LegalTech is Building its Profile in the Professional Community

The legal landscape is changing. The onslaught of structured and unstructured data that needs to be researched, analyzed and applied to the myriad legal processes has been ripe for innovation. With the advent of AI, machine learning and cloud-based services, among other technologies, a historically risk-averse industry is now taking notice.

Three years ago Ryerson University was the first to establish the Legal Innovation Zone as part of its ever-expanding portfolio of tech incubators. In March of this year, Evichat won the Zone’s Artificial Intelligence Legal Challenge for its development of an AI social media eDiscovery tool. This year, the award was supported by the Ministry of the Attorney General. Second place went to Diligen, an AI contract review company; followed by Splyt, an automated online tool for managing divorce.

Chris Bentley, managing director, admits that the legal profession has tended to lag other industries in terms of adopting new technologies and processes. But things are changing. “Now we are seeing significant growth in legaltech and incubators such as One Eleven and MaRS contributing to the ecosystem. The bottom line is, there is a lot more going on. As a result, firms big and small, as well as large corporate legal departments, are starting to take notice and do some innovative things. The industry is feeding off a very strong tech community.”

Key areas of development focus include eDiscovery, as well as document assembly, analysis and management, Bentley says. “Many startups are interested in the in-house counsel space. Most of them are B2B solutions, but there are also some B2C ones out there which we will see more and more of. Technology platforms and chatbots are increasingly sophisticated. Financing is also improving as investors become more aware of what’s available.”

Now celebrating three years of business growth, Benjamin Alarie, CEO and co-founder of Blue J Legal, is a relative veteran in the field. Blue J uses AI and machine learning to predict legal outcomes for tax and HR professionals. Currently a tenant at One Eleven, the company’s continued growth will drive a need to find another space, Alarie says.

Blue J has navigated the legaltech startup system extensively since its early days at UTEST (University of Toronto Early Stage Technology) program. It has also spent time with Creative Destruction Lab (CDL) at Rotman.

He has seen a growing list of innovative technology solutions for the legal profession in recent years. “Some are not particularly new or sophisticated but being put to really fantastic use. Clio out of B.C., for example, makes cloud-based practice management software for small and medium-sized practices and is doing phenomenally well. Knomos in Vancouver is doing a lot of data visualization stuff. It’s a different way of thinking about law and relationships among legal materials. In Ontario, Kira Systems is doing really interesting stuff with agreement analysis. Beagle is doing work in the corporate compliance area.”

As the legal and accounting industry gets on board, Alarie reports that inbound interest has been accelerating. “It’s a very exciting time for us to start to scale.”

One thing he has learned is the importance of framing the right value proposition. “It’s not about replacing people with robots. It’s about getting the insight they can’t get in any other way and converting mountains of case law to actionable insights. It gives them superpowers to see things that otherwise remain invisible or inaccessible. It becomes a lot less scary for them if you frame it that way.”

As a cloud-based provider, Dye & Durham in Vancouver has worked towards replacing many of the manual processes associated with estate transfers, due diligence, corporate records and more. In the past two years, the company has grown from 12 to 200 people operating throughout Canada and the U.K. Today, 70 per cent of the company’s activities are fully automated.

A key to its success is applying technology to simplify processes such as real estate transactions through a single environment, says Matthew Proud, CEO. “We provide an ecosystem that, in the case of real estate, can perform services such as due diligence, purchase and remortgaging in one place.”

While he agrees that some observers are more resistant than others to technology change, it creates significant opportunities for those who embrace it. “In the last couple of years there has been a huge uptake in interest within the startup community and investors.”

Proud contends that technology is becoming the differentiator for legal firms because it is becoming crucial in setting them apart from their competition. “With AI for example, a computer can read through an entire body of law and return answers in a short period of time. It allows lawyers to separate themselves from colleagues who don’t use it.”

The industry is now reaching the point that a technology advantage will be an important trump card for lawyers, Alarie agrees. “It gives them the ability to outmaneuver their competition. If they don’t have it, the other side will. Either way, they need to have the technology to be competitive.”