The Legal Tech Market Landscape

Market Observations

Ad tech vs Legal Tech

I started my career in advertising technology back in the early 2010s. It was at a time when printed advertising was on the decline and the advertising technology industry was still in its infancy. 

Global advertising spending is expected to reach $1.07 trillion this year. This supports 15,000 ad-tech companies with a combined value of nearly $600bn

Ad tech vs Legal Tech market caps

What’s this got to do with legal tech?

That same disruptive energy that was present in ad-tech a decade ago is now rife in the legal tech industry. 

Global legal spending is expected to increase to over $1.4 trillion by 2032. Yet there are still only a few thousand legal tech companies on the market and they are collectively worth less than $30bn.

Will legal tech reach the heights (and saturation) of the adtech space? Who knows. 

What I do know is that it was a great time to be in ad tech in the early 2010s and it’s a great time to be in legal tech in the mid 2020s. 

Other Market Predications

Ed Walters, the founder of vLex also wrote about how the legal tech market could be worth $250bn. Here's the "back of a napkin" maths:

🇺🇸 U.S. legal services market is valued at $453 billion

~20% of people get help with their legal problems so true market value could be estimated at $1 trillion

🌍 Assume that the rest of world is another $1.5 trillion - thats now $2.5 trillion

💵 If 10% of the market is served by tech then the legal tech market value could be estimated at $250 billion

You can read more about it here.

Gartner also recently published their findings, stating that the market had potential to reach $50 billion by 2027. More on this from Gartner here.

Target Audience of Legal Tech

When thinking about where the market will go, it’s important to also consider where it is now and where legal tech has focused its efforts up to this point.

Customer Organisations

Upon doing some market analysis, the majority of legal tech appears to be targets at the big law firms and whilst the same data breakdown wasn’t available for in-house legal teams, our belief is that the same is true for in-house legal tech.

Legal tech market audience by company

Practice Area

Focusing in on the type of work these tools cater to - it’s evident that the transactional practice areas (and IP) are well catered to.

This graph highlights the segmentation of legal technology by practice area. Unsurprisingly. corporate law and other transactional practice areas dominate, with significantly higher legal tech adoption, indicating the need for automation and tools to manage complex, high-value work in these areas.

Many companies are also focused on other areas such as Real Estate, Tax, and Regulatory where tech solutions address workflow efficiency and compliance requirements. 

Practice areas like Advertising Law, Insurance Law, and Intellectual Property lag behind. Is this untapped potential or less perceived need for technology-driven solutions. 

Overall, this segmentation underscores that investment in legal tech is largely concentrated in areas with high transaction volume, cross-border complexities, and evolving regulatory landscapes.

Legal tech market audience by practice area

Functional Area

This graph presents the segmentation of legal technology by functional areas. 

“Business of Law” leads by a significant margin, with Contracts, Litigation Management, and Document Management also show strong adoption. We dive deeper on this below. 

Notably, emerging categories like Data and Legal Research are gaining traction, which points to increasing reliance on analytics and AI-driven insights.

Overall, the graph reveals that legal tech is primarily focused on enhancing efficiency, managing high-volume tasks, and delivering cost-effective solutions for legal practitioners and businesses. Perhaps there is space for technology specifically focused on enhancing the delivery of services to clients?

Legal tech market by functional area

Business of Law

This graph drills deeper into the Business of Law technology segmentation, showcasing where legal technology solutions are most concentrated. Practice Management dominates the category by a significant margin, highlighting its central role in optimizing day-to-day operations, workflows, and resource allocation for law firms. Other notable areas include Billing, Matter Management, and Timekeeping, all of which reflect a strong emphasis on financial management and operational efficiency.

Surprisingly, areas like Budgeting, Client Portals, and Project Management exhibit lower adoption, suggesting potential opportunities for tech growth in client-facing and planning solutions. 

Overall, the segmentation reveals a clear focus on driving productivity, profitability, and organizational efficiency across the legal business landscape.

Legal tech market in the business of law

Litigation Management

This graph delves into Litigation Management technology segmentation, highlighting the varied adoption of tools supporting litigation workflows.

Exhibit and Evidence Management leads significantly, emphasizing the critical role of technology in managing and organizing case materials for litigation. eDiscovery Services and Litigation Case Management also stand out, reflecting the increasing reliance on tools to streamline data discovery, review, and overall case handling. Other prominent areas, such as Expert Witness Selection and Early Case Assessment, demonstrate a focus on improving pre-trial efficiency and outcomes.

In contrast, solutions like Jury Selection, Brief Bank, and Redaction show lower adoption, suggesting specialized but less broadly deployed needs.

Tools for Remote Trials and Remote Depositions indicate the rising importance of virtual litigation solutions, likely accelerated by changing post-pandemic dynamics.

Overall, this segmentation highlights a strong focus on leveraging technology for document-heavy, evidence-centric, and data-driven aspects of litigation, while tools for remote proceedings and trial preparation continue to grow following the pandemic.

Legal tech market for litigation

What’s next / What else?

Whilst the above observations may not be novel, when combined with the >200 conversations with legal tech startups in 2024, we think that it still leaves a significant blue ocean in a number of areas. 

1. Embedded Legal Tech - where legal solutions are integrated or encapsulate entire legal workflows designed for specific industries and the nuances of their legal requirements. These solutions may not be entirely legal tech and therefore perceived more broadly but have the legal at their core.

2. Industry Niche Firms are uniquely positioned to leverage specific or custom-built technology tailored to their practice needs. These firms can create competitive differentiation by adopting or building tools that solve sector-specific legal challenges.

3. Law Firm Product Development is another relatively untapped space. Forward-thinking firms are beginning to transition from pure legal service providers to technology developers, creating commercialized products to solve recurring client problems, create “stickiness” and drive new revenue streams, enhancing their value proposition and points of differentiation. 

4. Client Service Delivery remains a critical yet underserved area. Innovations focused on improving the client experience present an opportunity for firms to redefine how they engage with and deliver value to their clients.

5. Legal tech where legal has not gone before - with AI reducing development costs, legal tech will now expand into areas that have not historically made financial sense to conduct any legal work. This will be a significant driver for A2J (access to justice).

6. Pre rather than post legal tech - with the cost of technology development reducing and capabilities increasing, legal tech can now be proactive and preventative rather than reactive when there is a problem.