Ken Crutchfield, vice president and general manager of legal markets at Wolters Kluwer Legal and Regulatory U.S., discusses the booming legal technology market, including what in-house counsel can do to ensure that they choose the right solutions for their company – now and in the future.
CCBJ: What are your thoughts on the current state of the legal tech market? We’re seeing many new companies and technology solutions entering the marketplace, along with significant funding. What do you project we’ll see in 2022 and beyond?
Ken Crutchfield: When you see new legal technology solutions coming out, it’s indicative of an attractive market for investors. That is really the key, because ultimately this is a business. If you aren’t moving forward, you’re falling behind. The number of businesses that have to comply with increasingly complex laws and regulations is continuing to grow. Any company that is experiencing growth also naturally needs more legal services and is likely to have more compliance challenges as it expands into new geographies and new jurisdictions, or as it begins to offer products or services that have new dimensions of compliance. The large number of special acquisition companies, along with the access to capital markets and low-interest loans that we’re seeing right now, really indicates that the underlying market of these business needs is growing. This all makes legal technology very important.
I believe that’s why you’re seeing this increase of money into legal technology by investors and the expansion of technology opportunities in general. With respect to what we’ll see in 2022 and beyond, I think we’re going to see a number of these solutions really start to mature. The second and third versions of products are usually the ones that really begin to get traction in the marketplace and start to solve the fundamental problems. So, you may see that maturity, and consequently greater adoption of these solutions, as time goes on.
What is surprising to you at this moment with regard to legal tech?
What’s surprising about the boom in legal tech is that there are so many different technologies being aimed at corporations in particular. There are a thousand different ways to apply artificial intelligence to different problems, for instance, and I think it’s surprising to see legal technology achieving a status that’s not unlike fintech. Fintech has become an entire category unto itself that permeates the broader business community, and I get the sense that legal tech is nearing that point as well.
Billions of dollars were invested in legal tech in the last year – as much as 3 or 4 billion, by some accounts. That, coupled with Gartner’s expectation that the current numbers will triple in the next few years, should give you an idea of how much demand there is for these sorts of solutions.
How do you think in-house counsel can best evaluate these new solutions?
The first thing is to not get overwhelmed with all of the different options that are out there. Really step back and take an inventory of what the challenges are that your business is dealing with and focus on those problems.
It’s always wise to look at what others are saying. That means understanding what the market is talking about with respect to products, and actually engaging with others – whether it’s a consultant to help guide you in a process that you may not be familiar with or leveraging an outside law firm that has more knowledge or experience across the market. Those would both be great first steps to evaluate different technologies.
It’s also important not to invest in technology for technology’s sake. Look at what you need to do from a process standpoint. Once you’ve determined a use case and the right technology solution to address that use case, consider what you need to do within the organization to get buy-in and achieve success with the new solution that you’re implementing. Considering that and the cost of change are crucial.
How can in-house counsel work within their organizations to ensure efficiency and to make sure that the solutions are matched with their compliance and outside counsel guidelines?
This ties back to that business problem from the prior question: making sure that you’re looking at and understanding what the problems are, and then looking at the buy-in. That is key,as is consulting with outside counsel before going too far down the path with a particular technology, since they might have some insights that are very important. So it really does come back to the business problem, and then also making sure that you understand what is it that you’re trying to solve for, as opposed to just trying to implement a cool technology.
What should our readers consider about the evolution of these legal tech solutions, as they look at their long-range planning?
Recognize that what a product does today is not necessarily what it will be able to do in the future. The subsequent releases of a product always make the product better, so don’t get caught up in the benefits or limitations of a product today. Those will improve over time. The other thing I think is important to understand is that there are some categories that have dozens of different solutions, so you really need to know which ones are the right fit for your business and your segment of the market. Not all of them are going to survive, and that’s just the reality. And in fact, unfortunately, it’s not always the best technology that is going to win.
That’s where reputation and understanding the right fit become critical. You should also consider the fact that investors who put their money behind these technologies want to get a return on their investment – so if they want to sell at some point, that’s an important factor to consider. You want to know where the solution you buy is in that life cycle. Hopefully the company gets sold to another company that has a strong balance sheet and will be able to continue to invest for the long haul. That means the solutions will continue to evolve and you won’t have to implement a new technology two years later.
What else would you like to share with our readers?
The main takeaway is just to make sure that there’s a real understanding from vendors about the types of solutions that you’re going to need. Not every solution on the market is going to fit your exact needs. You want a vendor who is willing to work with you, because if this is something that you’ve never done before, there’s a risk there. You’re staking your reputation on this project. And if it doesn’t work, it might undermine your ability to request new technology for the next project down the road. Make sure that you’ve considered all of these factors when you’re deploying and implementing new solutions – and that you’re working with people who understand your needs and are committed to helping you achieve them.