AI isn't just a trendy buzzword ⸺ it's reshaping how businesses operate at an unprecedented pace. The real question isn’t whether AI will disrupt, but which industry will be next.

From cleantech to cybersecurity, AI is creating efficiencies for higher-value strategic work. Two-thirds of jobs are already exposed to some level of AI automation, with potential to replace up to a quarter of current work tasks, making generative AI’s impact profound.

Historically, technological advancements have both displaced and created jobs at the same pace. However, generative AI could accelerate this shift, potentially reducing labor demand in the near future while also creating new types of jobs with these technological innovations. While adopting AI will inevitably have growing pains, it promises to unlock new opportunities, innovative business models, and higher job satisfaction. With Goldman Sachs estimating a seven percent increase in global GDP, AI's economic potential is not just significant⸺it’s transformative.

One Industry On The Brink Of Transformation Is Legal Tech

The legal sector is poised for significant disruption due to AI. Legal tech companies are experiencing a surge in market interest and funding. AI adoption is being explored broadly, both in-house and in law firms, and across various segments like practice management, litigation, and transactional work. It’s even being incorporated in subsegments and practice areas, such as depositions, E-discovery, knowledge management, and Intellectual Property (IP) and Patents, among others. Existing large legal tech markets, such as Contract Lifecycle Management (CLM), are seeking to implement AI as part of their product toolset and roadmap. In addition, and while not covered in this article, many of the technologies and use cases below have the potential to expand to legal adjacent areas, such as procurement and supply chain, among others, further expanding the market size and potential.

The global legal services market size reached USD 952.5B in 2023 (43% of that was in North America) and is projected to surpass around USD 1,486.24 billion by 2033, expanding at a CAGR of 4.60% from 2024 to 2033. Underpinning this massive market and growth is the legal tech market. The global legal technology market size was calculated at USD 27.32B in 2024 (~51% of that was in North America) and is expected to reach around USD 65.51B by 2034. The market is expanding at a rapid CAGR of 9.14%. We see this growth happening across various subsegments:

• Reports estimate the global e-discovery market is currently valued between $14B and $16B and is set to grow at a CAGR of 8% to 11% over the next 8 years.
• Similarly, litigation management software is currently estimated at $8B to $9B and is set to grow at a CAGR of 9% to 11% over the next 8 years.
• Even the traditionally complex area of IP and patents aren’t immune to this wave of innovation. The global market for patent drafting services alone was valued at $3.42B in 2021, and is forecasted to grow to $4.08B by 2025 with a steady 4.5 percent CAGR. This doesn’t even account for the revenue and services related to patent portfolio monitoring, infringement claims, and patent maintenance, just to name a few. In 2023, there were 3,111 patent cases filed in US Federal district and appellate courts and the average cost of patent litigation processes is $2.3-$4M.
• Legal knowledge management is around a $2B global industry¹ and is predicted to grow at a CAGR of over 12% reaching a $5B market size in 2030. Separately, the Legal Analytics Market size was valued at $2.13B in 2024 and is expected to grow at a CAGR of 31.6% and reach $16B by 2031.
• CLM is estimated at around $2B to $2.5B globally and is expected to grow at a CAGR of 13% over the next 8 years.

While some of these areas may see overlapping technology providers (e.g. knowledge management, transaction, and contract lifecycle management, etc.), and thus competition, we believe AI will accelerate the shift of revenue from the massive legal services market to the already large legal tech subsector. While competition will be fierce, this will provide a large enough market for multiple winners.

The market size and its potential are further illustrated by the high valuations of some established legal tech companies across all categories, which all are trying to adopt AI and/or seeing AI-fueled growth:

• E-discovery: Relativity, a PE-backed company was valued at $3.6B following a strategic investment by Silver Lake in March 2021. Additionally, Everlaw received $202M in its most recent financing (Series D), at a $1.9B pre-money valuation in October 2021.
• Litigation and Legal Research: Thomson Reuters, the owner of legal research platforms Westlaw and Practical Law, has a $76B market cap, and recently acquired CaseText, an AI legal research technology, for ~$650M.
• IP and Patents: Patsnap raised a $300M Series E at a $700M pre-money valuation in March 2021.  
• Knowledge Management: NetDocuments, a PE-backed company, was acquired through LBO in July 2021 with an estimated valuation of $1.4B; Litera, another PE-backed company, surpassed $200M in revenue in 2021.
• CLM Market: LinkSquares raised a $100M Series C at a $740M pre-money valuation in March 2022; Ironclad raised a $150M Series E at a $3.05B pre-money valuation in January 2022; Evisort raised a $100M Series C at a $560M pre-money valuation in May 2022.
  • LinkSquares, an early disruptor spearheading the AI revolution in legal tech, is already generating buzz from its AI solutions that streamline operations for in-house legal teams. It provides AI tools that simplify contract analysis, improve negotiation processes, and efficiently manage entire legal departments.

AI unlocks a multi-billion-dollar market opportunity, offering law firms and in-house legal teams the tools they need to operate more efficiently and scale. Below is a market map of a sampling of the legal tech industry.

Why Myriad Is All In on Legal Tech‍

We’re just scratching the surface. Our extensive network spans the entire legal ecosystem⸺from boutique law firms and corporate legal departments to the top AM100 Big Law Firms⸺and we invest where innovation meets potential. We have continuous discussions and feedback sessions with our deep bench of law firm partners and practitioners, legal operations experts, GC and CLOs, CIOs, CTOs and CISOs at each of these organization. We have complemented those valuable insights with our first-hand experience in the legal sector and our deep understanding of business strategy to inform our thesis.

Our conversations with these industry experts combined with our own experiences have led to a few high-level takeaways about in-house teams and law firm:

1. In-house teams and law firms are ready to buy AI software that shows the requisite accuracy and security.
2. They believe AI software can achieve the level of accuracy and insights needed to drive efficiency.
3. While adopting AI solutions will impact their businesses from a revenue, cost, profit, and business model perspective, they believe the opportunities it creates will significantly outweigh the costs.
4. They have a huge focus on the responsible deployment of AI solutions, especially with respect to privacy and security.
5. They are particularly sensitive around AI tools accessing company and customer data and attempting to use such data to “train” or “fine-tune" the AI tool ⸺ this sensitivity is understandably high and can be even higher depending on the use case.

We believe the startups that navigate these concerns will come out on top.‍

AI Is Reshaping How Legal Practice Intersects With Business And The Practice Of Law‍

Traditionally, law firms are hesitant to change their processes and workflow, for good reason. There are high costs associated with disrupting revenue-generating workflows by changing the status quo and the industry's non-negotiable demand for confidentiality and accuracy ⸺ something newer tech innovations haven’t consistently guaranteed or delivered. But this hesitation is being addressed head-on by rapidly advancing, cutting-edge AI tools. Firms are experiencing a dovetail effect ⸺ they’re more open than ever to solutions that drive efficiency and productivity, allowing a legal professional to focus on more high-value work. At the same time, they're answering the growing pressure from clients on pricing and efficiency, and addressing competitors on price and the growth of alternative business models.

By delivering increasingly comprehensive capabilities that meet the requisite accuracy, confidentiality and user experience, AI could shift everything from who performs this type of work to how it gets done. For instance:

• Law firms may have fewer paralegals, associates and/or back-office diligence teams.
• Corporate in-house teams may do more of this work completely on their own, or initially on their own before sending it to their outside firm to review.
• An even more drastic outcome is that some of this work could be completely shifted to a third-party AI-driven software platform utilized by the corporates and the firms.

We've seen this kind of technological and business model transition before, with Carta as a prime example. Historically, law firms managed startups' cap tables manually ⸺ a costly, time-consuming process. Eager to cut costs, startups advocated for Carta's adoption. The law firms that adopted its use early caused other competitors to do the same, showcasing a cooperative push by law firms and businesses toward tech-driven service solutions. Initially met with resistance, this technology has now become an industry staple.

New AI legal tools are being developed to create new workflows and integrate them into existing processes while maintaining mission-critical accuracy. The legal industry stands at an inflection point. Law firms and corporate legal departments are actively exploring and deploying AI tools, recognizing the necessity of staying ahead in an increasingly competitive landscape.

How AI is Changing Legal Tech: Deep Dive into Use Cases

AI is poised to transform the legal industry, designed to ease the burden of manual tasks, generate faster results, and deliver more accurate and streamlined processes. The greatest opportunities are in areas where AI can deliver near-instantaneous results, speeding up processes and saving money.

1. Litigation

Litigation is notoriously complex and requires years of specialized education. However, AI can revolutionize many of the workstreams related to litigation, such as legal research, brief and motion drafting, deposition process, e-discovery, and analytics/tech-enabled services.

• Legal research and the subsequent legal drafting are dense and time-consuming processes typically handled by Junior Attorneys. AI can accelerate these tasks by serving as a personal research and drafting associate in a fraction of the time.
• In e-discovery, AI simplifies the complex processes of document collection, analysis, and exchange during legal disputes and investigations. It also enhances statement of facts, fact reviews and chronologies by providing immediate, streamlined, and fact-focused reviews, highlighting key information pertinent to the issues at hand.

Trained to comprehend legal language and context, these AI solutions are making significant strides in meeting the high expectations the legal sector demands - often starting with very specialized tools that seek to solve a specific use-case or pain point (e.g. fact gathering and building chronologies in litigation diligence).

2. Knowledge Management

Lawyers often reuse documents, precedents, and emails to share collective wisdom, but without original context and consistent structuring of data, these materials can lose their value and efficiency. AI shows the promise to disrupt the knowledge management solutions by turning content into actionable intelligence, allowing lawyers to generate new legal content with context consideration. For example, it seeks to turn a firm’s entire unstructured knowledge base into a structured, searchable and referenceable knowledge database. In turn, this can help draft agreements that leverage an archive of past results for a certain client, counterparty, and/or transaction type, and thus moves the needle from negotiated drafts closer to a finalized agreement. Over time, we see this segment as having the potential to overtake portions of the transactional drafting, redlining and negotiating segment below, at least with respect to use in law firms. Here, small language models fine-tuned on synthetic data are likely to come out on top, offering scalability and enhanced security features. Our view is that the accuracy and specificity required to support the needs of law firms and other legal users require this type of approach. While these models may start in the legal vertical, they could easily extend to other complex transactional categories as well.

3. Transactional

As mentioned above, AI can enable real-time contract drafting, redlining, and negotiation of complex agreements, such as vendor and supplier contract drafting, purchase agreements and credit agreements. By understanding negotiating leverage and deal dynamics, AI enhances the efficiency of these tools. Automated negotiation and drafting can save money and speed up deals, reducing time delays that might otherwise jeopardize transactions.  

Moreover, AI can prove to be an important value-add and additional product offering for CLM solutions, predominantly used by in-house legal teams and corporations. In particular, CLM solutions that are native AI and native repository-focused are in a unique position to improve the transaction journey by tapping into the repositories of data living within their CLM platforms to drive faster, better, and cheaper commercial results built on a playbook of previous transactions, as well as, better insights into a corporation’s contracting history and portfolio.

4. IP & Patents

AI is revolutionizing the patent lifecycle. It starts with quickly identifying evidence of use, followed by analyzing infringements and generating claim charts. In the invalidity stage, AI assesses patent strength, pinpointing weaknesses efficiently. Patent drafting, once time-consuming, can be completed in minutes. AI can also manage patent portfolios, streamline searches for similar inventions with advanced filtering, and provide real-time insights for go/no-go decisions. Additionally, it helps match competitors to shell corporations and tracks IP ownership with precision. AI integration at each stage of the patent lifecycle makes the process more productive, accurate, and cost-effective.

AI holds great promise but faces challenges such as hallucinations, accuracy issues, trust, cost, scaling, and security, which can limit its adoption. However, it also provides significant opportunities for law firms and corporate lawyers to rethink their structures and uncover new revenue streams. To fully realize these benefits, AI must be implemented and applied in a thoughtful and consistent way, with respect to accuracy, security, confidentiality, and scaling efficiencies.

With the legal profession’s zero error tolerance policy, implementing new technologies is particularly challenging. However, for law firms, AI holds the potential to refine business models, enhance productivity, and improve accuracy, leading to substantial time and cost savings, increased efficiency, and a better bottom line. This enables attorneys to focus on higher-value tasks, enhancing job satisfaction and client outcomes. Corporations benefit from greater internal efficiency and insight, and more effective and cost-effective interactions with law firms, underscoring AI's transformative potential.

Myriad’s Commitment: Driving the Next Generation of Legal Tech

At Myriad, we're not just observers of the AI revolution in legal tech⸺we're active participants, driving the next wave of innovation. The Myriad Model is more than a business intelligence tool; it’s a bridge connecting disruptive startups with industry giants to create solutions that define the future of business solutions.‍

By creating these connections, we are able to focus on the solutions that help businesses run better across industries. The future of legal tech is bright, but it will require a willingness to embrace change and navigate the challenges that come with it. AI offers law firms and corporate lawyers the tools they need to thrive in an ever-evolving landscape. By adopting AI-driven solutions, the legal sector can unlock new opportunities for growth and success and we’re here to ensure that our partners are equipped to thrive.