Founders, legal tech isn’t just for law firms

It’s impossible to run a successful startup without help. From IT and accounting to branding and marketing, no founder can do it all – and they shouldn’t try to. It’s much better to focus on the core problem you’re solving, outsourcing as many of the wider support functions as you can for as long as you can.

Legal services are the perfect example. Most founders aren't lawyers (although I’m a rare exception!), yet every early-stage business requires access to legal expertise – for making senior hires, negotiating with customers or suppliers, or resolving the problems that inevitably occur when you’re navigating the complex, murky world of business regulations for the first time.

Adding an expensive in-house lawyer to the payroll usually isn’t a wise early-stage investment. It makes far more sense to pull in external legal support only when and where it’s needed.

The problem is that accessing high-quality external legal support is hugely expensive, and because the leading firms all bill by the hour, the cost can quickly escalate out of control. While the ability to deal with legal problems is key to running a business effectively, startups are forced to operate at a massive disadvantage because they simply can’t afford to access these essential services on tap.

The result is a justice gap with far-reaching consequences for our economy and society, stifling smaller firms’ ability to innovate and grow.

Generative AI holds great promise – but startups can’t rely on it as a legal aid

When it first rose to prominence in early 2023, Generative AI was lauded as a game-changing technology with the power to close the justice gap and make legal guidance and support affordable and accessible to all.

Headlines were made when GPT-4 passed the bar exam – seemingly with flying colours. In practice, however, the limitations of using the technology for legal advice have been laid bare. Large Language Models are not trained lawyers; nor are they trained on the sort of complex, confidential legal documents necessary to deliver trustworthy guidance – a problem only exacerbated by their tendency to hallucinate, as many legal professionals have already discovered to their cost.

If you’re a founder struggling to access legal support, Generative AI doesn’t (yet) offer the help you’ll probably need. But if you look beyond general purpose Generative AI tools, a host of more specialised AI-powered technologies are emerging that could provide a critical entry point for startups navigating legal waters for the first time.

Levelling the playing field

This new wave of legal technology has the potential to enact much-needed legal sector disruption and encourage new approaches that will radically lower the cost – and improve the speed – of legal service delivery.

AI-powered legal technology is already capable of automating tedious legal tasks such as document drafting and contract reviewing, significantly reducing the time spent on routine legal work. It offers powerful discovery and analytics capabilities for lawyers to help them surface relevant information and deliver powerful data-driven legal strategies much faster, without having to rely on an army of junior associates to do the legwork.

The upshot is that smaller legal firms will finally be able to compete with their large rivals and deliver high-quality work at greater speed and lower cost, despite only having a fraction of the human resources available to them.

In this way, AI offers a step-change in efficiency that will finally disrupt the industry status quo and make legal services more affordable and accessible to startups and small businesses everywhere.

Keeping legal costs to a minimum

And the disruption doesn’t end there. Rather than employing a law firm to carry out entire end-to-end legal processes on your behalf, you’ll be able to use these AI-powered legal tools yourself to carry out routine tasks like document drafting and contract creation, before handing over to a ‘lawyer-in-the-loop’ to check your work.

For a small business with limited financial resources, this is a far more efficient model that keeps costs under control by ensuring that trained legal professionals are deployed only where their skills are truly needed.

Giving startups access to these technologies won’t constrain legal sector growth. Quite the contrary, it will grow the market by encouraging founders to seek legal counsel more frequently, safe in the knowledge that they can finally afford the privilege.

Building better businesses

The UK has a rich history of entrepreneurship and boasts a thriving startup ecosystem. But while founders are able to access many of the essential services they need to grow successful companies, affordable legal support has long been the missing ingredient.

Generative AI changes the equation, not by allowing you to act as your own legal counsel, but by fundamentally changing the dynamics of legal service provision, granting every founder access to the legal technology tools and professional expertise you need, at a price you can afford.