Machine Intelligence & Legal Contracts: Why Now?

Machine Intelligence & Legal Contracts: why now?

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“It is now necessary to attempt to develop computer systems in law that can be said to embody knowledge, and even exhibit intelligence.”

Achievements over the last twenty years, in the branch of computer science referred to as Artificial Intelligence (A.I.), have perhaps now provided the appropriate technological framework within which the construction of such knowledge-based systems in law might be undertaken.” – Richard Susskind, 1986

Machine learning in the context of law is not an unfamiliar idea, but its rate of expansion in the market has been slow with only a few key players emerging in the space.

More recently, there has been strong growth in the market as people come to realise their old systems and methods are costing them significant resources which could be significantly better allocated.

The “bull case” is supported by seven key elements:
  • Market size – the Western European legal services market is worth ~$150B
  • Underserved mid-market
  • NLP advances as a supply side catalyst
  • COVID as a demand side catalyst
  • Evolving fee models
  • Weak incumbent offerings – Organizations lose 9.2% of revenue every year due to poor contract management practices. Source: IACCM
  • Poor existing practices – 60% of contracts get automatically renewed due to buyer oversight. Source: Forbes

For a new company starting in the legal tech space, they must choose from one of three key areas to effectively target their solution: law firms, in house counsel or other enterprise functions. A lot of new companies are experimenting with a mix of the three.

There are benefits and issues related to selling to each sector
  • Law Firm – short sales cycle and access to training data with the main challenge being aligning with practitioners’ incentives, such as hours they can bill to a client
  • In-house Counsel – GCs are often time poor although indirect/partner channels can lead to acquiring customers in the short term
  • Enterprise Functions – Potential for long term value and larger market
How should you evaluate new entrants?
  • How much is the customer spend?
  • Specialist or generalist
  • How deep is the data moat?
  • Can the product expand virally between counterparties?
  • Standalone product, or a feature of legal suites in the long run?


Global businesses lose $153 billion per year as missed savings due to ineffective contract management, according to the Aberdeen Group.  The opportunity is clear.


Original Article Authors: Chander Lal and Toby Coppel

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