5 Legal Technology Predictions Through 2025

In short:

• Corporate legal teams are exhausted by growing workloads, yet many organizations remain cautious of increasing legal department headcount. This is driving interest in legal tech adoption.
• The legal technology marketplace is volatile as vendors consolidate and new entrants emerge, challenging legal departments’ ability to select best-fit solutions that deliver intended benefits.
• Understand these 5 key trends to account for in your legal technology roadmap.

In a Gartner survey, 68% of corporate legal attorneys said they struggled to manage their workloads in 2020. Since then, rising business activity has only heightened these pressures. In 2021, over half of corporate lawyers reported some degree of exhaustion.

Download now: 2022 Top Legal Technology Predictions

The vast majority of legal functions are turning to technology to try to relieve these pressures, with just 11% delaying the execution of analytics, technology and/or automation initiatives. And yet nearly half of corporate legal teams see technology as their top weakness.

“This has the potential for disaster — exhausted legal teams with limited understanding of technology are searching for quick fixes to old problems. [This is] especially [true] when one considers the volatile marketplace with a lot of hype flying around,” says Zack Hutto, Director, Advisory at Gartner.

To help you navigate the current market conditions and capitalize on new digital opportunities for supporting legal and compliance workflows, Gartner experts have identified five key trends we expect to apply through 2025.

Watch now: Gartner Top Legal and Compliance Tech Predictions for 2022 and Beyond

No. 1: Despite consolidation in the marketplace, large organizations will require relationships with at least four legal tech vendors to fulfill their requirements.

No single vendor provides all the legal software most large organizations need, much less on anything like a single platform. Despite some consolidation, application markets — including matter management, legal case management, legal spend management, e-billing, legal document management, contract life cycle management (CLM), e-discovery and IP management — remain distinct and vibrant in their own right. 

Even though established enterprise technology vendors are entering the legal technology market, they don’t address the unique requirements of legal teams, and this will perpetuate market fragmentation in the near term.

No. 2: 100% of the leading CLM solutions will include native support for scanning and interpreting the content in any type of contract.

In recent years, several leading CLM vendors have acquired or built solutions supporting contract extraction and advanced analytics. To compete, other vendors will follow suit and incorporate these capabilities into their offerings.

As a result, smaller contract analytics vendors will likely be acquired or outcompeted by larger CLM vendors, and it may be difficult to gain this functionality without the use of a larger, established CLM provider.

No. 3: “Human-in-the-loop” solutions that combine staffing and software will comprise 30% of all new legal tech automation offerings.

Despite the promise of technology, applications marketed to corporate legal teams have yet to deliver transformative improvements in offsetting rising workloads or improving efficiency. More advanced AI-based solutions still require skilled humans for training, supervision and handling. 

Corporate legal teams often lack the capability or time to provide the technical and legal expertise required to capture “law as code.” Some vendors are beginning to address this by combining staffing, process (re)design and technology in their offerings.

No. 4: Legal and compliance oversight of environmental, social and governance (ESG) strategy and disclosures will drive new investments in third-party risk management (TPRM) solutions at 50% of organizations.

Seventy-six percent of organizations are increasing the number of third parties they work with. Plus, due diligence is expected to pay closer scrutiny to ESG issues — the potential costs of failing to do so are much higher than ever before.

This will create increased vulnerabilities for organizations in their due diligence processes and monitoring of third-party relationships. As these risk and reporting needs grow, so will demand for solutions to capture, manage and report ESG-related, third-party risk information. 

No. 5: Corporate compliance departments will reduce annual compliance training by 50%, displacing costs in favor of embedded workflow-based controls to guide employees.

Almost half of compliance leaders believe their programming fails to meet objectives. Plus, employees are not retaining the knowledge gained from training. Forty-two percent of employees don’t recall gifts and entertainment compliance; another 27% don’t recall completing finance compliance training.

With embedded controls — built-in, process-based mechanisms that shepherd employees to compliance within their workflows — the number of employees who miss compliance obligations drops by more than half. A 2021 Gartner survey found compliance leaders plan to increase their resource allocation toward embedded controls by 82% over the next 12 to 18 months.

“High demand and supply-side market activity will continue to drive rising investment in legal technology,” says Hutto. “End users should not avoid supporting legal workflows with the right technology investments, but neither should they be under any illusion that there are no potential headwinds to achieving the intended benefits.”