As technology continues to transform various industries, its impact on the legal sector, particularly legal services, is becoming increasingly significant. In the digital age, embracing technology is no longer a choice for law firms, but a necessary step to keep pace with the evolving landscape. This article explores the development of legal technology, focusing on artificial intelligence (AI), and discusses the digitalization of the legal industry.

The Concept and Theory of AI in Legal Tech

Legal tech encompasses not only AI trends but also the application of blockchain technology in the legal services industry. The past few years have marked the initial stages of AI development, and we are now witnessing a period of rapid growth. The next decade will undoubtedly be the era of legal tech, as it continues to drive the intelligent automation of the legal industry against the backdrop of digital transformation.

Legal tech can be understood through three main layers:

1. Enabling Technologies: This layer includes widely used tools such as remote working solutions and video conferencing platforms. A prime example is the adoption of online court hearings by law firms and courts during the pandemic.
2. Legal Process Support: The second layer involves systems that streamline legal processes, such as case management, document management, and business development functionalities. These tools belong to the realm of legal process support.
3. Legal AI: The third and most crucial layer is legal AI, encompassing cutting-edge technologies like AI-powered legal solutions, legal research, consultation, document drafting, and case prediction. These AI applications have the potential to challenge the core functions of legal professionals.

In 2023, the global market size of the legal tech industry is estimated to be around $22.3 billion, with expectations of rapid growth in the coming years. Key areas within legal tech include legal matter management, contract management, legal document management, judicial litigation services, and legal research services.

Realizing Legal Justice through Legal Tech

The relationship between law and technology is a two-way street: how law regulates technology and how technology enhances law. Legal tech is increasingly indispensable in rulemaking, standardizing transaction processes, and facilitating dispute resolution, continuously promoting the realization of legal justice. With the development of internet courts and smart courts in China, legal tech has been elevated to new heights.

Legal tech will serve as the foundation for legal justice in the digital era, influencing law in three aspects:

1. Rulemaking: AI will increasingly participate in the formulation of rules.
2. Transactions: AI will play a more significant role in empowering transactions, controlling risks, and facilitating processes like e-signatures and smart contracts.
3. Dispute Resolution: Legal tech will enable dispute resolution through the integration of multiple emerging technologies, such as AI and blockchain.

The Rise and Application of Legal Tech

While AI is profoundly changing many industries, such as e-commerce, education, and finance, it is unlikely to replace lawyers entirely, at least in the short term. In the legal industry, AI applications will primarily play a supportive role in decision-making, acting more like an assistant or servant. However, AI can already perform various tasks, such as drafting simple contracts and reviewing agreements, with legal professionals taking on a supervisory role.

The development of legal tech in the legal industry follows three major trends:

1. Intelligent Automation of Legal Activities: Legal AI enhances the efficiency and quality of legal activities, with applications focusing on intelligent search, legal document review, document generation, intelligent legal consultation, and case data analysis. These applications play crucial roles in legislation, judiciary, law enforcement, and the legal services market.
2. Online Dispute Resolution (ODR): ODR has emerged as a new trend in dispute resolution, addressing the vast number of disputes arising from the internet itself. ODR platforms, such as online mediation and arbitration, have developed to handle the volume of disputes that traditional courts may struggle to manage. China has become a global leader in ODR, with the establishment of internet courts and smart court applications.
3. Codification of Law: While still a distant concept, the codification of law may become a reality in the future. For example, with the development of Level 4 autonomous vehicles, traffic accidents could theoretically be eliminated as AI converts traffic laws into code, interacting with traffic lights and preventing violations. The codification of law may also lead to new business models, such as the automated licensing and transaction of intellectual property rights, reducing intermediary costs.

The Transformation Brought by Legal Tech Development

On a macro level, the development of legal tech may bring about three significant changes:

1. Realization of Legal Services in a Digital Society: AI and robots will become the primary entry points for the legal system, with legal professionals increasingly relying on legal tech products and services.
2. Construction of Legal Institutions and Talent in a Digital Society: Alternative legal service providers may emerge alongside traditional law firms. The shortage of interdisciplinary talent poses a challenge, as traditional lawyers may struggle to embrace AI tools, leading to a disconnect between law and technology.
3. Dispute Resolution in a Digital Society: New organizational structures, such as online courts and ODR, will emerge alongside traditional courts.

On a micro level, legal tech driven by big data, AI, and blockchain has eight major impacts on the legal industry:

1. Enhancing the efficiency of legal service providers in procedural and commoditized work.
2. Reducing costs by replacing human employees with AI systems.
3. Providing new ideas for innovative models and procedures in legal institutions.
4. Creating new jobs in the legal industry, primarily related to cybersecurity, data protection, and emerging technologies.
5. Supporting changes in decision-making and purchasing behaviors of legal consumers.
6. Introducing new competition for lawyers and law firms, as more legal procedures and services become standardized, systematized, commoditized, and automated.
7. Amplifying the Matthew effect: star lawyers vs. ordinary lawyers, and transformational lawyers who provide legal services through technology-driven, low-cost models.
8. Changing the role of legal professionals: routine tasks are delegated to machines, while new situations require the expertise of legal professionals.

The deep integration of technology and law requires legal practitioners to adapt to technological advancements and cultivate digital and technological literacy. By possessing the necessary legal tech skills and mindset for the digital age, we can transform technology into our most powerful assistant. Technology should serve as the servant of law, not its master, and legal professionals need to have a strong servant rather than allowing the servant to become the master.

Legal tech is set to shine in the future, and it is crucial for us to embrace the digital age and willingly combine our efforts with artificial intelligence.