LegalTech Market

LegalTech Market Outlook from 2024 to 2034

The LegalTech market appears poised for a transformative journey, with its influence extending well into 2034 and beyond. The market valuation is likely to hit US$ 29.60 billion in 2024, with forecasts indicating a potential exceedance of US$ 68.04 billion by 2034. This signifies substantial growth in the legal technology market, anticipated at a promising CAGR of 8.7% through 2034.

LegalTech Market Overview:

• The cost-effectiveness of LegalTech solutions cannot be overlooked. LegalTech streamlines workflows, saving time and resources for professionals. Consequently, there is likely to be around a 2.3X surge in the sales of LegalTech solutions by 2034.
• China and Japan are vigorously contending with the United States and Germany in dominating the market. They are becoming the front-runners in legal technology as they update and modernize their legal systems and dispute settlement procedures.
• LegalTech providers need to stay updated on the newest regulations and compliance standards to ensure their solutions meet the latest legal requirements.

Key Factors Influencing the Global LegalTech Market Growth

Specialized Cloud Services Drive LegalTech Revolution! The legal technology market is growing faster than ever because of the widespread use of cloud-based systems.

• Cloud-based solutions were adopted more slowly by corporate legal departments and law firms, but as work shifted toward hybrid projects, there was an immediate need to prioritize digital technology and offer cloud access.
• The proliferation of cloud services tailored specifically for the legal domain is bolstering the legal practice management market growth. Notable examples of such legal-specific cloud services include Clio, Rocket Matter, Practice Panther, NetDocuments, MyCase, among others.
• In December 2021, the Executive Office for United States Attorneys and NetDocuments Software, Inc., a cloud-based platform for information goods and services, partnered. Over 5,000 agency customers were served by the company's suite of solutions, which included email and document management.

LegalTech Demand Surges as Companies Seek Strategic Solutions! Demand for LegalTech software is also growing as companies want their legal departments to provide more strategic and timely legal services.

• In order to guarantee efficient workflows, legal practitioners, departments, and firms are under pressure to adopt LegalTech solutions and services due to evolving client expectations and productivity requirements.
• These solutions offer more creative collaboration capabilities and further simplify contract administration, which helps to lower the risk and time associated with manual chores and procedures.
• LegalTech helps lawyers share information with colleagues more easily, automate contracts and other documents, manage calendars and appointments, organize activities and deadlines, and access data more efficiently. LawTech 365, for example, claims that by automating repetitive operations in the legal service delivery market, attorneys and law firms can save around 40% of their time.

Obstacles Compressing the LegalTech Market Revenue Trends

The legal services technology market faces several restraints. These include

• regulatory hurdles, such as compliance with data protection laws
• limited adoption by traditional law firms due to concerns about security and reliability
• the complexity of legal processes and resistance to change within the industry

Sudip Saha

Principal Consultant

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Historical Market Study on LegalTech alongside Future Projections

From 2019 to 2023, the LegalTech market showed impressive growth, boasting a 7.1% CAGR. During this period, there has been an increase in the use of LegalTech products and services.

The necessity to streamline communication inside law firms as a result of the increasing number of remote working cases is what drove the market's growth. This trend is likely to construct a positive outlook for the LegalTech industry in the upcoming years.

Short-term Analysis of the LegalTech Market

The LegalTech market forecast a promising trajectory. The increasing demand for legal services is driving the adoption of LegalTech software and solutions. As legal complexities continue to grow, law firms and legal professionals are recognizing the need for modern tools to enhance their productivity and effectiveness.

Moreover, the rise in LegalTech applications is also being fueled by the growing emphasis on privacy and data security in legal affairs. LegalTech solutions address concerns about data breaches and unlawful access by offering safe platforms and encryption capabilities.

Long-term Analysis of the LegalTech Market

Advancements in technology have made legal processes more efficient. LegalTech firms are increasingly incorporating AI and machine learning technologies into their platforms to streamline legal processes, enhance efficiency, and provide more accurate insights.

For instance, the Law Society Library redefined legal research in February 2024 by integrating AI into topic guides and offering streamlined access to precedents, practice notes, and case law. This is expected to have a highly positive impact on the global demand for LegalTech services in the long run.

Top Opportunities Awaiting for LegalTech Market Players

The global trends in the LegalTech industry spotlight that legal analytics tools are gaining popularity. These help lawyers analyze large volumes of data, predict case outcomes, and make more informed decisions based on data-driven insights.

Moreover, the legal industry is exploring blockchain technology to improve security, transparency, and efficiency in tasks such as contract management, IP protection, and property rights. These are likely to create opportunities for market players in the upcoming decade.

LegalTech Market Trends

• An evolving trend in the LegalTech market is the adoption of cloud-based solutions by legal tech companies more often. This improves flexibility and cooperation by allowing legal professionals to securely access and manage data from any location.
• As legal processes become more digital, LegalTech companies are prioritizing robust security measures to safeguard sensitive client data and comply with regulations like GDPR and CCPA.

Demand Analysis of LegalTech by Region

The North America LegalTech market stands out as a dominant force. This is because it boasts a highly developed legal industry with a strong emphasis on innovation and technology adoption.

Europe is witnessing steady growth in demand for LegalTech services as businesses and legal professionals increasingly recognize the value and benefits that technology can bring to the legal industry.

The Asia Pacific LegalTech industry is likely to progress significantly. This is due to the burgeoning startup ecosystem and investment inflow in LegalTech initiatives that are fueling legal information technology adoption.

United States Sets Pace for LegalTech Evolution amid Rapid Adoption

Demand for LegalTech platforms in the United States is set to rise with an anticipated CAGR of 6.7% through 2034. Key factors influencing the Legal software market include:

• The existence of well-established leading firms providing LegalTech software and solutions is responsible for the country's success. Furthermore, the United States is the global market with the fastest rate of change and fiercest competition. Furthermore, compared to other countries, the United States is predicted to adopt new technology more quickly.
• In order to differentiate themselves from competitors and enhance their product offerings, industry players are always attempting to integrate cutting-edge technology. For example, CoCounsel Core, "the commercial offering of legacy CoCounsel Skills" that lawyers can utilize for legal research, was launched by Thomson Reuters in November 2023.

Digital Transformation Trends Reshape the LegalTech Industry in Germany

The Germany LegalTech market is expected to surge at a CAGR of 8.9% through 2034. The topmost dynamic forces supporting the LegalTech adoption in the country include:

• The LegalTech movement in Germany is centered on leveraging technology to enhance client services. Digital business concepts and solutions for the legal industry are promoted by the Legal Tech Association Germany. Additionally, they have a platform named "Digital Referendariat" that provides trainee opportunities in the legal technology industry.
• Google-backed Legal OS, a Berlin-based company, declared the public release of its generative AI platform in July 2023. The brand-new platform gives business teams, including sales and marketing, a legal assistant who resides wherever they work and is aimed at in-house legal teams.

Legal Robots and Artificial Intelligence Power China's LegalTech Supremacy

The China LegalTech market is forecasted to inflate at a CAGR of 11.9% through 2034. Prominent factors backing up the LawTech market growth are:

• The government sets the direction for the LegalTech sector. It is actively promoting the use of technology to modernize the legal system and enhance transparency. It also places a strong focus on LegalTech patents, such as legal robots, which demonstrates its dedication to intellectual property.
• Legal robots are just one aspect of China's hegemony in the legal technology industry. In various legal technology fields, including AI-powered contract analysis and blockchain-based smart contract solutions, the country has obtained a sizable number of patents.

Startups Drive Market Expansion in Japan with Innovative Solutions

Sales of LegalTech solutions in Japan are estimated to record a CAGR of 10.3% through 2034. The primary factors bolstering the legal technology market size are:

• Japan's commitment to technological modernization and digital transformation across various sectors, including the legal domain, supports the LawTech landscape in this country. Government initiatives such as the "Society 5.0" vision and the "Japan Revitalization Strategy" underscore the importance of leveraging technology to address societal challenges, including those within the legal system.
• Startups are innovating in this sector to carve out a unique space in the market. For example, LegalOn Technologies, a Tokyo-based legal tech business, unveiled in December 2022 the release of AI Revise, a GPT-4-enabled contract editing tool for their contract review platform.

LegalTech Market Analysis by Segment

As far as the solution of LegalTech is concerned, the cloud-based segment is likely to dominate in 2024, holding 37.6% LegalTech market share. Similarly, the corporates legal departments segment is expected to lead the in terms of end-user, with a projected 36.6% revenue share of LegalTech industry in 2024.

Legal Industry Embraces Cloud-based Solutions for Flexibility and Cost Savings

The cloud-based segment is anticipated to lead the way. Here are a few key factors that contribute to the cloud-based solution’s acceptance in the market:

• Since cloud-based solutions are scalable, legal departments and law firms can readily increase or decrease their usage in accordance with their demands. This is compatible with the variable nature of legal workloads.
• Cost-effectiveness plays a significant role. Cloud-based solutions often involve lower upfront costs compared to traditional on-premises systems, with on-premise models offering more predictable expenses over time.
• Security advancements in cloud technology have addressed many concerns regarding data protection and compliance. They provide robust encryption, authentication, and backup measures to safeguard sensitive legal information.

Legal Efficiency Demands Propel Corporate Legal Departments to Forefront of LegalTech

The corporates legal departments segment takes the top spot in the LegalTech market, a legal technology trends and predictions validated by factors such as:

• The dominance of corporates legal departments can be attributed to the increasing demand for enhanced efficiency in legal processes within large organizations.
• Corporates place a strong emphasis on risk management, and LegalTech solutions cater to their needs by providing tools for better compliance and risk mitigation.
• Large corporate legal departments dealing with vast and diverse legal portfolios find value in LegalTech tools that streamline tasks, manage documents, and facilitate smoother collaborations.

Competitive Landscape of Emerging Market Players

Start-ups are looking at several ways to stand out in the highly competitive LegalTech market. Some prioritize accessibility, offering affordable online platforms for basic legal needs.

Others emphasize specialization, catering to niche areas such as intellectual property or immigration law. Additionally, there are startups focusing on democratizing legal expertise through virtual consultations and DIY document templates.

Top Start-ups and their Key Developments

KLoBot, a United States-based start-up, creates a machine learning-capable platform for building legal AI chatbots. Legal companies can create voice- and text-based chatbots in minutes using this platform. A number of functions, including question answering and knowledge repository search query response, are carried out by chatbots developed on KloBot's platform for legal companies.

Codefy, a Germany-based start-up, provides legal firms with an artificial knowledge assistant to help them manage difficult cases, save time, and boost profitability. With Codify's sophisticated search function, legal teams can locate the most pertinent content fast. Additionally, these virtual assistants provide tiers of help for carrying out crucial procedures including contract preparation, contract review, litigation, and dispute settlement.

Competitive Landscape of Leading Market Players

Market players employ diverse LegalTech sales strategies to gain a competitive edge. Companies compete by offering innovative solutions that streamline legal processes and enhance efficiency. Some focus on developing AI-powered tools for contract analysis and legal research, aiming to reduce time spent on tedious tasks.

Others specialize in providing cloud-based platforms for case management and collaboration among legal teams. Additionally, some companies differentiate themselves by offering cybersecurity solutions tailored to the legal industry, ensuring data privacy and compliance.

Recent Developments

• To help organizations "gain unprecedented clarity" and control legal costs, Xakia, an in-house legal software business, announced a new solution in February 2024 for legal practitioners. Xakia's latest solution streamlines external expenditure tracking for legal teams and offers in-house team insight, allowing for subject-centric spend control in a matter of moments.
• The world's top supplier of cloud-based legal technology, Clio, stated in February 2024 that Lawyaw, a LegalTech startup that Clio acquired in 2021, is going to henceforth function as Clio Draft under the Clio name. Since the acquisition, Clio has improved the depth of its product and service integration, advancing its goal of centrally revolutionizing legal document workflows on its best-in-class platform.
• A SaaS platform called LegisTrak 2.0 was introduced in August 2023 by the LegalTech startup Legistify to simplify legal administration for companies. Using artificial intelligence to support decision-making, the platform assists with contract administration, issue management, and intellectual property protection. Over 300 businesses have already signed up with Legistify, including Coca-Cola and ICICI Lombard.
• Global legal company Hogan Lovells unveiled the introduction of ELTEMATE, its latest Hogan Lovells technology brand, in May 2023. To help customers get high-end, digital solutions to problems in all areas of law, ELTEMATE is going to consolidate the firm's legal technology products under a single, core global unit.

Top LegalTech Market Players

• LexisNexis
• Icertis
• DocuSign, Inc.
• RPX Corporation
• Casetext Inc.
• Themis Solutions Inc. (Clio)
• Everlaw
• Filevine, Inc.
• Checkbox Technology Pty Ltd
• Mighty
• PracticePanther
• MyCase
• CosmoLex Cloud, LLC.
• Smokeball, Inc.
• TimeSolv

Key Coverage in the LegalTech Market Research Report

• Adjacent Study on the LegalTech Artificial Intelligence Market, the Legal Innovation market, the Legal Automation Market
• LegalTech Demand Outlook in the United States, China, Japan and Germany
• Opportunities Available in the Legal Process Automation Market and the Legal Operations Technology Market

Key Segments

By Solution:

• Deployment
  • Cloud-based
  • On-premises
• Services
  • Integration & Deployment
  • Consulting
  • Support & Maintenance

By Type:

• Case Management
• Lead Management
• Document Management
• Contract Lifecycle Management
• Billing & Accounting
• Others

By End-user:

• Law Firms
• Corporate Legal Departments

By Region:

• North America
• Latin America
• Europe
• East Asia
• South Asia & Pacific
• Middle East & Africa (MEA)