Editor’s Note: In this concise article, veteran legal technology executive Hal Brooks offers his insights into the transformational changes underway in the legal services sector. Speaking at the recent SOLID East conference, Brooks outlined the growth trends, investment drivers, and strategic imperatives that are accelerating consolidation and technological adoption. With cyber risks mounting, cybersecurity and data handling are emerging as top priorities in legal tech deals. Brooks expects continued innovation and integration of legal expertise with AI capabilities. As this new era unfolds, agility and client-centricity will define which firms thrive. For legal industry leaders, the mandate is clear: adapt or risk extinction.

Industry Veteran Hal Brooks Foresees New Era of Innovation and Consolidation for Legal Tech at SOLID East

New York, NY – The legal technology and services sector is entering a transformational new era, according to industry veteran Hal Brooks. In an expert presentation at the recent SOLID East conference held in New York on September 12, 2023, the CEO of HaystackID offered his insights into the investment trends, market forces, and strategic imperatives currently shaping the competitive landscape.

Speaking before a full-house audience of legal industry executives, investors, and professionals, Brooks charted the explosive growth and resilient demand driving increased deal activity. The global legal tech market has steadily expanded, surpassing $27 billion in 2021, and projected to reach nearly $36 billion by 2027. Brooks attributed this upward trajectory to the sector’s counter-cyclical nature: when economic times are good, demand rises as deals proliferate; when recessions hit, litigation and bankruptcies also increase as parties fight over shrinking resources.

This market profile helped spur a surge in investments and acquisitions during the pandemic, as historically low-interest rates made capital highly accessible. Since 2021, at least 200 deals have been completed across legal tech’s four primary segments: Enterprise Legal Management, Practice Management, Attorney Workflow, and Alternative Legal Services Providers (ALSPs). The resulting consolidation has positioned leading platforms to rapidly scale through strategic acquisitions of technologies, resources, and client bases.

However, macroeconomic headwinds have recently slowed deal activity. Between rising inflation, the war in Ukraine, and monetary policy tightening, market volatility increased in 2022. But Brooks noted that deal velocity is expected to rebound as debt markets stabilize. Dry powder remains abundant among investors looking to capitalize on legal tech’s steady growth.

At the same time, emerging technologies like artificial intelligence and machine learning are transforming how legal work gets done. Brooks believes that while AI will continue enhancing productivity and insight, human expertise remains indispensable for judgments requiring reasoning and nuance. As such, the focus should be on combining the strengths of machines and professionals.

Brooks also highlighted how cybersecurity has become a foremost concern in legal tech deals. With rising cyber risks, obtaining comprehensive cyber insurance coverage has become essential in M&A due diligence and vendor selection processes. As platforms scale through acquisitions, ensuring rigorous data protection and compliance practices across expanded technical footprints is critical.

For legal industry leaders, Brooks stressed the importance of proactively embracing innovation and adaptability. Legal departments must re-evaluate talent strategies, workflows, and tech stacks to fully capitalize on emerging capabilities. Firms that fail to adapt risk losing talent and clients to more nimble competitors.

In closing, Brooks observed that the legal sector stands at a crossroads entering this new era of consolidation and technological change. By gleaning key insights from forums like SOLID East, stakeholders across the legal ecosystem can stay at the forefront of how services are delivered, gain actionable intelligence on M&A opportunities, and remain responsive to client needs. With his four decades of experience spanning legal tech’s evolution, Brooks expects this next chapter to be defined by new levels of client-centricity, innovation, and integration between legal expertise and enabling technologies.

*Image provided by eDiscovery expert and influencer Cat Casey. Assisted by GAI and LLM technologies.