4 AI-driven lawtech startups changing the legal landscape

The legal sector is ripe for AI disruption, and lawtech startups like Luminance, Legal Technology Services, Ravel Law and Lex Machina are already making headway.

Key Takeaway

From tech-enabled law firms, to legal document scanning, to predictive analytics on upcoming cases, AI-driven lawtech startups have been disrupting the legal profession. While many fear they may be taking jobs, others are confident they’ll enable a more efficient and transparent legal environment in the future.

Legal tech is on the rise. A report by Thomson Reuters confirmed a 484% increase in legal services patent filings over the last five years, led by the US, China and South Korea, as more firms invest in technology. This number reflects the “rise of alternative legal services – such as virtual law firms – and the rapid expansion of the online legal industry.”

According to Forbes, in the past 50 years, more than $750M has been pumped into U.S.-based legal tech.  67 legal tech financing deals were closed last year – more than ever before, with a record 27 in the final quarter.

Luminance transforms due diligence

London-based AI startup Luminance leverges pattern recognition and machine learning to pull valuable information from thousands of contracts and legal documents in seconds – particularly in the case of M&A.

The idea is that it takes out the tedious work, allowing lawyers to focus on the decisions that require human logic. The platform’s pattern recognition technology can also identify potential risks or unusual clauses and cases, ranking them to bring lawyers’ attention to the right place.

The firm has raised $10M as it sets sights on expansion into the US. Beyond pulling more insights, the technology enables legal review to be completed 75% faster, without using large teams of paralegals and junior lawyers working long hours.

While some fear this efficiency may replace some junior level lawyers, CEO Emily Foges is not worried. “You get all these time-savings in doing document review and you lose nothing,” she said. “You are gaining more thinking time.”

Legal Technology Services provides technical backbone for law firms

Co-founded by Chris Smoak and Twitch.tv’s Justin Kan, Legal Technology Services offers a suite of tools to power law firms with the tech needed to better serve their clients – particularly in the startup space. They offer things like document creation, e-signing, and project management workflows.

The first firm to implement LTS technology was Atrium, which began as a way of pushing back against the traditionally slow-to-adopt industry when it comes to tech. Founded along with Kan, the firm aims to “make access to corporate legal services transparent and price-predictable by building the largest structured data platform for organizational and contract data…modeling how best to store this information, and inventing new ways for lawyers and paralegals to interact with the resulting structured data to help advise clients.”

According to the Financial Times, Sally Wokes, a partner at Slaughter and May, says Luminance can halve the time spent on due diligence.

Lex Machina and Ravel Law help predict court rulings and case outcomes

Purchased by LexisNexis in 2015, AI-driven Lex Machina uses Natural Language Processing (NLP) to look at data from a number of lawyers, judges and court documents in an effort to predict how a particular judge might rule on a case and to determine all the attorneys involved.

Similarly, according to CEO Daniel Lewis, Stanford-born Ravel Law uses Amazon Web Services to drive computing power that enables the technology to ingest current and historical U.S. legal data. Also picked up by LexisNexis in 2017, Ravel uses NLP and machine learning to map how cases interrelate, and how judges tend to rule. “We can spin up hundreds of computers in complex data-science work at relatively low cost,” Lewis says.

Without data on these legal documents, however, companies like Lex Machina and Ravel Law wouldn’t exist. In 1999, US federal courts created PACER (Public Access to Court Electronic Records), a web portal that provides lawyers with access to all documents related to cases in federal bankruptcy, district, and appellate courts. “The federal courts tend to have what’s described sometimes as the Cadillac of law,” says PacerPro CEO Gavin McGrane in Fast Company. “All the cases you tend to hear about, like Apple vs. Samsung, Bernie Madoff—they’re all in federal court.”

The algorithms utilized by these companies extract valuable information from the vast amount of structured and unstructured data contained within these legal documents, while using historical court data to predict outcomes based on the judge or attorneys involved. Ravel’s Judge Analytics tool visualizes data points related to specific judges, broken down by court and case type. Lex Machina’s judge tool can offer insights into a judge’s experience and tendencies.

The fear of automation

A study by Deloitte predicts about 114,000 legal jobs are likely to be automated in the next 20 years and that technology has contributed to the loss of about 31,000 sector jobs.

While AI and automation tools in the legal profession will undoubtedly make the work of junior legal professionals and lawyers across the board more efficient and enable them to process more data much more quickly, many fear this will turn into dramatic job loss in the sector.

According to Nik Reed of Ravel, the goal instead is to enable those professionals to better use their judgment based on more comprehensive data insights. The human judgment call remains a crucial element for any legal decision. “What we’re hopefully doing is finding cases that you need to understand,” he said. “Professional lawyers have to use their intuition and their best judgment to understand the law.”

“We get AI to do a bunch of things cheaply, efficiently and accurately — which is most important,” says Wendy Miller, partner and co-head of real estate disputes at UK firm BLP. “It leaves lawyers to do the interesting stuff.”

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