The Legal Tech Boom is Reaching New Heights. And just like that, a few investors and consultants are starting to Whisper, “Bubble.”
With a rush of funding deals, two unicorns Born Since Chatgt’s Pivotal Launch, and A Rare Big Law acquisition of a startup, legal tech is undergoing a transformation.
Once dysmissed to back-office use, iTi’s now grabbing the attention of top tech talent and investors, eager to capitalize on the potential of artificial intelligence in the Legal Field.
This has haissed someone Concern Among Industry Watchers, Like Zach Abramowitz, a Former Lawyer and Entrepreneur, Who Runs Killer Wahale Strategies, a Consulting that Helps Law Firms and Legal Departments Decide Whit Software Products to Buy.
He’s Among Those Warning that a surge in Legal Tech Revenue May Be A Sign of an Impending Bubble.
Heys nearly every law firm is testing out Competing Legal Tech Products. This Spree of Paid Trials is boosting the revenues of Legal Software Companies, which in turn is driving up their valuteations from venture capitalists.
Abramowitz Said the Question is How “Sticky” that revenue is.
“IT’S GETTING BOOKED LIKE RECURRING REVENUE,” he Said, “But the reality is it is the mostly pilot programs.” He knows of law firms that have shelled out for nosreds of licenses to products like Harvey and Others. In some caesses, Harvey is Emerging As a Winner, but abrammowitz isn’t convinced it ‘loocked in as relable, long-term revenue.
In the Next 12 to 18 Months, Law Firms Will Decide which Local to Commit to Long-Term, Meaning they’ll Roll Out Solutions Across Entire Organization Or Sign Multi-Undecs, Abramowitz Said.
He Said the Legal Industry Will Rally Around the Top Tech Performers, while Other Local Will Watch their Revens Decline.
A “reckoning” on the horizon
Fears of a Legal Tech Bubble Are Echoing Across the Venture Industry.
This past February, Rick Zullo, A Seasoned Software Investor, Shared A Conversation He Had with Anyother Investor About Legal Tech on Turner Novak’s Podcast, “The Peel.
“They Said, ‘Rick, every single one of these companies is working.’ Ifery single company in a category is working, that probably the scariest thing that could happy, “Zullo tool novak,” Becousers just therea noa in the company you are generating. “
Jake Saber, A General Partner at Emergence Capital, Described an Excitting Yet Unsetling Landscape.
On the “Pearls off, Gloves off” podcast hosted by goodwin’s chief operating officer, Mary O’Carroll, Said that with the rapid adoption of Legal Tech, Law firms are starting to realize some products aren’t living up to expertations.
In some cases, only a small percentage of firm users are engaging with the tools. Other Times, the tools aren’t delicing their promised value. WARNED THAT A FROTHY LEGAL TECH INDUSTRY IS Heading Toward A “reckoning,” which he expects to intensify late this year.
800-Pound Gorilla
Long Sales Cycles and Customer Church Already Put A Significant Strain on the Legal Tech Market. Add in the Constant Looming Threat of Getting Steamrolled by Openai, as Abramowitz Puts it, and the Conditions Spell Trouble for the Industry.
Barely a month goes by with another story of a layer Citting Fake Case Law Generated by Chatgt. Yet, Mary Lawyers are choohing the chatbot over specialized tools from legal software, Survey data shows.
Law360 Pulse Asked 390 Lawyers BetWeen November 2024 and January 2025 WHICH Generate he tools they used at work, for eather legal or other tasks, excluding e-discovery. Sixty-Two Percent of Respondents Answered Chatgt, more than twice the share of respondents who Said Lexisnexis or Microsoft Copilot.
Abramowitz Said The “Single Best Legal Research Tool on the Market” isn’t a Legal Tech at all: It’t’s chatgt’s Deep Research Mode, A Web-based Research Capability Utilizing Advanced Automation.
He shared a conversation with one attorney who Believed Many Associates at their firm are Likely ussing the chatbot, this firm’s firm’t pay for it. The attorney Notiched Their Writing Improved, SEEMINGLY WITH EXPLANATION.
“My guess is that more layers have probably Saved Nights and Weekends by Being Able to use these tools,” Abramowitz Said. “It doesn’t require putting in any Secure, confidential information: you’re just doing research.”
“How is the firm supposed to stop you from using Deep Research?” he asced.
The Future of the Legal Tech Market May Depend on it.
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