Study: Legal Tech Market will significantly grow in the next Years

In “Catching the Wave: Legal Technology Spend at $3 Billion and Growing” Mitratech shared the results of its survey of the U.S. legal technology landscape among corporate law firms and legal departments in which it predicts significant growth for legal technology investments. The survey also shows that legal departments need to handle more legal matters without significant growth in their law departments, while at the same time, they are reducing spend on outside counsel. This puts high demands on corporate legal departments. The survey suggests that legal departments wont’t be able to cope with the workload without leveraging legal technology.

According to the survey, law firms are also under heavy pressure because legal services are increasingly brought in-house or outsourced to legal service providers to reduce cost. Law firms will try to differentiate their services from competing firms and offerings through legal technology. Technology provides a way for law firms to become more collaborative and transparent with their corporate clients.

The survey concludes that there is a tremendous need to catch up in the legal industry because adoption of various legal technology solutions is still minimal, especially in smaller legal departments and law firms.

Several key insights of the survey are worth mentioning:

• Law firms and legal departments spend approx. $3 billion each year on legal technology.
• Law departments spend $1.5 billion annually on 11 types of software including matter management to compliance to legal analytics.
• The total addressable (potential) market for legal software (both corporate law departments and law firms) is $15.9 billion in the U.S. annually. Of that $15.9 billion, $6.5 billion in total addressable market is found in the corporate legal department market and $9.4 billion is found in the law firm market.
• Large legal departments are most likely to invest in e-Billing, matter management, document management software, and legal hold software (all of which saw more than 65% spend penetration) while small legal departments are most likely to invest in document management and contract management software.
• As organizations are facing complex and multiplying governance, regulatory, and compliance challenges, governance, compliance and contracts management are predicted to have the strongest growth in the next five years.