A new report finds that corporate law departments spend an estimated $1.5 billion per year on legal software, and predicts explosive growth in this area in the next few years.
Compiled by the legal software company Mitratech, the report is called“Catching the Wave: Legal Technology Spend at $3 billion and Growing.” It was based on a survey of 353 law firm and legal department “decision makers,” interviews with 15 leading industry experts and secondary research on legal industry software trends.
According to the report, the total potential market size for corporate legal department software is $6.5 billion — more than four times the current spend. It also found that the fastest-growing corporate legal technology areas are knowledge management, legal analytics, legal project management, contracts management and governance & compliance software.
Right now, e-billing and matter management constitute the largest percentage of corporate legal software spend. But within the next five years, investment in areas such as contracts management and governance and compliance are expected to outpace e-billing and matter management, the study said.
Amar Sarwal, vice president and chief legal strategist for the Association of Corporate Counsel, which represents more than 40,000 members from 10,000 organizations, said the growth is happening as corporate law department look for investments that will help reduce their overall costs.
Sarwal said, “[Technology] helps not only with costs and making sure your processes are efficient…but it also leads sometimes to better outcomes.”
Silvia Coulter, a founding principal at the consultancy LawVision Group, explained “All of this investment is ultimately geared to creating competitive advantage and that’s one of the business outcomes that can be achieved by investment and the right technologies,” Coulter said.
Protecting confidential client information is another emerging technology concern, Coulter said. Any law department that’s concerned about customer and client privacy will want the latest technology available to protect that critical information, she said, adding that the study is spot on about the fastest growing technology areas it cited.
“All of this investment is ultimately geared to creating competitive advantage and that’s one of the business outcomes that can be achieved by invesment and the right technologies,” Coulter said.
The study said: “For legal departments to effectively manage outside counsel, to efficiently manage workloads, and to better collaborate with business partners, smart investments in technology are critical.”