Legal Technology Market Size, Share & Industry Analysis, By Component (Software and Services), By Deployment Mode (On-Premises and Cloud), By End-User (Law Firms and Corporate Legal Departments), By Application (E-discovery, Legal Research, Practice and Compliance Management, Document Management, Billing and Time Tracking and Others), and Regional Forecast, 2024-2032

The global legal technology market size was valued at USD 29.54 billion in 2023. The market is projected to grow from USD 31.59 billion in 2024 to USD 63.59 billion by 2032, exhibiting a CAGR of 9.1% during the forecast period.

Legal technology refers to all the strategies and methods that help users interact and navigate the law. Legal software systems help businesses and lawyers practice law more effectively. This technology is used for many purposes - for instance, to enhance the efficiency of legal services through AI and blockchain technologies that reduce regulation and compliance burdens more effectively. According to an industry analyst, in 2023, more than 82% of in-house legal teams were considering or had considered the use of AI for e-discovery.

The market’s growth is expected to be driven by increasing investments in technologies that automate and optimize legal procedures to improve the productivity and profitability of law firms and streamline operations. Law firms and legal services have been able to record data securely due to the emerging trend of smart contracts and blockchain technology. Moreover, growing volumes of legal data are also driving market share.

Legal work has begun to increase as law firms, businesses, and government agencies begin to recover from the first shock of the COVID-19 pandemic. As organizations moved toward electronic documentation from physical documents, the pandemic accelerated the adoption of cutting-edge technologies by legal teams.

IMPACT OF GENERATIVE AI

Advanced Capabilities of Generative AI for High-Quality Legal Data to Fuel Market Growth

The capacity of generative AI to constantly learn, refine, and improve itself enables it to meet a wide range of legal needs. Generative AI is used to perform several tasks, such as research on the law, diligence work, preparation of reports, and summarization of large files. In 2023, Goldman Sachs estimated the potential of AI to handle up to 44% of legal activities at a significantly higher rate than other professions.

Generative AI has created a highly positive impact on the market as it helps in providing high-quality data. Moreover, with the rise of large language models that support generative AI, the legal technology market is positively reaching its highest level of transformative change.

Legal Technology Market Trends

Rising Demand for Streamlined Workflows and Cost Effectiveness in Legal Industry to Emerge as Key Market Trend

Businesses are increasingly demanding strategic and more responsive legal services from their legal teams. To achieve a seamless flow of processes, new client expectations and productivity demands have made lawyers, departments, and firms adopt legal tech solutions. These solutions, which help reduce risks and the time involved in manually performing the tasks and processes, simplify contract management and offer more innovative collaboration tools.

In addition, this technology makes it easier for lawyers to access data, manage calendars & appointments, manage contracts & other documents, schedule tasks & deadlines, and share information with colleagues. According to Lawtech 365, in 2023, lawyers and law firms can achieve about 40% of time savings through the use of legal tech solutions that can streamline repetitive tasks in the profession. Furthermore, to increase efficiency and simplify work processes, corporate enterprises around the world are taking advantage of this technology.

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Legal Technology Market Growth Factors

Increasing Advancements in Technology to Automate and Optimize Legal Procedures to Aid Market Growth

Legal technology has made a significant contribution to the improvement of judicial processes by automating tasks, such as document organization, file classification, and data analysis. Corporate legal departments and law firms use a wide range of technology tools and solutions to streamline a large part of their workload, enabling legal teams to focus their resources on core tasks.

By developing their own business operation solutions, companies have started to adopt this trend. Legal experts have found that the essential tools required for accelerating important tasks, such as data discovery, data review, and others, are low-code or no-code applications. A variety of developments in artificial Intelligence (AI) and automation drives legal technology solutions and services. According to an industry expert, legal departments have automated 50% of legal work related to major corporate transactions by 2024.

RESTRAINING FACTORS

Data Security and Privacy Concerns to Hinder Market Expansion

Data security and privacy are a major concern in this market as it deals with sensitive client information. To protect client data, legal tech solutions must address these concerns by introducing robust security measures and compliance protocols. As law firms and regulatory departments prioritize data protection and client confidentiality, any perception of vulnerabilities or defects can hinder the adoption of such technology. Thus, these factors can hinder the legal technology market growth.

Legal Technology Market Segmentation Analysis

By Component Analysis

Integration of Advanced Technologies in Legal Technology Software Fueled Segment Growth

Based on component, the market is segmented into software and services.

In terms of market share, the software segment dominated the market in 2023 due to the increasing adoption of legal software by law firms and legal departments to streamline workflows and improve efficiency. Moreover, key players are incorporating cutting-edge technologies, such as AI, machine learning, and blockchain, in their legal software. For instance, in April 2023, Filevine Inc. introduced Demands.ai, which uses the Vine platform and AI to simplify and accelerate the process of obtaining demand letters.

The services segment is anticipated to register the highest CAGR during the forecast period. Service providers maintain the infrastructure and make technology upgrades at the back end, enabling an organization to have all the tools it needs through a user's intuitive interface. These services help organizations reduce costs, avoid data fraud, and remove the risks associated with transmitting data to service providers. This factor is propelling the demand for legal technology services.

By Deployment Mode Analysis

Ease of Controllability and Accessibility Offered by On-Premises Mode Boosted Segment Growth

Based on deployment mode, the market is segmented into on-premises and cloud.

The on-premises segment dominated the legal technology market share in 2023. An on-premises strategy that allows users to view their site from a desktop or another system has increased the use of on-premises deployment. Performing legal duties in on-premise legal software enables law experts to manage their processes and allows them to isolate information from external users.

The cloud segment is anticipated to register the highest CAGR during the forecast period. Without the need for manual installation or updates by end-users, legal tech providers are constantly updating and enhancing their cloud software offerings. This ensures that the latest features, improvements, and security updates are accessible to lawyers without any disruption. Innovation is also encouraged by cloud solutions as legal tech providers can quickly develop and implement new characteristics and functions based on market needs and emerging trends.

By End-User Analysis

Law Firms Segment Dominated Market Owing to Enhanced Capabilities of Time-Tracking and Invoice Management

Based on end-user, the market is categorized into law firms and corporate legal departments.

In terms of market share, in 2023, the law firms segment dominated the market. By accessing large amounts of data accurately and rapidly, legal technology solutions allow law firms to perform tasks, such as due diligence and document review. In addition, due to their ability to help lawyers track time and assist in the management of invoices, as well as reduce error rates, features, such as document management and e-billing are becoming more popular among users.

By Application Analysis

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E-discovery Segment Dominated Market Owing to Need for Rapid and Accurate Information

Based on application, the market is categorized into e-discovery, legal research, practice & compliance management, document management, billing & time tracking, and others.

In terms of market share in 2023, the e-discovery segment dominated the market. E-discovery tools help in the process of appropriate disclosure and cognitive text analysis directs legal attention to the most relevant aspects while conducting counter-party disclosures during litigation. In addition, e-discovery teams often rely on data review software that is based on prediction coding as it enables their lawyers to conduct rapid and accurate reviews of large sets of information.

The practice & compliance management segment is anticipated to record the highest CAGR during the forecast period. The use of data analytics to enable informed decision-making is part of the growing usage of legal practice management software. This software gathers and analyzes significant amounts of data to provide valuable insight into an organization’s performance, resource allocation, and client trends. Law firms and legal departments are adopting law practice management software to remain competitive and meet client expectations. The implementation of this software gives legal professionals a chance to succeed and creates confidence in their ability to navigate the future.

REGIONAL INSIGHTS

Based on geography, the market is fragmented into North America, South America, Europe, the Middle East & Africa, and Asia Pacific.

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North America held a major market share in 2023. This growth is attributed to increasing penetration of automation through the use of AI and ML, coupled with increasing adoption of cloud-based solutions. The growth of legal technology in North America is also expected to be stimulated by the incorporation of blockchain technologies, which offer transparency and more secure transactions.

Asia Pacific is anticipated to grow at the highest rate during the forecast period. The rising number of corporate legal departments, increased government spending, and improved infrastructure will drive the growth of the regional market. The use of new technologies for legal research, document management, contract analysis, review, and other tasks is also increasing in this region, thereby boosting the market’s growth.

The Middle East & Africa is expected to register the second-highest growth rate in the market during the forecast period. The region is a hub for cross-border transactions, which require sophisticated legal solutions. Legal tech companies in the region are streamlining these processes to make them more efficient and transparent.

List of Key Companies in Legal Technology Market

Organizations are Adopting Legal Tech Solutions to Gain Competitive Edge

Major players operating in the market are providing enhanced legal technology solutions to help end-users practice law efficiently. Legal technology companies are prioritizing the acquisition of small and local firms to expand their business reach. Moreover, mergers, investments, and strategic partnerships will also contribute to an increase in the demand for the products of these market players.

List of Key Companies Profiled:  

• Filevine, Inc. (U.S.)


• DocuSign, Inc. (U.S.)


• Thomson Reuters (Canada)


• ProfitSolv, LLC (U.S.)


• Knovos, LLC (U.S.)


• CS DISCO, Inc. (U.S.)


• Everlaw, Inc. (U.K.)


• LexisNexis Legal & Professional Company (U.S.)


• Themis Solutions Inc. (Clio) (Canada)


• WiseTime (Australia)

KEY INDUSTRY DEVELOPMENTS:

• February 2024: LexisNexis, a provider of legal information and analysis, launched an Australian business preview for Lexis+AI, a generative AI solution that aims to change the working of lawyers. This brings together the proprietary LexisNexis search technology and authoritative content with the power of generative AI.


• January 2024: Everlaw, the cloud-based investigation and litigation platform, announced the latest features in the Everlaw AI range. It offers AI-powered assistance to help legal professionals perform their work more quickly and easily to deliver competitive advantages for customers.


• January 2023: Themis Solutions Inc. (Clio) expanded its business in Australia to develop & support sales, partnerships, and product development in the country’s legal industry.


• January 2023: Moxo Inc. partnered with Filevine Inc. to upgrade the management of legal cases and interactions between law firms and clients and improve the customer experience.


• April 2022: Filevine, the legal work platform, announced that it had raised USD 108 million in a series D funding round. As a result of the company's expertise in litigation and personal injury law, this funding will allow the company to expand more deeply into insurance defense, large law, corporate, governmental, and charity legal teams.

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The report provides a detailed analysis of the market and focuses on key aspects, such as leading companies and top end-users of the product. Besides, it offers insights into the market trends and highlights key industry developments. In addition to the factors mentioned above, the report encompasses several factors that have contributed to the growth of the market in recent years.

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