Both plaintiff and defense have a clear vested interest in the outcome of their litigation. For litigation funders, however, the interest is in prospective claims – thousands of them – which are reviewed using a due diligence that combines legal expertise with financial analysis. Given the ROI component that litigation funders are faced with, there is a growing tendency to rely on legal technology to properly aggregate and analyze all of that raw data. But to what extent are litigation funders – and the broader legal community – relying on AI and Legal Tech to inform their decision making?
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Both plaintiff and defense have a clear vested interest in the outcome of their litigation. For litigation funders, however, the interest is in prospective claims – thousands of them – which are reviewed using a due diligence that combines legal expertise with financial analysis. Given the ROI component that litigation funders are faced with, there is a growing tendency to rely on legal technology to properly aggregate and analyze all of that raw data. But to what extent are litigation funders – and the broader legal community – relying on AI and Legal Tech to inform their decision making?
As reported in the latest edition of Vannin Capital’s bi-annual Funding in Focus series, Legal Tech is evolving into a core component of the broader Legal Services industry. According to a recent Law Firm Leaders survey, 95% of UK-based managing and senior partners expect to increase their investment in Legal Tech over the next decade, the majority of whom said the investment would be ‘substantial.’
Of course not all Legal Tech is created equal. In such a nascent field, there are plenty of competitors out there, and the winners and losers of the space have yet to be clearly defined. That said, there are some clear trend lines that are noticeably emerging.
One such trend is the utilization of eDiscovery platforms. eDiscovery has been at the foundational level of the Legal industry for many decades – it’s simply much easier to catalog cases, motions and rulings on a computer than in a giant file cabinet. That said, advancements in the space are making production, collation, storage and review all the more efficient.
Cloud-based storage and processing, visual analytics which group related documents, and AI/machine learning tools that assist in data analysis have catapulted eDiscovery from a decades-old timesaver into a powerful instrument for any legal expert. eDiscovery platforms can now identify and map key phrases within related (or seemingly unrelated) documents, visualize data so researchers can better understand key trends and highlights, automatically redact sensitive information, and even track user accuracy so companies can monitor their reviewers’ progress. As a result, the global eDiscovery market is worth an estimated $20B.
Advancements in cloud computing have not only made eDiscovery a more streamlined and efficient process, but a cheaper one as well. Average storage costs have decreased from $40/GB/month to around $20/GB/month; sometimes much less if volumes are large enough. And with big names like Amazon Web Services and Google Cloud offering improved text-searching and data extraction services, the quality and efficiency of eDiscovery is bound to continue to improve.
Perhaps even more germane to the funding industry is the ability of Legal Tech to help predict case outcomes. Big Data analysis can help funders predict judicial rulings, the size of jury awards based on case type and jurisdiction, time-to-settlement, and whether arbitrators tend to favor plaintiffs or the defense. Some Legal Tech platforms even leverage ‘unstructured data,’ which is a term used to encapsulate all data that cannot be easily quantifiable. For example, a platform may scrape all of a judge’s or arbitrator’s public comments, rulings, and social media posts to infer via language and syntax what proclivities and/or biases he or she possesses. Such is the granular new reality we all find ourselves in when every aspect of life is reduced to an algorithm.
That said, granularity is a wonderful thing when you’re tasked with analyzing the potential return on a multi-million dollar investment. Of course, these Legal Tech tools can only provide the data – they can’t tell you how to interpret or act on it. That decision is up to the humans who control the purse strings. Additionally, as we all know, past performance is not always an indicator of future performance, so there remains some question as to just how ‘predictive’ this technology truly is.
Prominent legal technologist, Professor Richard Susskind recently affirmed: “I have no doubt that the work of courts around the world will increasingly be conducted online. Here indeed will lie the key to providing greater access to justice.” Indeed, from case initiations to online courts and tribunals, to virtual mediation rooms to the eventual (albeit somewhat far off) advancement of end-to-end AI dispute resolution, the entire legal landscape is bound to be disrupted by the transformative power of technology. While it remains to be seen exactly which Legal Tech firms rise to prominence as ‘the cream of the crop,’ their collective impact is already being experienced in all facets of the industry.
