European legal software sector set for shake-up

Europe’s legal software market is entering into an interesting new phase, as the ageing platforms that have supported law firms for decades are ousted by new cloud and AI-centric offerings from a new wave of suppliers.

This disruption is causing a major shake-up in the supplier landscape. UK-based software and IT services vendor Advanced recently acquired one of the best-known brands in the legal software space, purchasing Tikit, which has operated as part of telecoms giant BT for the last eight years. Thomson Reuters, one of the leading players in the practice management system space with its Elite system, acquired London-based HiQ whose secure file-sharing platform is used by half of the world’s 100 largest law firms. 

The battleground in recent years has shifted to usability and flexibility. Legal technology has often been criticised for not being particularly user-friendly, and all of the key suppliers in have been making efforts to provide an experience that can support an increasingly digitally-savvy workforce. This has included enhancements of the user dashboard to enable customers to have a clearer view on case progress and operational performance, and mobile functionality, enabling lawyers to access data from any location. 

The other big trend in the supplier market has been to switch from on-premise licensing to a Software-as-a-Service delivery model, fuelled by appetite for more scalable solutions and the attraction of a service that places less burden on the typically limited IT support capabilities of the customer. This has also had the effect of improving visibility on pricing levels for different solutions, making this an increasingly price competitive market – particularly for sole practitioners and at the lower end of the mid-market.

Clio is perhaps the most dangerous challenger in this segment. It recently raised $250m to fuel its international expansion and development of its portfolio. It is the only completely cloud-based practice management software endorsed by the Law Society of England and Wales. The company’s aim is to become the “operating system of the law firm,” building on its position at the heart of the operations side of the business to now focus on how lawyers deliver their legal services to clients. This has been the focus of recent M&A activity, which included the purchase of Lexicata, a cloud-based client intake and management tool, and expansion into client management with the recent launch of Clio Grow.

There are several other North American suppliers lining up behind Clio to target Europe, including ASG LegalTech (which is built on the merger between practice management system Practice Panther and billing company Bill4Time), Smokeball, Rocket Matter and CaseFlow. Another significant US player that has yet to enter the UK market is TrialWorks, which following its merger with peer player Needles, now supports 40,000 users across 2,500 firms.

The shake-up in the core practice management system space reflects signs of a wider change in the use of technology by Europe’s legal firms. The pace of technology-driven change has been slow in a sector where paper-centric processes and office-based working practices continued to be the norm – until recently at least. But the direction of funding into Europe’s bubbling legaltech sector during the last 12 months points to some really transformational propositions that are heading into the mainstream.  

France’s Doctrine.fr is a legal search engine that lawyers can use to retrieve information on court decisions, and has built up a user base of more than 4,000 legal professionals in its home market. The company raised €10m in its most recent funding round, although it is currently being challenged over anti-competitive behaviour by established rivals including LexisNexis and WoltersKluwer.

ContractPod Technology, a London-based legaltech firm, uses AI technology from IBM Watson to transform the onerous process of contract management. It has raised $55m in two funding rounds. And another interesting player emerging from the UK capital is GenieAI, which has raised €1.3m in seed funding. The company has developed an intelligent contract editor that uses machine learning to extract relevant clauses from previous documents to speed up the process of drafting new contracts.

The pandemic has shaken all industries and the legal sector is no exception. Delays to court cases and the domino effect of the turmoil in areas such as real estate are hitting hard. This could be the trigger to drive a new approach to technology adoption, both in terms of core platforms and the use of more cutting-edge legaltech.