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6 Legaltech Trends To Watch In 2023

2023 will see legal departments focused on technology solutions that provide efficiencies and solve pain points. Rumours of a recession will lead investment in legal tech to be more strategic and benefit based. With research indicating that legal departments will increase their legal technology spending threefold by 2025, tools that improve the efficiency in the delivery of legal services will lead from the front. With almost three years of uncertainty and volatility behind us, no one knows what lies ahead but let’s prepare for a fun ride!

Whether you are part of an in-house legal team or a law firm, improving efficiencies, lowering costs, and freeing up lawyers’ time will remain high on the radar. With the end of 2022 in sight, there has been a multitude of recent events that will remain top of mind while we enter 2023. The increase in high-profile data breaches, a looming recession, an energy crisis, and political instability, to name a few.

In this article, Conventus Law shares what are considered to be the top 6 legaltech trends to watch in 2023.

1. Cyber security

Right now, the hottest topic is cyber security, and we do not expect that to change in 2023. Large, trusted companies have had their reputations tarnished. There is a general air of chronic unease within the business community as it’s no longer a case of if a cyber attack happens but when. The global average cost of a data breach increased 2.6% from $4.24 million USD in 2021 to $4.35 million USD in 2022 — the highest it’s been in the history of IBM Security’s “The Cost of a Data Breach Report.”

Legal technology will support companies in their management of cyber incidents with new cyber incident reporting tools, cyber incident response plan management and secure data sharing. Platforms outside of an organisation’s internal IT systems may be considered beneficial as they can be accessed if an attack happens and the organisation’s internal systems are compromised.

Legal departments and law firms will also need to be hypervigilant about the secure transfer of information, storage of documents, and maintaining cyber safe work practices.

A helpful resource for legal professionals, the Law Council of Australia Cyber Precedent website provides information and educational materials to help lawyers defend against online threats. It covers topics including cyber security risks, moving to the cloud, protecting against ransomware, cyber insurance, and cyber risk management, along with helpful tools.

2. Client-to-firm regulatory workflows

As the global regulatory environment increases in complexity and scale, appropriately managing regulatory frameworks and maintaining legal compliance is becoming a significant challenge.

Law firms will develop innovative ways to solve clients’ pain points with customised client- or industry-specific regulatory workflow solutions. Incorporating a law firm’s knowledge and expertise with workflow automation technology will help clients navigate new challenges and regulatory obligations. Some modern legal technology platforms are highly configurable and designed to be two-sided (client-to-firm), ensuring the secure transfer of information, instructions, advice, and client collaboration.

Deploying easy-to-use workflow solutions for privacy, regulatory reporting, data subject access, and freedom of information requests will embed the law firm into their client’s business operations, securing long-term, mutually beneficial relationships.

3. Controlling external spend

Modern spend management practices and legal technology solutions must focus on the entire process of engaging a law firm and managing a matter, not just interrogating the bill after the work is completed. This starts with ensuring that instructions to law firms are sufficiently detailed and broken down into phases of work if appropriate. Best practice also suggests that when briefing matters to outside counsel, the legal team can either send instructions to one law firm or opt to send a competitive brief (RFP) to multiple law firms to obtain competitive quotes. Ideally, the decision framework for briefing law firms has an agreed protocol and logic. Technology can be a powerful enabler to streamline and provide the structure for this.

Use technology to compare and select preferred law firms based on defined criteria (price, experience, project management, etc.) and document the estimated budget (or alternative fee arrangement), agreed scope of work, and assumptions. Once this is set, variations can be monitored, managed, approved and tracked collaboratively with the law firm. Visualised reports and analytics can inform the progress of actual spend compared to initial and current estimates, along with reasons for scope changes.

In summary, an innovative approach to spend management allows legal departments to demonstrate value whilst reducing waste and increasing efficiencies. Importantly, precise, repeatable, and structured frameworks for allocating budget expenditure will ensure accountability and strengthen relationships with law firms by promoting transparent procurement decisions and delivering better legal outcomes.

4. Collaboration workspaces

Collaboration is defined as individuals working together to achieve a common goal. In legal operations, that goal is the successful completion of a matter and may involve internal and external communication and workstreams. The ability to facilitate seamless collaboration and communication between the legal department and their law firms is also a necessary competency to remain competitive in the increasingly digital legal landscape.

Although the concept of client collaboration tools is not new, the processes, capabilities and scope of functionality provided by these tools have advanced significantly. Generally referred to as ‘client portals’, the next generation of client portals – collaboration workspaces – have evolved beyond file sharing and one-way communication towards real-time collaboration, project management, budget communications, customised reporting, and much more.

In addition to providing greater transparency and facilitating more effective communication and collaboration processes, some welcome side-effects of secure collaboration workspaces include modernising and enhancing the client experience.

5. Visualised dashboards

Reporting metrics are indispensable to demonstrating value, sharing insights, understanding workload capabilities, and staying on top of spend and legal matters. Over the last few years, advances in this area have been significant, with the ability to use BI (Business Intelligence) reporting to customise dashboards and reports. Critically assessing the legal team’s output and capacity, demonstrating their efficiency, and tracking status and workflow metrics as matters progress is a game-changer for General Counsel. This enables a greater dexterity to facilitate changes as required and continuously improve service delivery and performance.

As well as internal dynamics, General Counsel and legal operations professionals need a bird’s eye view of actual legal spend compared to budget estimates, monitor budgets and spend of fees across time and firms and assess financial metrics in real-time. Valuable insights can uncover law firm engagement and selection decisions, identify the firms that receive the most work and why, and track and review project management performance such as budget change requests and matters approaching budget.

Modern legal departments increasingly seek greater granularity over how law firms resource their matters. As such, regular updates provided by law firms via streamlined workflows may be crucial. These additional data points could include insights such as fee earner estimates vs actuals across litigation or complex M&A projects or perhaps a breakdown of the diversity and inclusion footprint of who is working on the organisation’s matters.

Developing accessible, configurable, and automated reports and dashboards without the high administrative and manual burden is a must-have for legal departments. Ultimately, the General Counsel should be able to present the legal department’s metrics, matters, spend and activity with easy-to-read dashboards that make an impact and inform strategic decision-making.

Cloud storage is utilising a 3rd party service provider to store your company data in their virtual data centre instead of using an on-premise server. Several benefits to organisations that store in the cloud include greater scalability, cost savings in hardware and IT, reliability, access, and security. In the modern ‘working from home’ (WFH) environment, employees can access data from anywhere, encouraging easy file sharing, real-time collaboration, and better version control. It may also enable compliance with privacy regulations, as leading cloud providers can include built-in privacy and security features.

There are three types of cloud storage – public (or multi-tenant), private and hybrid. Multiple organisations share public or multi-tenant clouds, but every organisation has its own space in the shared cloud. A private cloud is dedicated solely to your organisation, and a hybrid combines both. Think of the public cloud as renting an apartment and private as owning your own home. It may cost more, but it is all yours.

Private cloud storage is gaining popularity as a digital infrastructure enabling secure, agile and modern working methods. Look for legal tech providers that offer private cloud infrastructure for enterprise-level data security.

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