Generative AI in Legal Market By Deployment Model (Cloud-based and On-premises), By Application (Document Review, Legal Research, and Other), By End-User (Law Firms, In-House Legal Department Corporation, and Other End-Users), By Region and Key Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends and Forecast 2023-2032
- Published date: April 2024
- Report ID: 118867
- Number of Pages: 261
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Report Overview
The Global Generative AI in Legal Market size is expected to be worth around USD 811.7 Million by 2033, from USD 69.0 Million in 2023, growing at a CAGR of 31.5% during the forecast period from 2024 to 2033.
Generative AI in the legal sector refers to the application of artificial intelligence technologies that can generate text, data, or other content based on existing legal documents, case law, and regulatory frameworks. This technology is particularly valuable in automating routine tasks such as document drafting, contract review, and legal research. It enables law firms, corporate legal departments, and other legal professionals to enhance efficiency, reduce errors, and focus on more strategic tasks that require human judgment.
The Generative AI in Legal Market encompasses the sales and development of AI solutions tailored for legal applications. The market is driven by the increasing demand for automation in legal processes, the growing volume of data to manage, and the need to reduce costs while improving service delivery. It includes offerings from tech startups specializing in AI, as well as traditional legal services providers who are integrating AI into their offerings.
Moreover, generative AI can assist legal professionals in conducting legal research. By leveraging large databases and vast amounts of legal texts, AI models can generate summaries, identify relevant cases and statutes, and provide insights on legal precedents, enabling lawyers to streamline their research process and make more informed decisions.
In the legal market, the adoption of generative AI has the potential to improve efficiency, accuracy, and productivity. By automating repetitive tasks and providing valuable assistance in complex legal processes, these AI systems can free up time for lawyers to focus on higher-level strategic work and provide more personalized services to clients.
In 2023, significant global investments were directed towards improving legal services with the incorporation of Generative AI. According to a survey conducted by LexisNexis, a notable 77% of legal professionals are of the opinion that Generative AI has the potential to markedly enhance the efficiency of lawyers, paralegals, and law clerks. This perspective underscores a growing recognition within the legal sector of the transformative capabilities of advanced technologies in streamlining processes and increasing productivity.
Key Takeaways
- Generative AI in Legal Market size is expected to reach USD 811.7 Million by 2032, projected at a CAGR of 31.5% during forecast period.
- On-premises deployment holds a dominant position in the market with over 57% share in 2022.
- Document Review segment leads the market with over 32% share in 2022.
- Law Firms segment dominates the market with over 37% share in 2023.
- North America leads the market with over 35% share in 2022, driven by advanced legal infrastructure and rapid technology adoption.
- The American Bar Association (ABA) initiated a ~$10 million fund to support the research and development of Generative AI solutions tailored for legal professionals.
- The United States Department of Justice dedicated ~$25 million of its 2023 budget to explore Generative AI applications in legal analysis and document management.
- The Legal Services Board of the United Kingdom committed ~£15 million (~$18.5 million) to a Generative AI initiative designed to improve public access to justice and legal services.
- The European Union announced a €50 million (~$54 million) investment aimed at advancing legal technology and data analysis projects through Generative AI.
- For the year 2024, India’s Ministry of Law and Justice unveiled a plan to invest ₹100 crore ($12.5 million) into Generative AI for enhancing legal technology and facilitating better access to justice.
Deployment Model Analysis
In 2022, the On-premises segment held a dominant position in the Generative AI in Legal Market, capturing more than a 57% share.
This leadership can be attributed to several factors that make on-premises solutions particularly appealing in the legal sector. Primarily, the need for stringent data security and privacy measures drives many law firms and legal departments to prefer on-premises deployment. These entities handle sensitive information, including client data and confidential case materials, which necessitates high levels of control and security that on-premises systems can more reliably provide.
Moreover, on-premises solutions offer legal professionals more control over the integration and customization of their AI tools. This is crucial in a field where customization can significantly enhance the functionality of AI applications, tailored to specific legal practices or jurisdictions. The ability to directly manage and maintain the systems also ensures that any regulatory compliance requirements specific to the legal industry are met without reliance on third-party service providers.
Despite the growth in cloud-based solutions, which promise scalability and cost-effectiveness, the preference for on-premises deployment in the legal sector remains strong due to these security and customization concerns. However, as cloud providers continue to enhance their security measures and as regulations evolve, a shift toward hybrid models may become more pronounced, blending the benefits of both on-premises and cloud-based deployments. This transition is anticipated to foster further growth and innovation within the market.
Application Analysis
In 2022, the Document Review segment held a dominant market position in the Generative AI in Legal Market, capturing more than a 32% share. This prominence is largely due to the critical role that document review plays in legal processes. Document review requires thorough examination of large volumes of documents to identify relevant information for legal cases or compliance.
Generative AI significantly enhances this process by automating the identification and categorization of information, which traditionally consumes substantial time and resources when performed manually. The efficacy of Generative AI in reducing the time and cost associated with document review has been a pivotal factor in its adoption.
Law firms and corporate legal departments are increasingly relying on AI to manage routine document scrutiny, allowing legal professionals to concentrate on more strategic and less procedural aspects of cases. Furthermore, the accuracy and consistency provided by AI technologies help in minimizing human errors, which are quite common in manual reviews and can have serious implications in legal contexts.
As the volume of digital data continues to grow exponentially, the demand for efficient document review solutions is expected to increase, thereby driving further growth in this segment of the market. Generative AI technologies are also evolving, incorporating more sophisticated natural language processing capabilities that can understand context and nuances in legal texts, which will enhance their applicability and effectiveness in document review applications. This evolution marks a significant step towards transforming legal practices to be more agile and data-driven.
End-User Analysis
In 2023, the Law Firms segment held a dominant market position in the Generative AI in Legal Market, capturing more than a 37% share. This leading position is attributable to the intensive document-centric nature of law firm operations, where Generative AI significantly enhances efficiency and accuracy.
Law firms handle a vast array of cases that require extensive document review, contract analysis, and legal research, making them prime beneficiaries of AI-driven automation. By integrating Generative AI, law firms can automate routine tasks, reduce operational costs, and allocate more resources towards higher-value activities like client consultation and courtroom preparation.
The adoption of Generative AI by law firms is also driven by competitive pressures. As clients become more cost-conscious, law firms are compelled to deliver high-quality services efficiently. Generative AI enables firms to process legal documents more quickly than traditional methods, offering a compelling value proposition by speeding up case timelines and improving client satisfaction.
Moreover, the technology’s ability to learn and adapt from past decisions and documents helps maintain a high standard of legal interpretation and application. Considering the continued digital transformation in the legal sector, the demand for Generative AI in law firms is expected to grow.
The ability of AI to handle increasing volumes of data and its potential to provide insightful analytics supports strategic decision-making. This ensures that law firms not only stay competitive but also leverage technology to forge stronger client relationships and optimize their legal outcomes.
Key Market Segments
By Deployment Model
- Cloud-based
- On-premises
By Application
- Document Review
- Legal Research
- Contract Analysis
- Prediction of Legal Outcomes
- Other Applications
By End-User
- Law Firms
- In-House Legal Department Corporation
- Government Legal Departments
Driver
Increasing Efficiency and Cost Reduction
The primary driver for the adoption of Generative AI in the legal sector is the significant enhancement in efficiency and reduction in operational costs it offers. Legal processes are traditionally labor-intensive, involving extensive document reviews, contract analysis, and case preparations that consume considerable time and resources.
By integrating Generative AI, law firms and in-house legal departments can automate these repetitive tasks, allowing legal professionals to focus on more complex and strategic activities. This shift not only speeds up the processing and increases the accuracy of legal documents but also reduces the manpower and hours needed, thereby decreasing overall costs. As the legal industry continues to face pressure to enhance service delivery while managing expenses, the demand for cost-effective, AI-driven solutions is expected to rise.
Restraint
Ethical and Bias Concerns
One significant restraint in the adoption of generative AI in the legal field is the ethical and bias-related concerns associated with AI-generated outputs. Generative AI models are typically trained on large datasets, which may contain biases or reflect historical inequalities present in the legal system. If these biases are not properly addressed and mitigated, there is a risk that AI-generated documents, analyses, or recommendations could perpetuate or amplify existing biases.
This raises concerns about fairness, equity, and the potential for legal outcomes that are influenced by biased AI systems. Additionally, generative AI models often operate as black boxes, making it challenging to understand and explain how a particular output was generated. This lack of interpretability can hinder the trust and acceptance of generative AI systems in the legal profession, especially when important legal decisions are based on their outputs.
Opportunity
Enhanced Legal Research and Analysis
Generative AI presents an exciting opportunity to enhance legal research and analysis. By leveraging large databases of legal texts and employing advanced natural language processing techniques, generative AI can quickly analyze and summarize vast amounts of legal information. This can significantly speed up the research process and provide lawyers with valuable insights, such as identifying relevant cases, statutes, and legal precedents.
Generative AI systems can also assist in the analysis of contracts, extracting critical clauses, obligations, and potential risks. This opportunity empowers legal professionals to make data-driven decisions, improve the quality of their legal arguments, and provide more comprehensive and accurate legal advice to clients. Furthermore, generative AI can help identify patterns and trends in legal data, enabling lawyers to gain deeper insights and make more informed strategic decisions for their clients and organizations.
Challenge
Regulatory Compliance and Data Privacy
A significant challenge in the adoption of generative AI in the legal field revolves around regulatory compliance and data privacy. Legal systems around the world have strict regulations regarding the handling and protection of sensitive and confidential information. Generative AI systems require access to large datasets, including legal documents, contracts, and personal data.
Ensuring compliance with data protection laws, safeguarding client confidentiality, and preventing unauthorized access become critical considerations. Legal professionals must navigate and address these challenges to ensure that the use of generative AI in their practice aligns with legal and ethical standards.
Additionally, as generative AI systems become more advanced, there is a need for clear guidelines and regulations to govern their use, transparency, and accountability. Striking the right balance between innovation and compliance will be crucial for the successful integration of generative AI in the legal field.
Growth Factors
- Increased Efficiency and Productivity: Generative AI significantly boosts efficiency by automating routine tasks such as document review, contract analysis, and legal research, allowing legal professionals to focus on more complex tasks.
- Cost Reduction: By automating various time-consuming and labor-intensive tasks, generative AI helps in significantly reducing operational costs within legal firms and departments.
- Enhanced Accuracy: AI systems minimize human errors by providing precise and consistent results, especially in document review and legal research.
- Scalability: Generative AI can handle a growing amount of work without a proportional increase in resources, which is particularly advantageous in managing large volumes of legal data.
- Regulatory Compliance and Risk Management: AI tools can assist in ensuring compliance with regulations by accurately maintaining and analyzing legal documents and data, thereby managing risk more effectively.
Emerging Trends
- Adoption of Cloud-Based Solutions: There is a growing shift towards cloud-based generative AI solutions, which offer scalability, ease of access, and lower upfront costs compared to on-premises systems.
- Advanced Natural Language Processing (NLP): Enhanced Natural Language Processing capabilities enable more sophisticated understanding and generation of legal texts, improving the functionality and application of generative AI in legal contexts.
- Predictive Analytics: Generative AI is increasingly used for predictive analytics, helping legal professionals forecast outcomes and make informed strategic decisions.
- Expansion into Emerging Markets: The legal sectors in emerging markets are increasingly adopting generative AI technologies due to their potential to transform legal practices cost-effectively.
- Integration with Other Technological Innovations: Generative AI is being integrated with other technologies such as blockchain for enhanced security and data integrity in legal processes.
Regional Analysis
In 2022, North America held a dominant market position in the Generative AI legal market, capturing more than a 35% share. This substantial market share can be attributed to several key factors. Firstly, the region’s advanced legal infrastructure and the rapid adoption of new technologies by North American law firms and legal departments have significantly contributed to this dominance.
The demand for Generative AI in Legal in North America was valued at USD 18.37 Million in 2023 and is anticipated to grow significantly in the forecast period. Additionally, the presence of major technology hubs in the United States and Canada, combined with substantial investments in AI research and development, has facilitated the proliferation of generative AI applications in legal settings.
The market’s expansion in North America is further bolstered by the region’s stringent regulatory environment, which necessitates efficient and innovative legal services. Generative AI has been increasingly utilized to automate routine tasks such as document review and case prediction, enhancing efficiency and reducing costs for legal practitioners.
Furthermore, the proactive stance of North American legal firms in integrating AI to gain competitive advantage has driven the adoption rate. For instance, data indicates a year-on-year increase of approximately ~20% in AI adoption for legal services within the region, underscoring the sector’s growth potential.
Europe, on the other hand, follows closely with a robust framework supporting AI innovations within the legal sector. The European market is driven by the growing demand for automation and data-driven decision-making in legal processes. With GDPR and other regulations, European law firms are leveraging AI to ensure compliance and improve the accuracy of legal outcomes. Moreover, initiatives by European governments to encourage AI integration in public and private sectors have laid a foundation for substantial growth in this market segment.
Key Regions and Countries Covered in this Report:
- North America
- The US
- Canada
- Europe
- Germany
- France
- The UK
- Spain
- Italy
- Russia
- Netherland
- Rest of Europe
- APAC
- China
- Japan
- South Korea
- India
- Australia
- New Zealand
- Singapore
- Thailand
- Vietnam
- Rest of APAC
- Latin America
- Brazil
- Mexico
- Rest of Latin America
- Middle East & Africa
- South Africa
- Saudi Arabia
- UAE
- Rest of MEA
Key Players Analysis
The Generative AI legal market features several key players that are shaping the landscape of AI-driven legal services. IBM Corporation, a leader in AI technology, offers tools that streamline complex legal processes, enhancing productivity and decision-making capabilities within law firms. Open Text Corporation and Thomson Reuters Corporation are prominent for their advanced data analytics and AI solutions that assist in legal research and compliance tasks, significantly reducing the time and effort required for legal document analysis.
Veritone Inc. specializes in cognitive computing solutions that help legal professionals in automating processes and extracting valuable insights from vast data sets. ROSS Intelligence Inc. has made notable strides with its AI legal advisor, which utilizes natural language processing to provide precise legal information, thereby improving the efficiency of legal research.
Top Market Leaders
- IBM Corporation
- Open Text Corporation
- Thomson Reuters Corporation
- Veritone Inc.
- ROSS Intelligence Inc.
- Luminance Technology Ltd.
- LexisNexis Group Inc.
- Neota Logic Inc.
- Kira Inc.
- Casetext Inc.
- Other Market Players
Recent Developments
- In 2023, IBM has made significant advancements in the field of Generative AI, particularly targeting the legal and enterprise sectors. One of the key developments is the launch of watsonx Code Assistant, which was officially released on October 26, 2023.
- Thomson Reuters completed the acquisition of Casetext, an AI legal tech startup, for $650 million. This acquisition, finalized in August 2023, aims to enhance Thomson Reuters’ capabilities in generative AI and automation within the legal industry. Casetext is known for its AI-powered tool, CoCounsel, which assists in document review, legal research memos, deposition preparation, and contract analysis.
- In 2023, Veritone Inc. advanced its AI-driven solutions in the legal and HR industries. On May 31, 2023, the company confirmed its acquisition of Broadbean from CareerBuilder for ~$52 million. This strategic purchase enhances Veritone’s offerings in HR by incorporating Broadbean’s specialized SaaS technology for talent acquisition and engagement.
Report Scope
Report Features Description Market Value (2023) USD 69 Mn Forecast Revenue (2032) USD 811.7 Mn CAGR (2024-2033) 31.5% Base Year for Estimation 2023 Historic Period 2018-2022 Forecast Period 2024-2033 Report Coverage Revenue Forecast, Market Dynamics, COVID-19 Impact, Competitive Landscape, Recent Developments Segments Covered By Deployment Model (Cloud-based and On-premises), By Application (Document Review, Legal Research, and Other), By End-User (Law Firms, In-House Legal Department Corporation, and Other End-Users) Regional Analysis North America – The U.S. & Canada; Europe – Germany, France, The UK, Spain, Italy, Russia, Netherlands & Rest of Europe; APAC- China, Japan, South Korea, India, Australia, New Zealand, Singapore, Thailand, Vietnam & Rest of APAC; Latin America- Brazil, Mexico & Rest of Latin America; Middle East & Africa- South Africa, Saudi Arabia, UAE & Rest of MEA Competitive Landscape IBM Corporation, Open Text Corporation, Thomson Reuters Corporation, Veritone Inc., ROSS Intelligence Inc., Luminance Technology Ltd., LexisNexis Group Inc., Neota Logic Inc., Kira Inc., Casetext Inc., Other Market Players Customization Scope Customization for segments, region/country-level will be provided. Moreover, additional customization can be done based on the requirements. Purchase Options We have three license to opt for: Single User License, Multi-User License (Up to 5 Users), Corporate Use License (Unlimited User and Printable PDF) Frequently Asked Questions (FAQ)
What is Generative AI in the legal context?Generative AI refers to artificial intelligence systems that can create new content, such as text, images, or even legal documents, based on patterns learned from existing data.
How big is Generative AI in Legal Market?The Global Generative AI in Legal Market size is expected to be worth around USD 811.7 Million by 2033, from USD 69.0 Million in 2023, growing at a CAGR of 31.5% during the forecast period from 2024 to 2033.
Who are the prominent players operating in the generative AI in legal market?The major players operating in the generative AI in legal market are IBM Corporation, Open Text Corporation, Thomson Reuters Corporation, Veritone Inc., ROSS Intelligence Inc., Luminance Technology Ltd., LexisNexis Group Inc., Neota Logic Inc., Kira Inc., Casetext Inc., Other Market Players
Which region will lead the global generative AI in legal market?In 2022, North America held a dominant market position in the Generative AI legal market, capturing more than a 35% share.
Which are the driving factors of the generative AI in legal market?The main drivers behind the adoption of Generative AI in the legal market are its abilities to handle cross-jurisdictional and multilingual tasks, as well as its capacity for automation and efficiency.
Generative AI in Legal MarketPublished date: April 2024add_shopping_cartBuy Now get_appDownload Sample - IBM Corporation
- Open Text Corporation
- Thomson Reuters Corporation
- Veritone Inc.
- ROSS Intelligence Inc.
- Luminance Technology Ltd.
- LexisNexis Group Inc.
- Neota Logic Inc.
- Kira Inc.
- Casetext Inc.
- Other Market Players
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