Legaltech versus GDPR and AML


Published: 27 November 2019
Author: Andreas Fillmann

The worldwide legaltech market is growing rapidly and is set to disrupt the legal market environment. Legaltechs provide services to different geographies and jurisdictions, and offer solutions to various parties, such as lawyer to business, lawyer to consumer, and lawyer to lawyer.

There are various business models which all provide various electronic and technical legal solutions driven by the need for cost reductions or client satisfaction. The main areas for such legaltech business models are: 

  • Marketplaces, networks, and platforms for legal services (including blockchain)
  • Workflows, processes, and tasks (e.g. document review, e-discovery, intellectual-property asset management, automated document assembly, legal-contract management, legal-research analysis, and legal-practice management)
  • Online dispute-resolution, and 
  • Artificial-intelligence systems (e.g. providing legal case research and solutions).

Thereby, technical aspects in terms of personal data processing is of great value and importance to such business models. Legaltechs that are able to provide related solutions in this regard can spot and maximise new opportunities and reduce legal risks. Unlocking this value is however dependent on far more than clever algorithms and exponential processing power. It is also essential that companies in this space build and maintain the trust of law firms and the related market participants. As a result, concepts of data privacy and security are essential industry principles in the legaltech sector – for both reputational and compliance reasons. 

Various legislative changes affect the legal industry, in particular personal data handling and cybersecurity, such as the changes contemplated by the General Data Protection Regulation and the Money Laundering Directive. These changes require considerable know-how and sophistication from both the law firms as data controllers and the legaltech companies as data processors. In particular, there is a tension between the concept of bringing new players into the market,and the appetite for more control and ownership over data (as a valuable business asset) of lawyers. Overall, intellectual property concerns, as well as privacy considerations, are important aspects to be considered here. 

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