology in the law system to facilitate the delivery of legal services.
At first sight, there is not too much in common between Information Technology and
lawyers.
Information Technology is fast, based on a robust framework and futuristic, while
lawyers are precautious, wordy and conventional. But in the last decades, the influence
of information technology on the law system has increased significantly, and it started
to play a central role in legal practice and research.81
Together with the developments of artificial intelligence and machine learning, the
technology is now expanding in a range of legal fields, providing online platforms
which can replace the routine tasks of a lawyer, making them more efficient and
cheaper.82

81 Hartung (n 79) 3-6.

82
Willem Ridder, 'Blog. The Future Of Legal Services. Part 6 Of The Series ‘Disruption And New
Business Models’' (Futures Studies, 17 April 2017) <https://futuresstudies.nl/en/2017/04/17/blog-the-
future-of-legal-services-part-6-of-the-series-disruption-and-new-business-models/> accessed 17 May
2019.

31
 Figure 10 describes the legal fields where technology is widely used based on their
profitability.
$951

$658

$377 $349

$203
$130 $123 $114 $101
$43

Figure 10: Legal Tech Key Market Segmentation ($M)83

Most of the Legal Tech Software solutions are based on the latest information
technology approaches, bringing five main benefits for law firms:84
• Enable lawyers to be more efficient at legal advice delivery;
• Are cost-effective by replacing remunerated lawyer with software;
• Create process innovation and new business models for law firms;
• Improve the lawyer-client relationship by providing cheaper and faster legal
services;
• Generate new legal fields, such as cybersecurity, data protection and new
technology laws.
Usually, Legal Tech companies are startups founded with the purpose of replacement
the operation of the traditionally conservative legal profession with improved and
simplified legal counselling85.

83
Adapted from Hongdao and others (n 12).
84
The Law Society of England and Wales, ‘The Future of Legal Services’ (The Law Society 28 January
2016) <https://www.lawsociety.org.uk/support-services/research-trends/the-future-of-legal-services/>
accessed 17 May 2019

32
 According to their ultimate purpose, these companies divide as follows:86
• Legal Tech that supports lawyers in their work, for example, any software and
tools that are maximising the professional productivity, by taking care of the daily
repetitive tasks.
• Legal Tech used as a marketplace that brings clients and lawyers together, such as
online platforms meant to find the lawyer that will suit the client’s best interest.
• Legal Tech software meant to provide individual and autonomous legal services.
Based on the technology adopted and used, there are four categories of Legal Tech
startups:87
• Online legal services
This category includes startups that offer online legal services without the need to
involve an actual lawyer for consultation and guidance process. A prosperous Legal
Tech startup in this field is LegalZoom88.
• Online matching platforms
These kinds of platforms are connecting the clients with the fitting lawyer, without
the costly engagement of a law firm.
• Artificial Intelligence Tools
The third category consists of startups that are using artificial intelligence tools for
time-effective legal research activities. LegalSifter89 is an example of a device that
assists the lawyer in reviewing contracts faster.
• Blockchain Technology
The startups based in blockchain technology aim to replace lawyers as intermediaries
in certain types of transactions. The most powerful impact that blockchain startups can
have on the legal system is their ability to substitute notary and registry services.90

85
Marcelo Corrales, Mark Fenwick, Helena Haapio, Digital Technologies, Legal Design and the Future
of Legal Professions in M. Corrales, M. Fenwick, H. Haapio, Legal Tech, Smart Contracts and
Blockchain, Perspectives in Law, Business and Innovation (Springer 2019) 1-14.
86
Hartung (n 79) 7.
87
ibid.
88
LegalZoom is an online legal tech startup, founded in 2001 in California that provides help for creating
a range of legal documents without the need for consulting an actual lawyer.
<https://www.legalzoom.com/> accessed 17 May 2019
89
LegalSifter is a Legal Tech startup, founded in 2013 in Pennsylvania, that helps reviewing contracts
faster and with less risks, by using artificial intelligence. <https://www.legalsifter.com/> accessed 17 May
2019.
90
Mark Fenwick, Erik P.M. Vermeulen, The Lawyer of the Future as ‘’Transaction Engineer’’: Digital
Technologies and the Disruption of the Legal Prefession in M. Corrales, M. Fenwick, H. Haapio, Legal

33
 According to the Tech Index, Legal Tech products can be summarised as follows: 91
• Automated Legal Advice Products
These are well structured and automated companies that process and enforce claims.
They offer legal services or legal documents easily rapidly and cheaply. 92 The software
is designed to map a ‘process and decision tree’93 which will apply automatically on
similar future cases. Flightright94 is an example of an automated legal advice product,
that takes care of the compensation claims for air passengers.
• Electronic Marketplace
These products help the clients to find the ideal lawyer for their cases when their
needs are not fulfiled by the automated products. The providers offer particular
additional legal services, standardised and at fixed prices.
• Legal Process Outsourcing
Outsourcing startups aim the lawyers and law firms, and not the end-user. They
provide project lawyers, employed for specific projects. In these situations, technology
comes into use when, through electronic platforms, clients and project lawyers can
exchange legal information more easily.95
• eDiscovery and Document Review
In the case of these systems, a large amount of data and documents can be analysed
in a short time, with fewer errors. They have the purpose of helping lawyers by carrying
out daily repetitive activities that take time and precise attention to details.
The automation and standardisation of the daily tasks will change the role of a
lawyer. By outsourcing the legal work to software and robots, the role of a lawyer is
becoming more business-oriented centred its attention on increased efficiency, enhance
client services and cost-reductions.96

Tech, Smart Contracts and Blockchain, Perspectives in Law, Business and Innovation (Springer 2019)
253-272.
91
Tech Index is a databes mantained by CodeX Center for Legal Informatics at Stanford University,
where all international Legal Tech companies are included. <https://techindex.law.stanford.edu> accessed
24 July 2019
92
Hartung (n 79) 7-8.
93
ibid.
94
'Claim Your Right For Flight Delay Compensation, Flightright' (Flightright.com)
<https://www.flightright.com> accessed 24 July 2019.
95
Hartung (n 79) 7-8.
96
ibid.

34
 No matter if Legal Tech is used as a tool, in order to facilitate the lawyer daily work,
as a product, provided by the law firm for the purpose to customize their practice, or as
a service, replacing the thorough lawyer tasks, the development of new technologies
leads to more creative and faster legal solutions.
Even though a wide range of practice areas are segmenting the Legal Tech market,
this research will focus on the following relevant technologies which can improve a law
firms’ business model:
• Artificial Intelligence
• Legal Automation
• Document Automation and Smart Contracts.

3.2. Artificial Intelligence in Law Industry

Artificial intelligence is the theory and development of computer systems able to
perform tasks usually requiring human knowledge, such as visual perception, speech
recognition, decision-making, and translation between languages.97
This technology has been seen lately as a vital tool able to transform different
industries worldwide, including the legal market.98
When it comes to the law, it represents a hybrid between artifice and evolution, and,
similar to artificial intelligence, it involves the use of code as a core instrument.99
But the use of artificial intelligence in this field is not a new topic. Legal work
involves by its nature a vast amount of unstructured data, which makes it a target for
implementing artificial intelligence tools.
Based on legal scholars opinions, the use of technology in the field of law can be
both remarkably innovative and incredibly disruptive.100
In its article based on the improvement of the legal system through technology, the
futurist Ray Kurzweil explained that ‘[W]e have the opportunity in the decades ahead to

97
'Artificial Intelligence, Definition Of Artificial Intelligence In English By Lexico Dictionaries' (Lexico
Dictionaries English) <https://en.oxforddictionaries.com/definition/artificial_intelligence> accessed 20
May 2019
98
Micha-Manuel Bues, ‘Artificial Intelligence in Law’ in M. Hartung, M. M. Bues, G. Halbleib (eds)
Legal Tech: How Technology is Changing the Legal World, A Practitioner’s Guide (CH Beck 2018) 265-
274.
99
Marc Lauritsen, ‘Artificial Intelligence in the Real Legal Workplace’ in Arno R. Lodder, Anja Oskamp,
Information Technology & Lawyers: Advanced Technology in the Legal Domain, from Challenges to
Daily Routine (Springer 2010) 185-196.
100
Bues (n 98) 265.

35
make major strides in addressing the grand challenges of humanity. Artificial
intelligence will be the pivotal technology in achieving this progress.’101
On the other side, back in 2014, the physicist Stephen Hawking gave a warning
regarding the use of artificial intelligence because:

[T]he development of full artificial intelligence could spell the end of the
human race... It would take off on its own, and re-design itself at an ever-
increasing rate. Humans, who are limited by slow biological evolution,
couldn't compete, and would be superseded. 102

Rollo Carpenter, the creator of Cleverbot, a software designed to chat like a human,
also uttered its concerns about the development of artificial intelligence, concluding that
‘we cannot quite know what will happen if a machine exceeds our own intelligence, so
we can't know if we'll be infinitely helped by it, or ignored by it and sidelined, or
conceivably destroyed by it’.103
A stronger opinion against the use of artificial intelligence and its negative
consequences was the technology entrepreneur Elon Musk’s warning ‘(...) with artificial
intelligence we are summoning the demon’.104
Back in 2013, as an overall perspective, researchers Carl B. Frey and Michael A.
Osborne predicted that more than 45% of all jobs would be replaced by artificial
intelligence by 2033.105
In the present, the OECD Employment Outlook 2019 estimates that 14% of jobs are
at high risk of automation, significantly fewer than the researchers’ predictions.
Undoubtedly artificial intelligence is a powerful tool, and its potential is vast, being
able to change the way lawyers are providing legal services.106

101
Ray Kurzweil, 'Don’T Fear Artificial Intelligence' (Time, 19 December 2014)
<http://time.com/3641921/dont-fear-artificial-intelligence/> accessed 17 May 2019
102
Rory Cellan-Jones, 'Hawking: AI Could End Human Race' (BBC News, 2 December 2014)
<https://www.bbc.com/news/technology-30290540> accessed 17 May 2019.
103
ibid.
104
Matt McFarland, ‘Elon Musk: With artificial intelligence we are summoning the demon’ (The
Washington Post, 24 October 2014)
<https://www.washingtonpost.com/news/innovations/wp/2014/10/24/elon-musk-with-artificial-
intelligence-we-are-summoning-the-demon/??noredirect=on> accessed 10 May 2019
105
Carl Benedikt Frey and Michael A. Osborne, ‘The Future of Employment: How Susceptible are Jobs
to Computerisation?’ (Oxford University 2013)
<https://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf>) accessed
17 May 2019.
106
Organisation for Economic Co-operation and Development, ‘The Future of Work’, OECD
Employment Outlook 2019 (OECD 2019) <http://www.oecd.org/employment/Employment-Outlook-
2019-Highlight-EN.pdf> accessed 22 July 2019.

36
 But, considering that the use of technology in the law system is rapidly growing, it is
crucial to understand how it works.
The use of artificial intelligence involves a wide range of methods, algorithms and
technologies, such as:
• Machine Learning, discussed below.
• Machine Vision enables trained software to evaluate and recognise images.107
• Natural Language Processing, discussed below.
• Robotics is the industry related to the engineering, construction and operation of
robots.108
From these techniques, the most used are Machine Learning and Natural Language
Processing.
Machine learning comprises a range of algorithms that enable the system’s capacity
to automatically learn and improve from experience without having to be explicitly
programmed.109
Machine learning algorithms are trained to fulfil a specific purpose, not being able to
perceive new concepts and ideologies or understand some human contexts.
Supervised machine learning represents the main field of machine learning, and has
the ability to identify patterns in the data and form heuristics, showing that artificial
intelligence also requires an anthropomorphic component for supervision.110 In other
words, supervised machine learning aims to predict as accurately as possible a result,
based on already know cases and collected data.
Applications of machine learning in the field of law can involve forecasting
decisions, legal expert systems and argumentation or document modelling.
Different approaches to machine learning can be used to identify clauses or specific
content within a text, such as deep learning, inductive logic programs or decision tree
learning.

107
'What Is A Machine Vision System (MVS)?, Definition From Techopedia' (Techopedia.com)
<https://www.techopedia.com/definition/30414/machine-vision-system-mvs> accessed 22 July 2019.
108
'What Is Robotics?, Definition From Techopedia' (Techopedia.com)
<https://www.techopedia.com/definition/32836/robotics> accessed 22 July 2019.
109
Bues (n 98) 267-268.
110
ibid.

37
 • Inductive logic programs or inductive reasoning represents the main engine of
machine learning systems. It is the use of evidence to propose a theory, relying on
the given data which makes it probabilistic or uncertain.111
• Deep learning is an album of algorithms used in machine learning for designing
and training neural networks considered highly promising decision-making
points.112
• Decision tree learning is a tool that provides analysis results based on the input
data. Its purpose is to make rapidly correct decisions.113
Law is mainly formed by written words, and Natural Language Processing is playing
a vital role in this field.
This technology enables computers to analyse, interpret and understand the human
language, to have as the central task the detection of syntax, semantics, relationship
extraction and speech recognition.114
Based on different natural language processing techniques, more approaches are
developed and trained by researchers to make artificial intelligence able to understand
legal content, such as information extraction or information retrieval.
Information extraction represents a natural language processing technique, able to
extract automatically structured information from unstructured or semi-structured
machine-readable documents.115
Information retrieval is the opposite of information extraction. This technique deals
with the recovery of information matching words in the query against the database
index and reviews the database using hypertext links.116
Information extraction draws facts, while information retrieval looks for relevant
documents, and used together, they aim to be a powerful tool for legal professionals.
Even if the use of artificial intelligence in the legal field is still at the beginning, the
combination of the two techniques has evolved in the last years developing tools able to

111
'What Is Inductive Reasoning?, Definition From Techopedia' (Techopedia.com)
<https://www.techopedia.com/definition/32950/inductive-reasoning> accessed 27 July 2019.
112
https://www.techopedia.com/definition/30325/deep-learning (accessed 27 July 2019) 'What Is Deep
Learning?, Definition From Techopedia' (Techopedia.com)
<https://www.techopedia.com/definition/30325/deep-learning> accessed 27 July 2019.
113
'What Is Decision Tree Software?, Definition From Techopedia' (Techopedia.com)
<https://www.techopedia.com/definition/13879/decision-tree-software> accessed 27 July 2019.
114
Bues (n 98) 267-268.
115
ibid.
116
ibid.

38
improve the search and discovery of legal content in databases, classification of
documents and extraction of information, and prediction of individual decisions.
The legal system has adopted and implemented, based on the characteristics
mentioned above, some use cases.117
• Legal Databases.
As a field mostly based on research, the legal system sheers a mass of content often
unlabelled, unstructured and imprecise.
The development of machine learning and natural language processing enabled the
implementation of legal databases with fast and reliable search results. The researchers
are confident that in the future, artificial intelligence techniques can improve the search
ranking, query understanding and user classification.118
Lexis Answer119, a software able to interpret searches and mining answers, is an
example of legal databases enhanced with machine learning and natural language
processing provider.
• eDiscovery
Electronic Discovery is formed by artificial intelligence codes for the purpose to
seek, locate, secure and search data to use it as evidence in legal cases.
Being a form of supervised machine learning, eDiscovery applies certain predictive
search logic to large data sets and to reduce the number of irrelevant and unfit
documents.120
• Legal Analytics
The law industry encounters three types of legal analytics: descriptive, predictive and
prescriptive.
Descriptive analytics can be used by lawyers to develop legal strategies by applying
historical data aggregation and mining. It helps to analyse the behaviours of participants
in litigations, forecast litigation costs and timing and determine the likely outcomes of
the case.121

117
ibid 269.
118
ibid.
119
The program is provided by LexisNexis Legal & Professional, an US leading global provider of legal,
regulatory and business information and analytics. <https://www.lexisnexis.com/en-us/home.page>
accessed 19 August 2019.
120
Bues (n 98) 267-268.
121
ibid.

39
 Predictive analytics uses statistical techniques to predict future trends and results.
Even though it can’t replace human judgment and experience, it helps to decipher
patterns based on current data.122
By using prescriptive analytics, lawyers can receive recommendations on legal
strategies that can be adopted based on similar cases from the past. By using historical
trends, this technique analyses future decisions and advises on possible outcomes.123
• Document Analysis
Lawyers are spending a lot of time reviewing contracts, tending to miss relevant
details due to the manual process of analysing that involves an increased concentration.
The legal content analysis includes several artificial intelligence techniques to better
asses a text, to classify various types of documents and clauses and for named entity
recognition.124
The application of these algorithms is still a young practice, but promising to provide
a more accurate approach of legal contract analysis.

3.3. Legal Automation or how to build a Robot Lawyer

Technology has changed the business landscape in the last decades, and even if the
legal system has tried to adopt most of the digital tools able to facilitate a lawyer’s
work, the legal service delivery did not suffer any transformation.
Legal services are still hourly-billed and provided by lawyers in law firms, legal
departments or institutions. For most of the legal professionals, the automation of the
legal system involves the replacement of their professions with robots able to provide
proper assessments and counselling.
The development of the automation tools is based on the idea that a small individual
expert system can decrease complexity and effort, can accelerate legal analysis and
facilitate proceedings.125
But the automation of the legal system as a whole, the replacement of the human
thinking process, is not an achievable goal.

122
ibid, 168-170
123
ibid.
124
ibid.
125
Michael Grupp, ‘How to Build a Robot Lawyer’, in M. Hartung, M. M. Bues, G. Halbleib (eds) Legal
Tech: How Technology is Changing the Legal World, A Practitioner’s Guide (CH Beck 2018) 249-257.

40
 Information technology posses limited semantic comprehension and for legal
application is required a semantic highly sophisticated understanding, which makes the
formalisation of legal reasoning very difficult.126
When it comes to formalising the automatic legal thinking, the researchers have
encountered struggles, because legal reasoning involves general knowledge, common
sense and sense of justice.127
Proper automation tools are developed based on artificial intelligence, natural
language processing, and machine learning, all adaptable to legal services, and they can
access vastly amounts digitised data such as legal documents, legal journals and
research and court cases.128
According to the Deloitte Insight Report from 2016, ‘profound reforms’ will take
place in the legal sector, and almost 40% of legal professions will be automated in the
longer term.129
The company further predicts that by 2025, the jobs in the legal system will
encounter overwhelming changes due to technological development and a new lawyer-
client relationship, the need to offer more value for money.130
Robotic Process Automation is a new technology that has evolved lately, promising
significant efficiency benefits for the legal industry.
The Institute of Robotic Process Automation and Artificial Intelligence (IRPAAI)
defines robotic process automation as:

The application of technology that allows employees in a company to

configure computer software or a ‘robot’ to capture and interpret existing
applications for processing a transaction, manipulating data, triggering
responses and communicating with other digital systems.131

126
ibid.
127
Grupp (n 125) 249-257.
128
Judith Bennett and others, ‘Current State of Automated Legal Advice Tools’, Networked Society
Institute Discussion Paper 1 (Networked Society Institute 2018)
<https://apo.org.au/sites/default/files/resource-files/2018/05/apo-nid143431-1220271.pdf> accessed 18
May 2019.
129
Caroline Hill, 'Deloitte Insight: Over 100,000 Legal Roles To Be Automated, Legal IT Insider'
(Legaltechnology.com, 16 March 2016) <https://www.legaltechnology.com/latest-news/deloitte-insight-
100000-legal-roles-to-be-automated/> accessed 18 May 2019.
130
Peter Saunders, ‘Developing legal talent: Stepping into the future law firm’ (Deloitte, February 2016)
<https://www2.deloitte.com/uk/en/pages/audit/articles/developing-legal-talent.html> accessed 18 May
2019.
131
'Definition And Benefits' (IRPAAI, 2019) <https://irpaai.com/definition-and-benefits/> accessed 19
May 2019.

41
 By applying specific technologies, the process automation is used to standardise
tasks and automate routine, freeing lawyers from the tedious responsibilities that take
too much time.
Further, the IRPAAI states the benefits of using technology, which can also apply in
the legal system.132
First of all, the use of robotic process automation creates cost savings. According to
the IRPAAI, ‘a software robot can cost as little as one-third the price of a full-time
offshore employee’.133
Second, robotic process automation has proved higher efficiency. As opposed to
lawyers, robots can work continuously and produce the same work as five legal
professionals. The automation of the judicial system is expected to improve the legal
advice delivery by increasing the accuracy and value of the provided information.134
Another use brought by the automation process is advanced analytics. The facility of
gathering and organising data to predict future outcomes, by using technology, can
ensure ‘regulatory compliance, cost-effective growth and optimised operations’.135
An experiment conducted by LawGeex, an artificial intelligence contract review
platform, called AI vs Human, has proved a harsh truth: ‘AI outperforms human lawyers
in reviewing legal documents’.136
Twenty lawyers were asked to review five non-disclosure agreements, while, at the
same time, LawGeex artificial intelligence program was doing the same. The study was
held for two months, and in the end, the software finished the test with an average
accuracy rating of 94% and a reviewing time of 26 seconds, while the lawyers achieved an
average of 85% and needed an average 92 minutes for assessing the contracts.
According to the experiment, a lawyer had a rating of 97% accuracy for a single
agreement, while the artificial intelligence program had 100%.137
Unlike humans, robots are trustworthy and consistent, able to perform the same daily
work without error or fraudulence, achieving higher performance and quality.138

132
ibid.
133
ibid.
134
ibid.
135
ibid.
136
Kyree Leary, 'The Verdict Is In: AI Outperforms Human Lawyers In Reviewing Legal Documents'
(Futurism, 27 February 2018) <https://futurism.com/ai-contracts-lawyers-lawgeex> accessed 19 May
2019.
137
ibid.

42
 The implementation of robotic process automation system in the law firms business
model can offer two solutions: complete automation and hybrid automation.
Through complete automation, the entire legal activities will be done by the robot,
which will generate solutions for the lawyer or the end client.139
In the case of hybrid automation, the robot is just observing the tasks executed by the
lawyer, as a virtual colleague, being able in the end to perform the repetitive tasks
correcting the errors.140
A notable example of robot lawyer is the artificial intelligence lawyer ROSS141, ‘the
world’s first artificially intelligent attorney’ based on IBM’s cognitive computer
Watson.142
The program was designed to collect, analyse and understand the case law and legal
literature, and then generate responses, faster, errorless and cheaper than a lawyer.
ROSS is also able to learn from experience and gain knowledge through interaction.143

3.4. Document Automation and Smart Contracts for Future Lawyers

Documents and contracts are probably the most popular product of legal work. The
new technological tools are playing an essential role in the document creation, making it
faster, more accessible and errorless.144
The concepts of document automation and smart contracts mean that anyone can
automatize the execution and enforcement of their legal obligations, ensuring at the
same time better compliance with laws.

138
Grupp (n 125) 249-257.
139
Sriram Chakravarthi, 'Robotic Process Automation Comes To The Legal Industry' (Linkedin.com, 5
July 2017) <https://www.linkedin.com/pulse/robotic-process-automation-comes-legal-industry-sriram-
chakravarthi/> accessed 19 May 2019.
140
ibid.
141
ROSS Intelligence is a Legal Tech artificial intelligence solution, developed in 2014 in California.
<http://www.rossintelligence.com/> accessed 17 May 2019
142
'AI Lawyer “Ross” Has Been Hired By Its First Official Law Firm' (Futurism, 11 May 2016)
<https://futurism.com/artificially-intelligent-lawyer-ross-hired-first-official-law-firm> accessed 20 May
2019.
143
ibid.
144
Braegelmann (n 148).

43
 3.4.1. Document Automation Software
Drafting legal documents such as contracts or other agreements involve extreme care
and attention, and ‘efforts that were prone to introducing errors and took a great deal of
time’.145
In 2012, according to a report by Lumen Legal, was considered that the use of
document automation by lawyers, to create documents and packages, can increase their
effectiveness by 80%.146
Until 2015, the existing document automation tools were difficult to use, and
inefficient from the profitability point of view due to the billable hour practice. In the
same year, Geoffrey Goldberg suggested that the:

[...] corporate clients continue to pressure their law firms to cut costs,
increase efficiency and move to fixed fees and alternative fee arrangements.
[...] Law firms are also grappling with partners and associates jumping from
firm to firm, taking knowledge and clients with them. Document automation
can help address all of these problems.147

Document Automation Software plays an important role when it comes to Legal

Tech solutions. This technique increases the quality and efficiency of legal work,
generating legal documents in an effortless and faster way, with fewer errors. All the
document templates are centrally managed, all the updates being available to all
users.148
Through this technology, it is expected an increase in the efficiency of lawyer work
and a reduction of firms reliance on the billable hour resulting into significant savings
for the clients, and increase profitability for the firm.149
The program is designed to generate parts of a document which can be standardised
and reproduced for each case, lawyers being able to dedicate more time on those parts
that depend on their assessment.150

145
Geoffrey Goldberg, 'What Is Document Automation?' (Law Technology Today, 30 January 2015)
<https://www.lawtechnologytoday.org/2015/01/document-automation/> accessed 19 July 2019.
146
How Law Firms Use Document Automation to Turn Today’s Price Pressures Into a Competitive
Advantage (Lumen Legal 2012) <http://www.lumenlegal.com/wp-content/uploads/2012/07/Legal-
Document-Automation-Report.pdf> accessed 19 July 2019.
147
ibid.
148
Tom Braegelmann and Markus Kaulartz, ‘Smart Contracts for Modern Lawyers’ in M. Hartung, M.M.
Bues and G. Halbleib (eds), Legal Tech: How Technology is Changing the Legal World, A Practitioner’s
Guide (C.H. Beck, 2018).
149
Goldberg (n 145).
150
ibid.

44
 Being a new practice, it encounters challenges when it comes to an understanding of
how it works and how the lawyers can benefit by using this technology.
An automated document creation program works in general based on individual
document templates, called programmed-templates.
First, to develop a programmed model, the existing templates will be included in a
single pattern. Second, the obtained template will be algorithm-based, and, in the end,
the model will be programmed.151
The first two steps have their bases on legal work that can be carried out by lawyers
with specialised training. The final step involves specialists and a technical approach,
which includes the use of variables and control commands founded on a specific
programming language.152
PerfectNDA is a software, developed by the Artificial Intelligence software platform
Neota Logic System, that ensures correct non-disclosure template selection and
automates non-disclosure document filing, based on the user’s existing templates.153
In the end, the user can fill in a non-disclosure agreement in ‘six clicks’, having more
time to dedicate to the ‘business at hand’, thus providing efficiency for the professional
and the firm.154
The main achievement of the use of document automation is the reduction of the
unrecoverable hours associated with document drafting, in this way helping the law
firms to bring new clients, and to increase profits by combining better services at lower
costs.155
Another accomplishment can refer to knowledge management and retention. By
using technical language, the lawyer's expertise is codified and maintained in the
system, which helps the firm to reduce knowledge drains.156
The lawyers should understand how to use the program based on their field of
practice, and what tasks are appropriate for the use of templates, in this way a proper
implementation of the software in the law firm structure leads to an efficient way of
using it.

151
Braegelmann (n 148).
152
ibid.
153
'Perfectnda - Neota Logic' (Neota Logic) <https://www.neotalogic.com/product/perfectnda/> accessed
19 July 2019).
154
Braegelmann (n 148).
155
ibid.
156
ibid.

45
 3.4.2. Smart Contracts and Blockchain Technology
To understand how Smart Contracts work and how law firms and their clients can
use them, the author considers it necessary to describe Blockchain technology and its
features.
The Blockchain is considered a decentralised and distributed cryptographic digital
‘ledger’ used for recording transactions. This technology allows clients who do not
know or trust each other to engage in an extensive digital record of ‘who owns what’
that enforces the consent of everyone concerned.157
Blockchain technology represents a new infrastructure for data storage and software
application management, decreasing the need for centralised control.158 It constitutes a
public database having the potential to store and transfer tangible assets such as physical
properties, and intangible assets such as information, reputation or ideas.159
This technology can be regarded as a robust public database with a high level of
trust, which allows parties to send, receive and store information through a distributed
peer-to-peer network of multiple computers. Every transaction circulates through the
entire system and, when it ratifies the validity of the transaction based on past deals
from the previous blocks, it is recorded on a ‘block’. Each block follows the other one
successively, keeping the complete history of all transactions that have been done, not
allowing the parties to erase or hide certain information.160
The Blockchain purpose is to provide transparency, through a checkable way of
keeping transactions, as everyone holds the ledger, and to present trust, for the
distrustful parties when it comes to contracting without intermediaries, through the
inflexibility of these transactions using a consensus protocol.161
By acting as a database that keeps every transaction executed in the network, it is
trying to decentralise the certification process, providing a high level of security and
protection for the parties.162

157
Corrales (n 85) 2-3.
158
Primavera De Filippi, Aaron Wright, Blockchain and the Law : The Rule of Code (Harvard University
Press 2018) 33.
159
Corrales (n 85) 3.
160
ibid.
161
Vanessa Mak, Then Foek Eric Tjong Tjin Tai and Anna Berlee, Research Handbook In Data Science
And Law (Edward Elgar Publishing 2018) 159.
162
ibid.

46
 The first Blockchain was an essential characteristic of Bitcoin, a cryptocurrency
created by Satoshi Nakamoto163 to prevent ‘double spending’, acting as an autonomous
public recorder for all Bitcoin network transactions.164
In 2016, the founders of Slock.it165 launched the first decentralised independent
organisation called ‘The DAO’, based on the blockchain platform Ethereum166. This
‘employee-less company’ was entirely controlled by its shareholders and raised more
than $150 million US from the sale of the virtual tokens to them. More than that, the
shareholders were able to sell their virtual tokens on a range of web platforms or to
transfer these currencies on the Ethereum blockchain and redeem them through ‘DAO
Entity ‘’split’’ process’.167
In the same year, an anonymous ‘hacker’ succeed to hack the system and, by using
the terms and conditions of the smart contracts and truly understanding them. The
hacker was able to design the program to give back multiple times the DAO’s
currency168 before the smart contract could update its balance and diverted between $40
and 50 million US from the company fund.169
Even though DAO was designed to be a fully decentralised peer-to-peer network
company, its founders admitted that the members from the DAO’s community were
looking for leadership.170
Cryptocurrencies, based on the decentralised Blockchain technology, such as Bitcoin
or Ethereum, have led to the appearance of Smart Contracts.
Back in 1996, Nick Szabo was the first one who approached the concept of Smart
Contracts and defined a contract as ‘a set of promises agreed to in a meeting of the
minds’, as ‘the traditional way to formalise a relationship’.171

163
Satoshi Nakamoto is a pseudonym that referes to a person or a group of people, credited for exploring
the first block of Bitcoin in 2008. <https://nakamotoinstitute.org> accessed 19 July 2019.
164
Corrales (n 85) 4-5.
165
Slock.it is an online company that works with stratups and corporations worldwide to implemnet
secure and functional blockchain solutions, <www.slock.it> accessed 19 July 2019.
166
Ethereum is the world’s leading programmable blockchain, launched in 2015 by the programmer
Vitalik Buterin, and has a native cryptocurrency called Ether. <https://www.ethereum.org> accessed 19
July 2019.
167
Mak (n 159) 161.
168
Samule Falkon, 'The Story Of The DAO — Its History And Consequences' (Medium, 24 December
2017) <https://medium.com/swlh/the-story-of-the-dao-its-history-and-consequences-71e6a8a551ee>
accessed 19 July 2019.
169
Mak (n 159) 161-162.
170
Falkon (n 168).

47
 Regarding smart contracts, he stated that:

I call these new contracts ‘smart’ because they are far more functional than
their inanimate paper-based ancestors. No use of artificial intelligence is
implied. A smart contract is a set of promises, specified in digital form,
including protocols within which the parties perform on these promises.172

Wattenhofer provides a definition that connects both Blockchain technology and

Smart Contracts as ‘an agreement between two or more parties, encoded in such a way
that the correct execution is guaranteed by the Blockchain’.173
Since the first emergence of it, the concept of Smart Contracts has gone through
development and innovation, nowadays it can be described as software that runs in a
digital environment to generate and enforce legal agreements or statutory obligations.174
Smart Contracts developers consider that ’in many ways, smart contracts are no
different than today’s written agreements’.175
Figure 13 below describes, in short terms, how a Smart Contract is designed by using
Blockchain technology:

The agreement is
plugged into the
• The seller eco-sytem • The contract
makes its executes itself
conditions • The buyer (Smart
agrees with Contract)
these
conditions The parties can
Agreement track the
transactions

Figure 11: How Smart Contracts work?176

171
Nick Szabo, 'Smart Contracts: Building Blocks For Digital Markets' (Fon.hum.uva.nl, 1996)
<http://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CDROM/Literature/LOTwinterschool200
6/szabo.best.vwh.net/smart_contracts_2.html> accessed 20 May 2019.
172
ibid.
173
Roger Wattenhofer, The Science of the Blockchain (CreateSpace Independent Publishing Platform
2016) 88.
174
Braegelmann (n 148).
175
De Filippi (n 158) 74-75.
176
Adapted Corrales (n 85) 21.

48
 As shown in Figure 11, in order to execute a Smart Contract, parties have to
negotiate first the terms of their agreement. Once agreed, the clauses are recorded in
Smart Contract code, triggered by digitally signed Blockchain-based transactions. In
case of disputes, parties can renegotiate the arrangement or address to a court or
arbitration panel for compensations.177
From the legal point of view, a Smart Contract is a software programmed to perform
an obligation which has been already legally agreed outside of the code by the parties.
The duties are not written in a common legal language. They are integrated into the
system by using a programming language which offers the ability of a smart contract to
enforce those obligations by using an autonomous system.
In other words, by using computer code, the parties can negotiate complex
transactions, with reduced costs outcoming from the absence of third parties. Also,
Blockchain is working continuously, thus with this technology, time and transaction
costs are reduced, providing greater efficiency when doing long term business.178
Figure 12 illustrates a comparison between the traditional use of contracts and the
future applications of Smart Contracts in the legal system:

Traditional perspective of
Future perspective of contracts
contracts

Contracts designed legally Contracts that facilitate and guide

perfect that seek to allocate the parties desired actions and help
risk to the other party them implement the agreed terms

Contracts as a legal tool: legally Contracts as business tools: clear

binding and enforceable and easy-to-use

Contracts allocate risk Contracts add value

Contracts presented as text, code,

'Text-only' contracts
visuals, audio, video or hybrids
Figure 12: Future perspective of contracts179

177
De Filippi (n 158) 74-75.
178
Corrales (n 85) 5.
179
Adapted from Corrales (n 85) 9.

49
 Even though the use of smart contract in the legal system is still rare, the European
Parliament resolution from 2016 encourages this practice by ‘recognising (...) the
potential of smart contracts combined with digital signatures, applications allowing for
heightened data security and synergies with development of the Internet of Things’.180
Since the Blockchain and Smart Contracts are new and disruptive technologies, the
implementation in the legal field remains difficult. Understanding and using these
solutions requires technical competence and skills and finding specialised personnel to
adapt it within the structure of law firms can take time.181
One of the main issues of using Smart Contracts remains the difficulty to embed the
laws into the digital code and to translate the technical language into an agreement.
Because such language uses algorithms, lawyers or legal professionals should be able to
understand coding and to learn how to code.182
Another legal challenge appears to be the anonymity regarding the use of
cryptocurrencies, which can facilitate criminal activities such as money laundering or
selling prohibited goods online.
The lack of regulation in this field generates not only some legal concerns but also
stagnates the development and adaptation of Blockchain and Smart Contracts.183

180
European Parliament Resolution of 26 May 2016 on virtual currencies [2016] (2016/2007(INI))
2018/C 076/13.
181
Corrales (n 85) 6.
182
De Filippi (n 158) 191
183
De Filippi (n 158) 192.

50
 4. A NEW BUSINESS MODEL PROPOSAL

The legal advice delivery market is reshaped by the development of Legal Tech
solutions together with new demands from modern clients, as shown in the figure
below.

Traditional Modern Legal

Legal Industry Industry
(today) (tomorrow)

Client • Need for legal Need for project management,

Demands advice cost reduction and efficiency

Legal advice, project management, case

Offering • Transactions
(services) and legal advice management, legal-tech consulting, online
dispute resolution and contract management.

Pricing
• Billing per hour Fixed price and billable hour
Structure

Figure 13: New demands of modern clients compared with traditional ones184

At the beginning of 2019, the Legal Tech market was estimated to be a $16 billion
industry, providing solutions and tools for both law firms and legal departments.185
This chapter will explore some changes that a law firm should implement to succeed
in the new market hit by digital transformation.

4.1. Improving Access to the Legal System through Technology

The digital transformation represents ‘the use of digital technologies to change a
business model and provide new revenue and value-producing opportunities; it is the
process of moving to a digital business’.186
The digitalisation of the legal industry involves the use of technology to improve
productivity and add value to firms and to reduce the cost of legal services delivery.
184
Adopted from The Boston Consulting Group and Bucerius Law School (n 19) accessed 17 May 2019.
185
Kirk Mahoney, 'Legal Tech Market Overview, Catalyst Investors' (Catalyst.com, 29 November 2017)
<https://catalyst.com/research_item/legal-tech-market-overview/> accessed 24 July 2019.
186
Bues (n 3) 15-26.

51
 To benefit from the new digital tools, law firms have first to change their mindset,
business culture and models.
This change involves new adaptations, which will allow the legal professionals to
investigate, experiment and embrace recently developed technologies. Enhancing the
traditional business model based on new digital designs is required for the changing and
challenging market environment.187
Professor Jonathan Molot of the Georgetown Law School states in one of its studies
that ‘the law firm partnership is a poor institutional choice for the delivery of legal
services in today’s legal market. Its structure fails to serve virtually all of its
stakeholders.’ 188
Most of the worldwide law firms are structured in fixed departments, which control
and organise the lawyers.
By using technology, the new structure will focus on project teams to achieve
particular aims.
Also, in the traditional business model, every law firm bills its clients and
compensates its lawyers based on the amount of time used to deliver the legal services.
An innovative structure will require a new billing system.
The new technologies, the automation of the services and the multi-sourcing have a
clear objective, to reduce the amount of time and improve the productivity for
delivering legal counselling.189
To increase their profitability in a new digitalised market, law firms should rethink
two elements: their value and their operating model.
First of all, to achieve a sustainable transformation, traditional law firms should aim
the following goals:190
• Understand how digital solutions can be utilised in daily work, to win market
shares, add value, increase productivity, and decrease costs;
• Take a look at the clients’ demands and gain their insights into the new services;
• Obtain information about technologies that are threatening their business;
• Develop a business model which will address these opportunities and threats.

187
ibid.
188
Jonathan T. Molot, What’s wrong with law firms? A corporate finance solution to law firm short-
termism (Southern California Law Review, Vol. 88:1, 2014) 4.
189
Bues (n 3) 15-26.
190
ibid.

52
 To fulfil these goals, firms have to go through two steps. 191
The first step involves the creation of a new vision by making research on the digital
market.
The second point includes the establishment of precise goals by following the
S.M.A.R.T. criteria, which means to set specific, measurable, attainable, relevant and
time-bound goals.192

4.1.1. A New Business Model

As mentioned in the previous chapters, the Legal Tech landscape includes three
categories: enabler technology to facilitate the digitalisation, programs for support-
process, and substantive law solutions.
Any legal business has to start its digital transformation by creating a clear strategy
and vision. Legal Tech is an enabler of digital transformation, and together with a good
tactic, strong leadership, and developed culture drives the business innovation and
evolutions.193
To survive in the new digitised legal market, and to generate and offer value, law
firms should implement these approaches in their business model.
But the development of a new business model requires significant investments and
alteration of the products and services offered.194
By implementing new products and services, the firm should also find new ways of
remuneration and revenue generation.
For example, a digital business model may include developing software and
designing a new pricing model for an additional cost and offer value to clients. More
than that, law firms can create digital platforms for legal advice, which will improve the
platform value for clients.195
In the new business model, law firms should reshape the value proposition by
offering more than support on litigation and transaction cases. They can also provide

191
ibid.
192
ibid.
193
Prasanna Kumar Illa, 'Integrations: Key Technology Enablers In Digital Transformation'
(DATAVERSITY, 1 October 2018) <https://www.dataversity.net/integrations-key-technology-enablers-
digital-transformation/> accessed 22 June 2019.
194
ibid.
195
ibid.

53
project management by creating a department dedicated to this new service to leverage
legal technologies.196
Also, they can implement in their practices, advanced legal analytics and decision-
support solutions. Going further, the law firms can become intermediate between clients
and Legal Tech providers, and guide clients to legal outsourcing partners to retain
control over mandates and strengthen their business.
Scholars have developed three strategic growth paths for successful companies that
can be implemented by the ambitious law firms, namely:197
• Build Strategy
• Borrow Strategy
• Buy Strategy
Build Strategy involves the development of internal Legal Tech solutions inside of
the firms. The design of new capabilities can be seen as a resource straining exercise, by
using the software developers, data analysts and coders from different parts of the
business can create the right environment for a law firm to explore this strategic
option.198
Borrowing Legal Tech solutions by contracting or signing partnerships with external
Legal Tech startups may be another strategy for the law firms digital transformation.
Law firms can achieve this plan by following two paths: by licensing the Legal Tech
solutions, either through strategic partnerships with Legal Tech entities.199
The possibility of buying Legal Tech solutions is another strategy for the firms to
integrate technology into their business model and practice.200
This research concludes four types of legal businesses that will exist in the future:
• Law firms. The already existing law firms, with the traditional mindset and
business structure, that refuse to develop and struggles with the market
competition.

196
The Boston Consulting Group and Bucerius Law School (n 19) accessed 17 May 2019
197
Laurence Capron, Will Mitchell, Build, Borrow, or Buy: Solving the Growth Dilemma (Harvard
Business Review Press 2012).
198
ibid.
199
ibid.
200
ibid.

54
 • New law firms. These are the existing law firms that are open to digital
transformation and decide to implement technologies in their legal service
delivery.
• Legal Tech firms. The Legal Tech startups that provide more accessible and
cheaper access to legal information and legal aid.
• Corporate legal departments. The future corporate legal departments provide
reduced legal costs, improved contract reviewing and drafting and contract
management, and automated daily tasks run by Legal Tech tools.

4.1.2. An Innovative Business Structure

Digital transformation also has a massive impact on law firms structure, hierarchies
and revenue.
The traditional pyramid model, in which the revenue is based on the daily associates’
work and high hourly rates, will be replaced with the ‘rocket-shaped model’, in which
clients will demand to pay fixed fees for legal services, and a partner will have fewer
associates, who will be supported by software and digital tools, as shown in Figure
14.201

Cooperation

Outsourcing Tech
Partners Solutions
Project Tech
Manage Manage
r r

Paralegals Legal Tech

Figure 14: The pyramidal structure of the future law firm business model202

In the new model, a new hierarchy will be adopted due to the decrease in revenue
generated by a partner.
201
The Boston Consulting Group and Bucerius Law School (n 19) accessed 17 May 2019.
202
Adapted from The Boston Consulting Group and Bucerius Law School (n 19) accessed 17 May 2019.

55
 For example, central management that will execute complex decisions will replace
the traditional decision-making power of the partner.203
The conventional career track will also be changed. Associates will no longer have
the possibility to become partners because the number of partners will not increase. In
this situation, modern law firms should find new ways to recruit young lawyers and
compensate for this decrease in opportunity.204
Also, with the digitalisation of the law firms, the number of non-lawyers will
increase by hiring digital, technological and operational experts. This significant
investment in the workforce brings forth a new challenge for firms: to cede power to
non-lawyer staff. Investing in software means that the non-legal departments will have a
leading role in digital transformation, which leads to a new corporate structure where
external investments and mitigation risks will rise.205
Another challenge for law firms is the pricing model. Traditionally, law firms have
used as a pricing method the billable hour model.
According to the new developments, this pricing structure has to be changed and
adapted to new clients demands.
To rethink the pricing approach, a law firm should follow some steps:206
• Get insight into clients price expectations;
• Analyse how their services are provided and what can be changed;
• Develop a cost structure based on each service delivered;
• Design templates for each task, level of fee earner and time required;
• Implement an automated management tool incorporating the template created.
As a new cost structure, law firms will move to a model based on wages and
technology, which will bring cost-saving efficiencies.
Standard tasks will be handled by digital programs in a quicker and errorless manner,
and by changing the revenue model to fixed pricing, the young lawyers will have a
motivation to be more efficient and productive.

203
The Boston Consulting Group and Bucerius Law School (n 19) accessed 17 May 2019
204
ibid.
205
ibid.
206
Hodgar (n 26) accessed 21 May 2019.

56
 4.2. The New Client’s Relationship
For generating profit and creating value for the law firm, the new business model has
to create value for the clients.
Firms must understand their clients' needs and what they expect from the legal
industry to deliver legal services at the right price and with an increased value. But,
complying with the clients' needs and demands presents the most challenging
transformation for law firms.
Clients have started to ask for higher transparency on fees, quicker analysis of facts
and better advice despite the quality of data at hand, and for delivering these requests,
law firms should rethink the ‘lawyer-client relationship’.207
A new dynamic relationship requires a business model adapted to the changes in the
clients’ operating environment, which can be achieved by supporting client value
creation, through business development processes, client management processes,
delivery of services, as well as pricing and revenue flows.208
While technology is developing fast, advice should be offered to the clients more
proactively and preventatively, the human aspects remaining very important.
Lawyers should become more enterprising and provide a customised service to
clients. As an example, client relationship management can be implemented in the firm
structure, which will gain clients’ support and understanding.209
According to BDO Report from 2017, to obtain a new relationship, the law firms
have to approach the following changes:210
• Improve connectivity and integration
• Price changes
• Less face-to-face interaction
• Closer partnerships
• Better collaboration between clients, law firms, and third partners

207
ibid.
208
ibid.
209
Sdu, ‘European Legal and Tax innovation Study’ (SDU 2018-2019)
<https://www.sdu.nl/content/sites/default/files/PDF/Sdu_European%20legal%20and%20tax%20innovatio
n_NL.pdf?utm_source=marketingmail&utm_medium=email&utm_campaign=innovationstudy&utm_con
tent=bedankmail&utm_term=do> accessed 21 May 2019
210
BDO, ‘Report 4: Changing Client Relationship’, Law Firm Leadership Series - Managing rapid
change (BDO 2017) 1-10, (available: < https://www.bdo.co.uk/en-gb/law-firm-leadership-series-
2017/overview>) accessed 21 May 2019.

57
 Improved connectivity and inclusion requires a proper implementation process of
technology between law firms and their clients, platforms for sharing data and
management tools and a collaborative online workspace.
These transformations will give clients more control by having direct access to data
and more transparency on their case progress and costs.211
Regarding the price changes, new fees should be designed to deliver clients more
value and transparency, which will offer the ability to share more of the risks and
reward with their law firms.212
The ability to communicate with the clients using online tools will bring more
flexible working arrangements for lawyers and lower costs for clients. Law firms should
not forget to balance the capacity to work remotely with the necessity to build closer
relationships with clients.213
Finally, lawyers and other experts will have to learn how to work together to provide
more advice and support to their clients.
A new relationship means ‘identifying those areas where we are able to make a
difference and create value to our client's business - being trusted partners, and not just
trusted advisors’.214

4.3. The Law Firm and Lawyer of the Future

The development of technology has announced to bring changes in the future legal
landscape. It will change the business model and structure of the law firms, will
transform the pricing structure and will lower the number of legal professions by
changing the nature of legal jobs.
The future law firm will be geographically broader, with offices and expertise
worldwide, offering to their clients a more comprehensive range of legal services,
provided with the help of technological solutions.215

211
ibid.
212
ibid.
213
ibid.
214
ibid.
215
The Law Society of England and Wals, ‘Capturing Technology Innovation in Legal Services’ (The
Law Society 2017) <file:///C:/Users/Dobre%20Catalina%20Elena/Desktop/capturing-technological-
innovation-report.pdf> accessed 21 May 2019.

58
 Clients will expect an increase in advice delivery and more accurate information.
Therefore the services provided by the law firm have to be easy-to-understand and easy-
to-use.
In the legal business will appear narrower cylinder for lawyers, and ‘non-lawyers’
departments, while some tasks performed by full-time associates will be augmented by
technology.
Another aspect of the future law firm is the concept of ‘data-driven business’. Law
firms will operate based on data-supported knowledge of clients history, which will
provide them access to information for consulting purpose.216
The goal of the firm will change from ‘selling the diverse skills of a law firm’, to
develop tailor-made offers based on knowledge and forecast of future client needs.217
Implementation of technological services will lead to an extension of the labour
division. The non-lawyers, such as programmers, data analysts, and legal technicians,
will work next to lawyers, to design new legal products and services.
Also, new firm management will be implemented, consisting of partners and
professional managers who will share responsibilities and be accountable for their
fields.218
For future law firms, another change is the opportunity to invest. For a full
implementation of the digital transformation, the firm will have to invest in technology,
training and more education.219
Development of Legal Tech has a significant impact on future law firms. They will
be based on a cooperation system between lawyers and non-lawyers, a client-centred
design of new and user-friendly products and services, and increased efficiency and
productivity.220
Future lawyers will be cross-competent leaders who will provide full services for
their clients, and will combine human skills and digital skills.

216
Hariof Wenzler, Big Law & Legal Tech in M. Hartung, M.M. Bues and G. Halbleib (eds), Legal Tech:
How Technology is Changing the Legal World, A Practitioner’s Guide (C.H. Beck, 2018) 44-48.
217
ibid.
218
ibid.
219
ibid.
220
Michele DeStefano, Erika C. Pagano, Transforming Lawyer-Client Collaboration and Creating Lasting
Change Through LawWithouthWalls in M. Hartung, M.M. Bues and G. Halbleib (eds), Legal Tech: How
Technology is Changing the Legal World, A Practitioner’s Guide (C.H. Beck, 2018) 207-212.

59
 The Lawyer Skills Delta represents a new concept based on the most relevant skills
that a future lawyer needs to possess to provide full-service-client-service, stratified into
three levels.221

Ecstatic Full Service

Clients Client Service
Innovation

Collaborative,
Desired
Creative Problem
Finding & Solving

C.O.S.T.
Necessary (Concrete, Organizational, Service,
Tech)

Unhappy
Clients
Figure 15: The Lawyer Skills Delta222
At the bottom of the pyramid are concrete, organisational, service-oriented, and
technology-related skills (C.O.S.T. Skills), related to cost, in terms of time and
money.223 The future lawyer will have to master these skills to be cost-efficient and
time-effective.
The middle level contains skills related to the legal practice: collaborative, creative
problem finding and problem-solving. Because the clients start to care more about the
way that the solution is delivered, the future lawyer should be able to apply creative and
collaborative problem finders and solvers, by showing empathy and cultural
competency.224
At the top level of the pyramid are the skills related to innovation and
entrepreneurship.

221
ibid.
222
Adapted from DeStefano (n 220).
223
DeStefano (n 220) 207-212.
224
ibid.

60
 The future lawyer should be able to adopt a new mindset, based on innovation and
creativity, opened to technology development and ready to adapt to the new
transformations.225

4.4. The Challenge of Adaptation and Keeping Up

As mentioned in the previous sub-chapters, the transformation of law firms requires
to comply with the needs and expectations of clients as shown in Figure 13.
For this accomplishment, legal businesses will have to reconfigure the employing,
compensation and training system. But the biggest challenge for the law firms will be
the adaptation to a digitilized legal landscape.
Legal Tech tools are used in the legal industry to overcome the challenges that
system has encounter and to offer sustainable solutions for law firms.
• Inflexible working
The legal profession is relying on accessing and analysing a massive amount of data
and documents, which will limit the lawyer’s flexibility to work.
The use of Legal Technology is bringing in the system ‘remote working’.226 Due to
the cloud-based file management system, lawyers can perform their tasks from
anywhere.
• Data vulnerabilities
The legal system consists of a large amount of clients data, making it the aim of
cyber attackers. To overcome this issue, some law firms have enforced, in their
departments, cybersecurity teams, able to design solutions to tighten security.227
• Time-consuming process and research
Lawyers are spending a lot of time on the administrative and the routine low-skilled
tasks. The implementation of process automation in the legal sector is a solution for
time efficiency.228

225
ibid.
226
Melissa Taylor, ‘How Legal Tech is Overcoming Challenges in the Law Industry’ (Luminous PR 20
February 2018) <https://luminouspr.com/legal-tech-overcoming-challenges-law-industry/> accessed 21
May 2019.
227
ibid.
228
ibid.

61
 By using technology to automate time-consuming daily tasks, the lawyers can focus
more on creating value for their clients. However, these solutions are not yet flawless
and have raised some legal matters.
The new developments of software and programs are bringing some concerns
regarding the use of Artificial Intelligence, such as:
• Transparency.
Transparency is known as a fundamental principle of justice, and it is the demand to
justify the reason for a decision. It applies across all the legal fields, both in public
institutions and within corporations.
In the application of technology, this principle is challenged, as more innovative
algorithms are designed, their inner workings become more complex and hard to make
sense.229
Besides this, most of the software programs are self-organising, without having
external guidance, which raises other issues around governance and liability, societal
impact, and human rights.230
• Ethics
When it comes to ethics in the Artificial Intelligence field, the difficulty is that the
software can teach itself most of the decision-making rules and the lawyers will not
know how or why the program provides individual conclusions.
As mentioned in the previous chapter, a new challenge for lawyers is the learning of
a minimum base about technology to fulfil the ethical standards.
• Liability
In all legal fields, the liability is an established principle, but in case of damages
produced by software tools, assigning responsibility is a challenge. Artificial
Intelligence systems are reliant of the data they were trained on, and in case of
interaction with other networks, the concept of liability becomes difficult to be
applied.231

229
The Law Society, ‘Artificial Intelligence and the Legal Professions’ (Academia 2017)
<https://www.academia.edu/36920594/Artificial_Intelligence_and_the_Legal_Profession> accessed 21
May 2019.
230
ibid.
231
ibid.

62
 In 2016, in a European Parliament resolution, an European Union committee concern
by this liability issue argued that ‘traditional rules will not suffice’ because it is not
possible to identify the responsible for the damages. 232
Also, in the same resolution, the committee says that Artificial Intelligence systems
are too vulnerable to hacking. 233
The issue of liability around artificial intelligence solutions can increase the need for
legal advice, but for that, the lawyers should be prepared to implement and monitor
these technologies.
• Electronic personhood
In the same European Parliament resolution, The European Union committee also
referred to the possibility of Artificial Intelligence and Robots to deserve
‘personhood’.234 They decided that rights and responsibilities have to be defined, similar
to corporate personhood.
The committee added that this not means that robots will have rights, but a legal
fiction will facilitate the application of current laws, and this can lead to a massive
disruption to the traditional social and economic norms.235
As this paper showed, technology can lead to the democratisation of legal services,
and even though Legal Tech is the solution for some flaws in the legal market, it also
brings some challenges in the system.
Nowadays, Legal Tech puts pressure on the traditional law firms business model
regarding the billable hour system, and transparency in both pricing and customer
reviews.
Also, these developments, through the use of programs and robots, are taking the
lawyer’s monopoly on legal knowledge and legal advice delivery, by decreasing the
time spent on a case.
On the other hand, the demand of legal professionals on the market is continuously
increasing, because no matter how skilled programs and software become, the use of
Artificial Intelligence will not replace the need for legal experts.

232
European Parliament Resolution of 16 February 2017 with recommendations to the Commission on
Civil Law Rules on Robotics [2017] (2015/2103(INL)).
233
ibid.
234
ibid.
235
ibid.

63
 Likewise, access to legal services is more accessible due to the development of
platforms and fixed-price schemes, which can lead to more demand in the market.

64
 CONCLUSION

The legal profession is one of the oldest occupations in the world, having a history
for almost two thousand years, and well-established traditions and peculiarities.
During the years, the legal advice has been given by lawyers working in law firms,
with a clear career path, having the opportunity to be promoted from junior associates to
partners.
In the firm, the hierarchy was clear, based on pyramidal structure: lawyers, divided
into partners and associates, were responsible for delivering legal services, while the
other legal professionals, such as paralegals, had the duty to help the lawyer in their
daily tasks. Based on this structure, the lawyers were in the top and middle of the
pyramid, putting their expertise, skills, and experience in each case, aiming for a
favourable decision.
Nowadays, the law industry is becoming more challenging. The information is
becoming more accurate and precise, and the market is facing an increased amount of
data to be analysed.
Today’s clients are demanding high-quality legal services and lower prices for legal
advice delivery. Also, they expect more collaboration between law firms and external
parties, and implementation of technological tools, in order to provide certain
information, faster, and in a transparent way.
As the author mentioned in this paper, the development of legal technology software
and programs has the potential to achieve the clients’ demands, ensuring cost and time
efficiency and decision-making effectiveness. But, to implement all these benefits, law
firms have to rethink their business model, including their field of practice and billable
system, and to embrace the possibility to outsource time-consuming daily tasks.
For a system that suffers from slow change, but showing a desperate need for
innovation, the implementation of technology requires changes in the traditional
mindset of the legal profession, with respect to how a law firm should work, not only
based on the power of lawyers, but also the cooperation between them and independent
professionals.
Equally noticeable is some legal experts’ willingness to adapt to a new system and to
explore new perspectives, taking advantage of the possibility to determine the future of

65
the legal system and legal professions, by creating the modern law firm able to face the
new challenges that technology will bring in the future.
On the contrary, if the law firms business model will not be reinvented and altered to
the new technological conditions, it is likely the firm will suffer a decline or will have to
compete, unprepared, with other firms better adapted to the new digital landscape.
The future law firms have to see the lawyers as specialists, with newly developed
skills, competent to fill in the gaps that technology is not able to address. This change
requires the creation of a new career path with a different type of compensation system
and an innovative pricing model.
Of course, no one can predict what the future will be like, but the existing legal
system should be open to finding the best solutions to implement all the changes that
technology has brought so far, and will bring in the next years.

66
 ABBREVIATIONS

BDO Binder Dijker Otte

C.O.S.T Concrete, Organizational, Service-oriented, and
Technology-related skills
FRA The European Union Agency for Fundamental
Rights
IBM International Business Machines Corporation
IRPAAI The Institute of Robotic Process Automation and
Artificial Intelligence
IT Information Technology
MV Machine Vision
OECD Organisation for Economic Co-operation and
Development
RPA Robotic Process Automation
S.M.A.R.T. Specific, Measurable, Attainable, Relevant and
Time-bound goals.

67
 TABLES AND FIGURES

Table/Figure Description Page Number

Table 1 The main application of Legal Tech tools in legal 8
practice
Table 2 Cost-benefits comparison between Legal Tech firms 9
and traditional firms
Figure 1 Investment in Legal Tech worldwide ($M) 15
Figure 2 Growth predictions of the global legal market ($B) 17
Figure 3 The hierarchy in traditional law firms 19
Figure 4 The pyramidal structure of the traditional law firm 19
business model
Figure 5 Legal and Legal Tech companies worldwide starting 24
with 2010
Figure 6 Worldwide Legal Startups evolution starting with 24
2010 (companies number worldwide)
Figure 7 The disruption process and new fees model 26
Figure 8 The external drivers of change in the Legal Industry 28
Figure 9 The internal drivers of change in the Legal Industry 29
Figure 10 Legal Tech Key Market Segmentation ($M) 32
Figure 11 How Smart Contracts work? 48
Figure 12 Future perspective of contracts 49
Figure 13 New demands of modern clients compared with 51
traditional ones
Figure 14 The pyramidal structure of the future law firm 55
business model
Figure 15 The Lawyer Skills Delta 60

68
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