Legal Tech Market Size, Share, Growth & Industry Trends 2031

Report Description

The global legal tech market size was USD 23.49 Bn in 2022 and is likely to reach USD 48.51 Bn by 2031, expanding at a CAGR of 8.8% during 2023–2031. Increasing investment in technologies and software to optimize legal procedures and improve the profitability and productivity of law firms is expected to fuel the market.

Legal tech is software and technology that caters to legal departments and law firms. It helps in developing a management platform, which delivers legal service and support law firms to digitize processes. Attorneys widely use this technology in their practice, as they have many ethical duties related to law firms.

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As per an article published by American Bar Association on November 29, 2022, about 77% of attorneys are aware of the benefits and risks of technology.

Legal tech coupled with artificial intelligence is a new trend in the market. This is expected to assist lawyers by automating routine tasks such as non-disclosure agreements and other contracts. It helps in reviewing documents, creating initial drafts, and advancing arguments. Several law firms adopted this trend. For instance,

• On May 3, 2021, Nagashima Ohno & Tsunematsu, a leading law firm in Japan, adopted Kira, a machine learning software across its practice. The software delivers innovative and results-oriented legal solutions to clients who seek M&A counsel.

Legal technology assists attorneys and law offices with the drafting and online delivery of contracts. It significantly increases the efficiency and productivity of legal professionals by improving the accessibility and quality of legal services through streamlining lawyer-client communication, leveraging analytics, creating online communities, automating e-discovery, simplifying case management, and increasing transparency.

The COVID-19 pandemic boosted the global market. The rise in legal tech software was due to a significant increase in remote work culture and the growing need for smooth communication across law firms. Moreover, the demand for labor-related corporate transactions increased during the pandemic, which led developers to focus on machine learning and natural language processing, which helped in improving the efficiency of the market players. This, in turn, boosts the global market.

Legal Tech Market Dynamics

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Major Drivers

Increasing adoption of legal practices in business processes is expected to drive the market. Legal tech provides faster data processing, offers greater transparency of legal services, and improves profitability. Growing concern to reduce the risk of errors in law firms is likely to boost the demand for legal tech software as it helps in increasing the efficiency and accuracy of lawyers by automating document drafting in law firms and corporate legal departments.

Existing Restraints

Increasing cases of breaches in network security and cyber risks associated with the software used in legal tech are expected to restrain the market. Numerous law firms resist shifting to legal technology due to growing concerns about data confidentiality.

• According to the American Bar Association, 1 out of every 4 law firms is a victim of data breaches that rely on software.

Emerging Opportunities

Rising adoption of data analytics in law firms is expected to create lucrative opportunities in the market.  Data analytics has the ability to interpret large volumes of documents to assist in legal matters. The use of data analytics streamlines document creation, manage case timeline, keep track of financial records, and optimize the operation of the law firm.

Increasing investment in technology and rising collaboration among law firms due to the growing trend of digitization creates new opportunities in the market. For instance,

• In December 2021, the Executive Office of US attorneys collaborated with NetDocuments Software, Inc to provide various solutions such as document management, email management, and others to more than 5000 agency users.

Scope of the Legal Tech Market Report

The market report includes an assessment of the trends, market, segments, and regional markets. Overview and dynamics have also been included in the report

Legal Tech Market Segment Insights

Solution Segment Analysis

Based on solution, the legal tech market is bifurcated into software, and service. The software segment dominated the market in 2022, due to rising adoption of cloud-based software by law firms. Cloud-based legal tech software provides big data storage, wide applicability, and low cost. Cloud database coupled with artificial intelligence reduces operational overhead cost by eliminating the physical infrastructure for maintenance and management. Major software-developing companies catering to law firms are focusing on developing AI-integrated software to increase work efficiency. For instance,

• On May 4, 2023, LexisNexis launched Lexis+. This is an AI-generative platform, which is designed to transform legal work.

The service segment is expected to witness a major market share during the forecast period owing to rising demand for legal consulting services which provide expertise and knowledge on legal matters. Major companies across the world are hiring legal consultants to gain insights and avoid legal disputes. Moreover, the rising adoption of support services by corporate organizations as these services offer technical assistance and maintenance of platforms and solutions is anticipated to drive market growth.

Type Segment Analysis

On the basis of type, the market is segregated into case management, e-discovery, lead management, legal research, contract lifecycle management, document management, compliance management, legal analytics, and others. Contract lifecycle management dominated the market in 2022, due to the increasing need for contract management for businesses to manage contracts more efficiently and effectively. Moreover, organizations are increasingly preferring contract deals due to the growing complexities in business processes.

The legal analytics segment is anticipated to attain a high CAGR during the forecast period owing to incorporating artificial intelligence and data analytics to help lawyers and legal professionals for better decision making, and improved scalability. For instance,

• On June 29, 2023, Filevine, entered into collaboration with Legal Soft to introduce Demands AI, which allows law firms to create high-quality demand letters with accuracy.

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End-user Segment Analysis

In terms of end-user, the legal tech market is categorized into law firms, corporate legal departments, and others. The law firms segment held a large market share in 2022 and is anticipated to hold a key share of the market in the coming years, due to accessing large data accurately, and quickly. Furthermore, the increasing number of enterprises and rising demand for economical legal assistants is projected to fuel the market growth.

The corporate legal department segment is expected to grow at a considerable CAGR during the forecast period, owing to the increasing demand for reducing complexities involved in legal formalities in the corporate organization. Legal tech helps the corporate sector enforce necessary legal rules and regulations. Moreover, the rapid expansion of the corporate sector across the globe is likely to contribute to segment growth.

Regional Outlook

Based on region, the global legal tech market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America dominated the market in 2022, due to the wide presence of established companies coupled with increasing automation by artificial, and machine learning that provide legal tech services to offer productive ground for legal tech startups.

The Asia Pacific region is anticipated to grow at a robust pace during the forecast period, owing to the rising adoption of artificial intelligence, machine learning, and data analytics in the legal industries. Major players are increasingly adopting legal technology to perform document management, case management, and legal data analytics. For instance,

On January 30, 2023, Themis Solution Inc. (Clio), a legal technology company that offers law firms cloud-based software, announced to expand the company’s footprint in Australia for new product development, sales, and customer acquisition.

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