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AI Legal Tech Trends that ISVs Can Capitalize On

Published: May 31, 2024

AI Legal Tech startups received more than $700 million in venture funding in 2023. Additionally, 90% of large law firms expect to increase their investment in generative AI in the next five years. And by 2036, 114,000 legal jobs are expected to be automated.

What does all of this mean? Independent software vendors (ISVs) are in an excellent business position. Firms know that their need for AI tools to help them build stronger cases is critical, and ISVs are uniquely positioned to fill that need.

AI Legal Tech Trends and How ISVs Can Respond to Them

#1: Generative AI Capabilities Are in High Demand

There’s been a marked shift from using traditional AI to generative AI. Given that 70% of law firms agree that generative AI adds value, let’s define this key term. Generative AI is an advanced branch of AI that focuses on creating new content, such as text, images, and videos, based on learned patterns and data inputs.

In the legal industry, traditional AI can analyze and process case data to make it easier for teams to develop arguments and documents themselves. Generative AI, however, can generate that content on its own–legal documents, contracts, and briefs–based on learned patterns and data inputs, mimicking the creativity and logic of human attorneys. The demand for generative AI capabilities in law firms is growing, and ISVs must respond accordingly.

Action Items

  • If you’re not already, invest in research and development to enhance generative AI capabilities tailored for your clients. This includes algorithms and models trained on legal data and patterns to generate legal documents accurately and efficiently.
  • Provide case studies, demonstrations, and ROI analysis showcasing the value of generative AI in legal operations. Highlight efficiency gains, cost savings, and improved productivity achieved through AI-driven document generation and analysis.
  • Establish a feedback loop with your clients to gather insights and feedback on the usability, accuracy, and effectiveness of your generative AI legal tech solutions. Improve and enhance AI capabilities over time.

#2: AI Legal Tech Streamlines Document Review

One of the most tedious aspects of legal operations has been manual document review. The number of data sources where client information is stored is only increasing, as is the volume of data stored within those sources. What does that mean for attorneys? They have to spend a mass amount of time and attention on this rote activity, which cuts into time they could be spending on more strategic, client-supporting work.

That’s where ISVs can bring value. AI legal tech tools resolve the pain of manual document review by automating the process. AI-driven technologies can actually reduce document review by up to 70% on average. With that time savings think about all of the other ways legal teams can then support their clients or even take on new clients.

Keep in mind that AI’s impact on document review is not just about efficiency. AI legal tech tools for document review also enhance the quality of legal work. By automating repetitive tasks, AI allows legal professionals to focus on higher-value activities such as legal analysis, strategy development, and client interaction. This not only improves overall productivity but also enhances client satisfaction and loyalty, positioning law firms for long-term success in a competitive marketplace. 

When developing or enhancing AI legal tech tools, ISVs would do well to consider how the tools can help attorneys save time and energy and deliver higher-quality work and service.

Action Items

  • Enhance your software by integrating PrizmDoc, designed to expedite legal teams’ document review process. PrizmDoc enables teams to securely view, annotate, redact, and more on a variety of file formats within your application. 
  • Offer advanced NLP features that extract key information, identify patterns, and improve accuracy in document analysis and review.
  • Develop algorithms that can group similar documents together based on content and context, making it easier for legal professionals to navigate and manage large volumes of documents efficiently.

#3: Identification of PII is Easier in High Volumes of Data

Protecting PII is a paramount concern in the legal sector, especially given the number of data sources that exist and the amount of data that is exchanged within those sources. There are so many opportunities for PII to be exposed or for a document to be tampered with. If either of those things happens, a document will likely be thrown out of a case. Make case preparation easier for your clients by offering them AI-powered technologies that keep their documents inside of a secure software application environment. 

Action Items

  • Explore integrating your software with PrizmDoc, which helps teams safeguard documents in several ways. The tool’s AI capabilities help teams identify and redact PII automatically. Additionally, PrizmDoc enables teams to view and collaborate on a variety of file formats in a single, secure environment. 
  • Develop data encryption and access control features to strengthen your software’s security. Offer granular access control mechanisms that allow law firms to define user roles, permissions, and restrictions to safeguard sensitive information.
  • Offer the capability to track and record actions related to PII handling within documents to create transparency and accountability among legal teams.

#4: Legal Services Are Poised to Become Less Cost Prohibitive

A much-needed transformation that AI has brought to the field is making legal services more financially accessible. AI is making this happen in several different ways.

First, AI legal tech tools help legal teams be more efficient on certain tasks, which results in less billable time for clients. For example, as we said earlier, automating document review can save up to 70% of time, significantly reducing the billable hours that a firm can charge to a client.

Second, thanks to AI, the nature of client billing itself is changing. By embracing AI, law firms can offer fee arrangements instead of traditional hourly billing. Because AI legal tech tools free up attorneys to focus on more strategic work, firms can offer transparent, value-based pricing models that prioritize only the value provided rather than hours spent on manual tasks. 

There are no signs of firms slowing their adoption of AI. 82% of attorneys agree that generative AI can be applied to legal work, and more than half believe that AI should be applied to legal work. More and more teams are beginning to use AI within their firms, setting a foundation for taking on more clients and/or serving clients at a more competitive rate.

Action Items

  • Integrate predictive analytics capabilities that help legal teams forecast budgets, identify cost-saving opportunities, and make data-driven decisions in resource allocation.
  • Build platforms that utilize AI to streamline document review processes–through automatic PII identification and redaction, as well as the ability to view and annotate documents in one platform–so that this service is more affordable. 
  • Develop AI-powered virtual assistants that can handle routine inquiries, provide legal guidance, and assist in basic legal tasks, reducing the need for human resources and overhead costs.

#5: AI Legal Tech Tools Can Be Reliable Assistants on Research and Due Diligence

Another trend that ISVs should note is that AI legal tech tools can serve as true assistants on certain tasks, especially for research and due diligence. For example, the research process often takes days. With an AI legal tech tool, research can take mere hours. This translates into substantial cost savings and improved productivity for legal professionals and law firms. With AI helping to expedite the research and due diligence process, legal teams have more time and energy to build the strongest cases possible for their clients.

Action Items

  • Offer AI legal tech tools that can analyze case law, identify legal precedents, and provide contextual insights to support legal research and due diligence efforts.
  • Develop features that enable visual representation of legal data, trends, and insights to facilitate decision-making and enhance the quality of legal research outputs.
  • Develop AI models that can analyze and extract key clauses, terms, and risks from contracts. This would enable faster due diligence processes and better risk management for law firms.

How to Bring the Benefits of AI Legal Tech to Your Clients

ISVs and technology leaders who thrive are those who grasp the rapid growth of AI while tailoring their tools to accommodate the varying paces at which law firms navigate this space. As the AI software market in the legal sector is projected to grow by over 10% annually, from $2.19 billion in 2024 to an estimated $3.64 billion by 2029, adaptability and responsiveness to the evolving needs of law firms on their AI journey become paramount for long-term success.

By integrating AI-driven solutions like Accusoft’s PrizmDoc into your offerings, you can help legal teams streamline document management, safeguard documents, and build airtight cases for their clients. 

We invite you to explore how Accusoft can help you provide better AI legal tech tools to your clients. Check out our Legal Tech Fact Sheet to learn more about PrizmDoc and discover how our solutions can elevate your AI legal tech capabilities.