chevron-down Created with Sketch Beta.

Business Law Today

April 2023

2023 LegalTech Predictions That Are Already Taking Shape

Wendell Jisa


  • The use of AI for eDiscovery is expected to continue growing at a rapid pace, driven by the proliferation of machine learning, natural language processing, and new use-cases like AI-generated art, among other things.
  • New data types will drive innovation, while also creating challenges for legal professionals. However, direct connectors and data visualization designed for these new data formats will take center stage in 2023.
  • ASLPs will likely consolidate in response to economic pressures and the desire to expand offerings beyond eDiscovery, with more players expected to enter fields such as information governance and compliance.
  • eDiscovery technology may expand beyond traditional boundaries as organizations leverage its power in areas of incident response, privacy, information governance, and more.
2023 LegalTech Predictions That Are Already Taking Shape

Jump to:

As the legal market moves through the first quarter of 2023, predictions from the team at Reveal-Brainspace have already become a reality—with many more ups and downs to come. From macro headwinds to advancements in AI and Web3 tech, the AI and LegalTech experts at Reveal have outlined the biggest moves that are already taking shape and the focus areas that will be taking much of legal practitioners’ attention for the rest of the year. One thing will stay consistent during 2023: AI will continue to have a multiplying effect on the legal vertical now and well into the future.

Overall market trends in LegalTech

The use of AI for eDiscovery is set to continue its rapid growth, driven by the successes experienced by early adopters in corporate legal departments, law firms, and legal services providers worldwide. The proliferation of artificial intelligence (machine learning (ML), natural language processing (NLP), ethical AI, AI-generated art, etc.) is a key driver of this growth, and 2023 will see a continued wave of AI adoption fueled by cost pressures and the need to accelerate time to evidence and insight. The increasing volume, variety, and velocity of data is also making AI a necessity rather than just a nice-to-have option.

In the area of eDiscovery, the growth and proliferation of new data types will drive innovation and create challenges for legal professionals. Direct connectors and data visualization purposes designed for these new data formats will take center stage in 2023, as more communication formats that don’t fit the traditional four corners of a page gain traction and legal professionals move towards modern eDiscovery.

In the business of law, Alternative Legal Service Providers (ALSPs) will likely continue to consolidate in 2023, in response to both economic pressures and the desire to expand their offerings beyond eDiscovery. More players are expected to enter the fields of information governance, compliance, and cyber functions to get closer to the data and remain stickier with their clients.

Massive advances in eDiscovery technology and use-cases

The mission to perfect AI-powered eDiscovery technology will continue, while new use cases will explode. We’re already experiencing this as we begin Q2 2023. eDiscovery technology will likely expand beyond its traditional boundaries as organizations look to leverage its power in areas such as cybersecurity incident response, privacy, information governance, and much more. Businesses and legal professionals will increasingly turn to the unstructured data analytics within eDiscovery to solve a range of challenges around human-generated and AI-generated data.

If you need any evidence of this already taking place, look no further than the explosion of generative AI tools like ChatGPT and DALL-E. These tools are going to be a major focus area for legal practitioners—creating new considerations and use cases for advanced eDiscovery solutions in a variety of situations.

Additionally, the technology underlying Web3 will continue to proliferate and raise complex legal questions, despite the slow rate of adoption of the Metaverse. For example, the conversion of real-world assets into digital ones with NFTs raises questions about the extent that real-world rights carry into augmented or virtual reality. As Metaverse or Web3 devices become less expensive and the user experience becomes more accessible, adoption and legal questions will continue to grow.

Softening of M&A activity

After several years of robust M&A activity, the market is expected to experience a dramatic slowdown in 2023, driven primarily by economic headwinds. If the global economy continues to experience a period of slow growth or uncertainty, it may make companies cautious about making new investments or acquisitions, with the LegalTech space no exception to the rule.

However, while M&A is softening, it will certainly remain relevant. The activity that will take place will be extremely deliberate, strategic, and meaningful to the companies involved. This is good for the industry, as it gives the entire space time to think, rethink, and make well-informed decisions.

Economic headwinds will drive AI-powered innovation in order to do more with less

While the economic uncertainty will likely affect M&A activity for the remainder of the year, it is simultaneously is driving greater adoption of legal technology to control budgets. Challenges in securing tech budgets may lead to corporate legal departments outsourcing to ALSPs that can provide access to the AI-powered tools they may not be able to directly procure in 2023. eDiscovery is expected to see increased use of AI to reduce document review costs in 2023.

The force multiplier effect of legal AI means it may see widespread adoption as practice groups and legal departments must do more with less. Crisis often is the most fertile time for organizational transformation, and 2023 is no different.