AI Software Market in Legal Industry - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

AI Software Market in Legal Industry - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The AI Software Market in Legal Industry is projected to register a growth of 29.17% over the forecast period. Artificial intelligence (AI) has always been at the forefront of utilizing new technical breakthroughs for productivity and efficiency improvements in the legal industry. Also, due to the advancements and the increase in processing power in NLP, neural networks, and chips, the legal sector is observing improved value in its application.

Key Highlights

• The legal industry has started implementing AI technologies more frequently to handle legal operations effectively. For instance, an internal legal department often spends 50% of its time examining contracts, even those as simple as non-disclosure agreements, slows down operations and causes unnecessary bottlenecks. By enabling lawyers to concentrate their review on the pertinent sections of each contract, AI can save countless hours.
• The market is expanding due to the growing demand for automation in fields including eDiscovery, contract review and management, case prediction, and compliance. In order to help businesses generate tangible value, automation in contract management improves a team's capacity to close agreements, strengthens connections with clients, and positively impacts many other areas of the organization. It costs more money to not comply with growing standards like HIPAA, PCI DSS, GDPR, and other financial regulations. According to Globalscape, it costs firms in the financial sector roughly USD 5.47 million to comply with IT rules for data protection, and when a company takes into account fines, lost productivity, and profits, the cost of non-compliance is close to USD 15 million.
• Legal AI continuously adapts in reaction to new information, unlike predictive legal software, which employs fixed models to analyze data sets. According to the 2021 EY Law Survey, 88% of General Counsels are eager to minimize the overall legal department costs within the next four years. The survey also suggested that continuously monitoring contract risks is a bit struggle for GCs. While 71% of respondents noted that they can't flag contracts "for deviations from standard terms," and 78% stated "they don't systematically track contractual obligations."
• The intersection of AI and law is anticipated to increase significantly throughout the forecast time period. Artificial intelligence (AI) can also be used for a variety of tasks, including due diligence (to review a contract, conduct legal research, or perform electronic discovery functions to do due diligence), prediction technology (to predict the likely outcome of cases being decided before a court of law), legal analytics (to provide data points from previous case laws and judgments and precedent law that lawyers can use in their present cases), automation of documentation, Intellectual property, a variety of other tasks, and several others.
• Due to the complexity involved in legal research, it can be time-consuming and tedious. The necessity for AI is further highlighted by the shorter deadlines that most law firms get to achieve efficient and precise legal research work. AI software can dramatically increase productivity and accuracy, helping judges make quick decisions. For instance, the ROSS Intelligence company uses automated technologies to examine contracts quickly. The program emphasizes pertinent documents. Legal research can be substantially enhanced and streamlined with the appropriate software.
• In addition to several domestic legislative frameworks, the Organization for Economic Co-operation and Development (OECD) listed 700 AI policy projects across 60 nations in 2021. High-risk AI systems will be clearly and thoroughly regulated in the European Union with the new Artificial Intelligence Act, which is anticipated to be finalized in 2022. Although many AI-related legislation suggestions have been put out, the United States has not embraced the European Commission's suggested all-encompassing approach to AI regulation.
• On the other hand, a wide range of corporate legal departments and law firms bought AI/machine learning solutions for their law libraries due to the outbreak of COVID-19. In law libraries, technology has a significant role. eDiscovery software and other artificially intelligent platforms have benefited in the fight against COVID-19. Such software, which has the potential to speed up medical researchers' investigations into how to cure COVID-19, is created to assist litigation attorneys in getting to the heart of a case more rapidly.

Key Market TrendsContract Review and Management is Expected to Witness a Significant Growth Rate

• AI software primarily contributes to and automates a variety of duties in the legal sector. Numerous contract-related tasks, such as clause extraction and identification, as well as contract management, are carried out using AI systems. By centralizing contract administration through a single AI platform and automating repetitive processes across the contract management lifecycle, AI enhances how businesses and internal legal departments handle contracts. For instance, a legal technology business called ContractPodAi provides an end-to-end contract management solution that can examine a database of more than 400,000 contracts. Clients of ContractPodAi report over 50% reductions in contract renewal time. ContractPodAi is designed to assist counsel in promptly and affordably managing any contract throughout its lifecycle.
• Additionally, contract management automation helps sales teams close more sales, fosters better customer connections, and affects many other aspects of a company, allowing businesses to gain real, observable benefits.
• Additionally, AI is revolutionizing contract assessment and management services in Asia-Pacific. For instance, Cyril Amarchand Mangaldas, one of India's top companies, has partnered with Canadian AI helper Kira Systems to use AI for contract analysis and evaluation.
• Recently, the market has seen several product releases, increasing its market share. For instance, in June 2021, Thomson Reuters introduced HighQ Contract Analysis, a contract review and analysis tool that uses machine learning to provide clear, concise answers to specific questions sought after by legal experts. For transaction due diligence, compliance reviews, and contact investigations, HighQ Contract Analysis combines machine learning and pre-trained models to assist lawyers in enhancing efficiency, reducing risk, and speeding up the contract review process. Therefore, by integrating with HighQ, the company's core asset in the collaboration and workflow automation market, new tools extend customer transaction workflows with improved insight and better automation.
• Furthermore, in May 2022, KPMG AG, one of the top auditing, tax, and advisory firms in Germany, joined forces with SirionLabs, a supplier of the AI-powered contract lifecycle management (CLM) product SirionOne. The goal of the cooperation is to speed up the digitalization of the full contract lifecycle for KPMG's clients, including supplier and client mandates. Advanced analytics, relationship management, risk management, performance management, and invoice auditing are all covered by it.

North America is Expected to Hold a Major Share

• Due to the increasing adoption of AI, North America is projected to hold the largest market share. Additionally, the area has a significant presence among companies that offer platforms and tools for artificial intelligence to the legal sector. OpenText Corporation, IBM Corporation, Ross Intelligence Inc., Veritone Inc., and Neota Logic Inc. are a few examples.
• AI plays a highly crucial role in assisting lawyers in improving their overall productivity, positively influencing the market's expansion in the area. A rising number of partnerships and acquisitions were seen in the area. For instance, in March 2022, Fireman & Company, a management consulting firm for the legal profession, was acquired by Epiq, a global provider of technology-enabled services to enterprises and the legal sector. With this acquisition, Epiq will be able to offer a broad spectrum of knowledge management and data management capabilities, giving its clients access to a broader choice of technology solutions and strategic legal advising services.
• In March 2022, CobbleStone Software declared the wide availability of CobbleStone Contract Insight, a suite of contract lifecycle management (CLM) software, in the SAP Store, an online store for SAP and partner products. CobbleStone ContractInsight is an AI-powered CLM platform that connects with SAP S/4HANA to offer customers contract lifecycle management, contract capture, and legal reviews. The company is a partner in the SAP PartnerEdge program.
• North America recently saw some of the most significant startup investments in the legal and technology fields. A strategic investment of USD 200 million was made in Onit, a US-based provider of business workflow solutions for legal and contract administration. Clio, a cloud legal management startup based in Canada, also obtained a USD 250 million Series D fundraising round. This was one of the most critical investments in a legal and Canadian technology company.
• Moreover, the wide availability of business incubators and innovation laboratories in the region supports the development of AI-based legal software. To aid the development of legal technology, established law firms, ALSPs (like Thomson Reuters), the Big Four, and financial institutions (like Barclays) teamed up or founded their own incubators. These incubators offer space to support legal tech startups and scale-up development and access the guidance, expertise, and funding that innovative enterprises need to flourish in the market.

Competitive Landscape

The AI software market in the legal industry has a low market penetration rate, which creates a massive opportunity for both existing players and outsiders seeking to enter the market. However, the market's present participants have a significant advantage over any new competitors. The competition between the current market participants is anticipated to intensify due to the strong prospects, expanding investments, and supporting activities.

• Mar 2022 - HaystackID, a professional E-Discovery service company that assists law firms and corporate legal departments, deepened its partnership with Reveal, another E-Discovery software provider using AI. HaystackID, a long-time Brainspace provider, leverages Reveal's end-to-end cloud-based AI platform for processing, early case assessment, document review, research, production capabilities, and a customizable API-enabled back-end with visual analytics.
• Jan 2022 - LinkSquares, an AI-powered provider of contract lifecycle management and analytics tools, declared the new AI ​​capabilities of its pre-signing technology, LinkSquares Finalize. LinkSquares Finalize's AI-powered contract reviews enable legal teams and general counsel to automate checks, reveal important information from contracts, boost transactions, minimize risk, and reduce manual processes. By expanding LinkSquares' AI capabilities from Analyze, LinkSquares' post-signature tool, to Finalize, the company targets to offer the first end-to-end AI-powered contract lifecycle management platform.

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