Lawtech and litigation funding

What is lawtech and what applications exist? Discover the impact of disruptive technologies in the legal sector.

The rise of automation, artificial intelligence and other disruptive technologies is opening up new possibilities in seemingly every aspect of our lives.

As our world becomes more and more interconnected and these technologies become more sophisticated, companies in every sector, whether it’s automotive manufacturing, agriculture or legal services, are under pressure to adopt solutions and develop their own applications.

With increasing reliance on computer systems and machine intelligence, what’s the end game? AI singularity where machines are so intelligent and capable that humans are freed from work and can start to rethink how we spend our time and manage our planet’s resources?

Perhaps, but for now technology is focused on narrow applications – automating or augmenting human capability to provide a solution to a specific task, often a practical business solution.

With so many applications being tested in so many different sectors and by so many different teams, it’s a fascinating time of experimentation. But what applications are there for emerging technologies in the legal sector?


Jump to:

What is lawtech? An overview

Early adoption and notable lawtech startups

What benefits does lawtech provide?

Lawtech applications in litigation funding

The future of lawtech and litigation funding


What is lawtech? An overview

Lawtech describes the application of new technologies in the legal sector. These are technologies designed to improve how legal services are delivered and the way the justice system works.

Lawtech, also referred to as legaltech, includes:


Automation describes the application of technology to perform tasks – for example, scanning documents for relevant terms and categorising them. With automation, it becomes possible to analyse and identify trends or anomalies in vast amounts of data, almost instantaneously and more accurately than a human could. At present, automation is only widely used for routine, predictable tasks.

Artificial intelligence

AI is the term applied to computer systems capable of replicating human intelligence or performing tasks associated with human intelligence – for example, chatbots, which use natural language processing AI to analyse language to improve how they interface and communicate with humans.

Machine learning

One way of achieving AI, machine learning involves systems capable of self-improvement. Machine learning is based on algorithms that can identify trends or anomalies in datasets and apply them to other scenarios, with feedback loops that allow them to improve. Currently, machine learning applications include facial and speech recognition, and prediction systems.

James Scragg, Portfolio Manager at VWM Capital, says:

“The potential of new technologies is enormous. They have the power to transform many areas within our sector, and we’re still only beginning to see what they’re capable of. As younger lawyers who have grown up surrounded by this sort of technology enter the profession, and as we benefit from the experience of tech applications in other sectors, many more exciting examples will begin to emerge.”


Early adoption and notable lawtech startups

Lawtech has already been adopted in top law firms to improve areas such as documentation review, cybersecurity, HR systems, client relationship management, and practice management, according to a 2019 report by the The Law Society.

In-house legal teams, meanwhile, have implemented the use of technology to help realise efficiencies in operations. The advice sector too has begun to use lawtech for management systems and in applications such as chatbots to expand the provision of their services.

A drive towards greater efficiency to reduce costs and growing workloads has pushed those in the legal sector to adopt lawtech, described by the Law Society as two waves:

  • Rules-based technology such as automation in document review.
  • Predictive technology that can identify likely case outcomes or perform assessments of legal risk.

The boom in lawtech has paved the way for startups to spring up, each with their own technology-fired solution. Some of the most exciting in recent years have included:

Who: Luminance
What they do: Document review and analysis to identify points of interest and any anomalies. It works through pattern recognition and machine intelligence.

Who: Leverton
What they do: A cloud-based data extraction platform that has been used for due diligence solutions.

Who: ThoughtRiver
What they do: They use natural language processing in the analysis of legal documentation.

Who: Sentry Funding
What they do: They use algorithm-based technology to predict legal decisions, working with litigation funders, law firms, banks and insurance companies.


What benefits does lawtech provide?

The legal services sector has already begun to see the advantages of lawtech. These include:

Improved accuracy

Computers are able to process information systematically, with a high degree of accuracy, in a way that humans are not.

In 2018, LawGeex published a study in collaboration with Duke and Stanford Law Schools in which an AI system was asked to perform the same task as 20 experienced US lawyers. The AI system’s accuracy rate was 94% compared with the lawyers’ rate of 85%.

Improved efficiency

Even a modest computer can process a huge amount of data quickly – and with advances in computing power, the efficiencies that are possible by using computers are staggering.

In the LawGeex, Duke and Stanford study, the AI system was able to complete the task in 26 seconds, compared with the lawyers’ average time of 92 minutes.

Reduced costs

With these improved efficiencies come cost savings, which can be invested elsewhere.

Improved job satisfaction

As in other sectors, automation and other lawtech applications are likely to replace staff functions at lower levels as they target repetitive tasks such as administration. Rather than displace human workers, however, the hope is that human jobs will become more rewarding with these mundane tasks done for them.

Improved legal outcomes

With improvements in accuracy and efficiency alongside reduced costs, better outcomes for clients are also made possible.

Improved access to justice

We’re already seeing specific innovative applications of algorithmic technology in the litigation funding sector. These systems are able to analyse vast volumes of case data and case history to improve the identification of cases with a strong probability of winning.

While, traditionally, litigation funding has focused on fewer large-sum cases, the efficiencies of automation mean it can now be applied to a broader range of smaller-value cases. These are cases with merit where previously the costs of litigation would have proved prohibitive.


Lawtech applications in litigation funding

In her article for the Cambridge Law Society, Elizabeth Huang identified three potential areas for innovative lawtech to be applied in the litigation funding sector:

Predicting case outcomes

There is a clear need for technology that can improve the prediction of case outcomes, as realising a return from litigation funding depends on the success of cases.

Connecting funders and cases

Portals such as Sentry Funding can open up litigation funding to a range of funders.

Automating aspects of the litigation financing process

From assessing cases against suitability criteria to automatically updating investors on the progress of cases, there are many aspects of the litigation funding process that have the potential to be improved and streamlined by automative technology.

James Scragg says:

“This is what we do at VWM Capital and it’s an area where lawtech can bring true benefits, both to investors and to those seeking justice.”


The future of lawtech and litigation funding

In his foreword to the 2018 Law Society report Artificial Intelligence (AI) and the legal profession, Kevin Hood, Executive Director at Willis Towers Watson and Head of Legal Services at FINEX Global, wrote: “Lawtech, the adoption of AI and new technologies has the potential to reduce costs and increase access to those seeking legal advice. However, in order to maximise the benefits, there also needs to be an awareness of the means to mitigate any potential challenges or risks.”

As investment in the sector increases and technology becomes more powerful and more reliable, applications within the legal sector will most likely expand to cover many more areas.

With increased dependency on these systems, it will become increasingly important to ask ourselves if the systems are robust, reliable and based on the right principles, free from unwanted bias. The question of ethics and how we make sure AI-based systems operate according to our principles is expected to become an area of intense focus.

In the litigation funding sector, it’s clear there are applications for lawtech that provide significant benefits and open up many exciting possibilities, such as better access to justice, more meaningful jobs unencumbered by repetitive administrative responsibilities, and improved accuracy.

As the market continues to grow, as is expected with the advance of lawtech and legislative reform in countries around the world, it will be interesting to see how our sector tackles these issues.

James Scragg says: “Automation and AI technologies have the potential to enhance the quality and efficiency of work in the legal sector. Rather than displace human workers, I believe we’ll see a shift in the nature of the work we do, the emergence of new roles focusing on human skills such as empathy and ethics, and an increase in demand for training in technology oversight roles.”

Transforming litigation funding with algorithmic technology

At VWM Capital, we’re harnessing lawtech to transform litigation funding – opening up access to more cases and offering lower risk investments.

While litigation funding has traditionally only been concerned with a small number of larger cases, we’re able to do things differently thanks to technology. Using a sophisticated algorithm, we can assess a high volume of smaller claims and preselect the ones that match strict criteria indicating a strong likelihood of success.

Once shortlisted, claims are then submitted to an independent panel of legal experts for consideration. Only a case with three legal experts agreeing there is a strong case will be selected for funding.

Find out how we’re using technology to open up litigation funding to more claimants.



Artificial Intelligence and the Legal Profession, The Law Society
And what are we doing about LawTech? Practical Law, Thomson Reuters
What is lawtech? The Law Society
#LegalTech v #LawTech – WTF?, Legal Geek
The rise of lawtech, Legal Futures
Lawtech adoption research report, The Law Society
Lawtech UK, Tech Nation
Industry in focus: third-party litigation funding meets Lawtech, Cambridge University Law Society
Law firm and start-ups awarded government cash to develop lawtech, Legal Futures
Legal Geek startup map
AI vs lawyers: the ultimate showdown, LawGeex
AI could help, not hinder, the success of future legal professionals, VentureBeat