The current state of Legal Tech in Central and Eastern Europe
Looking at the legal landscape around the world, one could get the impression that the market for legal tech solutions is mainly limited to the USA, UK and Australia. While the legal tech market in these countries has reached a later stage of maturity, the Central and Eastern Europe (CEE) region is a huge area for development and has an emerging scene of disruptive and scalable startups. The main driver for change in the legal industry in the CEE region is a new generation of young lawyers who recognize that better application of technology is a way to achieve an advantage in a highly competitive legal market.
One of the incubators of new ideas and legal tech startups in CEE is the annual Global Legal Hackathon (GLH). The 2019 incarnation of this contest was a significant success for CEE, with two startups from the region becoming global winners. One of them is Intelilex from Poland, which developed an MS Word add-in drafting assistant which uses AI to suggest clauses while drafting contracts. The second winner of GLH 2019 was Romanian startup Legal Shapers, who presented their Lawreai tool — a Facebook Messenger chatbot which aims to provide legal travel advice. Lawreai deals with common legal situations which might occur during a trip. Thanks to the global success of CEE-based teams in 2019, hopes and expectations are also high for the final round of the 2020 Global Legal Hackathon. SlothEye from Poland (with an interesting tool to track IPR, GDPR, and NDA compliance in IT projects), Legal Surfers and Identive from Romania, and Food Fighters from Hungary (with a legal compliance tool for food products advertising) are the semi-finalists in this year’s challenge.
The legal tech landscape in CEE is not only composed of startups, however. The best example of a company and an idea that has grown into a global solution is Legito. This document automation platform, founded in Czechia in 2014, has become a world-renowned legal tech provider with clients in 27 countries (including PwC, Schoenherr, and Skoda) and over 100,000 users in approximately 50 countries. Currently the company is incorporated in the USA and has a European office in Germany. Another excellent example of a startup from CEE, which is on its way to becoming a global company, is Avokaado. In 2016 this Estonian company launched a digital platform for contract automation for lawyers and companies. Since then it has become a solution of choice for large companies and law firms from the Baltic and Nordic regions (including Tele2 and Sorainen, the leading law firm in Baltics).
Although talented lawyers and developers are the greatest assets of the legal tech industry in CEE, there are also significant challenges ahead. One of them is gaining the interest of investors at venture capital funds, which is essential to scale up in the global legal market. The scale of VC investment in CEE legal tech startups has been insignificant so far, especially when compared to the UK or the US market. Legal markets in most countries in Central and Eastern Europe are relatively small. This means that going global is essential to growing a sustainable company, which is challenging without external financing.
The second barrier to developing and implementing legal tech solutions in the CEE region is the conservative mindset of old-school lawyers in these countries. New technology is still deemed to be a risk or an issue of professional ethics by some legal professionals. There are, however, some signs of change. In Poland, the Warsaw Bar Association of Legal Counsels has established a committee for legal tech, and the intersection of law and technology has become a topic of debate. Most contract analytics tools which make use of machine learning or natural language processing are not yet trained in local languages. To fully unlock the benefits of new technology in legal work, more AI solution providers will need to establish presences in Central Eastern Europe.
The best way to convince people to adopt technology is to show them real use cases, possible efficiency gains, and potential return on investment. Education of lawyers will be key to taking legal tech in CEE to the next stage of maturity.