It may come as a surprise that one of the most competitive industries in the world has a technology problem. But the truth is that not all law firms have corporate clients with deep pockets. Many work in smaller leagues where money is tight. Without piles of cash lying around to invest in the business, mid-sized firms can struggle to pay for good technology.

Money is tight for a lot of reasons. One of them is that while technology is still incredibly expensive in legal circles, consumers have an array of legal technologies they can use instead of paying actual lawyers. Judicata, Rocket Lawyer, and Clio are a few of the services that consumers are opting for.

Compound that problem with a spike in state-sponsored hacking groups that target law firms and you have a near perfect storm of problems for smaller firms that are unable to spend money on expensive solutions. However, where there is a problem there is also an opportunity, and entrepreneurs have taken notice. The problem is, solving the technology crisis in the legal industry takes a special breed of entrepreneur.

Challenges of Developing Legal Technology

“We spent 10, maybe 15, years trying to move the legal profession from WordPerfect. Bankers moved to Excel faster,” explains Steven Sinofsky, formerly a Microsoft executive. “Part of the reason is that the legal profession is a very people-based process. It’s also one where the tools you use are also encoded in law. You can’t just show up in a courtroom and change how everything works.”

In other words, the necessary technology must be developed by people who thoroughly understand the demands of the legal industry. Law firms require specialized document management systems, e-Discovery that meets regulatory standards, robust cyber security, and more.

John Sweeney, President of LogicForce and one of the entrepreneurs stepping up to solve this problem, says the issue is an enormous one. “Many law firms do not know how much money they are spending on their technology,” says Sweeney. “It can be tens of thousands of dollars more than they think and much of it is unnecessary. The problem is that firms are forced to buy software one piece at a time, creating a tangle of different products that do not work well together and that quickly age out of relevance.”

Because developing the technology requires a legal pedigree and because of the enormity of the problem, solutions have been slow to develop. But midsize law firms are increasingly reaching out to find modern solutions.

Some of the technology that needs to be replaced is remarkably archaic. In a blog post by a Houston-based IT company called Citoc, fax machines made a short list of technologies that law firms needed to replace. This is a definite example of how badly the legal industry needs to upgrade its technology. After all, when was the last time you used a fax machine?

The Rise of Cloud-Based Legal Technology

Entrepreneurs are beginning to release legal technology solutions that are comparable to what has been available in other industries and even to consumers for years.

Cloud-based services are a crucial leap forward for midsize firms that cannot afford the capital expenditures of constantly buying new software when their old software becomes obsolete,” explains Sweeney. “By offering all of the same technology as a service, we help midsize firms scale and remain current with the most modern technology.”

However desirable the new solutions may be, the legal industry is slow to innovate. It is bound by rigid standards created by the American Bar Association and it does not have a culture of rapid technology adoption. If law firms want to grow their practice, these issues need to be resolved.