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One of the world’s main Legal Tech Headquarters – the Startup Nation of Israel

Though Israel is new to the legal tech market, it is clear that the country is determined to keep up the pace with the rest of the world, as law firms and in-house departments are slowly – but surely adopting legal tech products.

The real revolution, however, is heralding from the legal-tech companies which are showing capabilities and potential that rival international companies and are already piquing the interest of the world.

There is no doubt today, that in the near future, Israel will become a symbol for exporting legal technology – a main hub for innovation and LegalTech.

Why Israel?

Necessity is the mother of all inventions. In a country that famously did not have many resources, Israelis had to rely on developing solutions on their own, which forces people to think outside of the box.

Israelis are used to being given a situation where limitations are finite and defined, so truthfully, part of the Israeli nature is to burst through those whenever possible.

Therefore, Israeli lawyers are typically less risk-averse than other cultures and are straightforward, informal and aggressive. When these younger Israeli lawyers are unhappy with the way law is practiced today and demand increased use of legal tech – they will make their opinions heard and either affect change within their law firms, start their own innovative practice or become legal tech entrepreneurs.

The Startup Nation’s legal tech market is fragmented and includes – on one hand – startups who offer a variety of solutions to both challenges presented in the legal market (Law firms / in-house departments) or on the other hand – as a disrupting force targeting the markets most-often missed by lawyers and law firms: helping those who are not necessarily familiar with the law but must confront it occasionally nonetheless.

Legal Tech Trends

There are roughly 40 Israeli legal tech companies. We can see that the Israeli legal tech market is highly diverse, reaching out to many fields such as:

  • Legal analysis
  • Online dispute resolution (ODR)
  • Small claims
  • Contract review
  • Contract automation
  • Spam fighters
  • Machine Learning solutions
  • Real-estate automation
  • Etc’

An interesting trend that has been catching on in the Startup Nation’s legal tech scene is a B2B2C model – Several Israeli legal tech companies have realized the added value of working hand-in-hand with major law firms. This realization has brought forth a collaboration between legal tech companies and major law firms in Israel, using the legal tech company’s technology and the prestige, clientele and credibility of the Israeli law firm, thus maximizing the relative advantage of both sides.

Major Startups Running the Israeli Legal Tech Scene

One of the most prominent Israeli legal tech companies is LawGeex (https://www.lawgeex.com/) which offers a machine-learning and AI-based product for contract review.

In a study published in February 2018 where 20 experienced US-trained lawyers were pitted against the LawGeex AI algorithm, the AI achieved an accuracy level of 94%, compared to an average accuracy level of 85% across the 20 human lawyers.

Another startup that in recent years has been successfully disrupting the legal market and reaching international levels is Lawflex (https://www.lawflex.com/) – with close to 400 highly skilled, flexible lawyers, who are certified in 24 jurisdictions and are proficient in 18 languages, Lawflex has become Israel’s first and leading outsourcing legal service operating via a pool of skilled lawyers – and an rising star in the global legal outsourcing sector. The company provides law firms, financial institutions and other corporations with top lawyers on a flexible basis and at competitive rates.

Characteristics of the Israeli Legal tech Scene

Although the Israeli legal market is very competitive and Israeli law firms are constantly seeking ways to improve their service offerings, many law firms in Israel have yet to embrace the latest wave of legal tech.

Most of the law firms still use simple solutions such as Microsoft Word extensions and anachronistic software that manages their practice.

There are a couple of reasons for this:

  1. Language– despite the fact that some Israeli law firms (mainly the largest) work in English, the majority of the local legal sector prefers to work entirely in Hebrew. They therefore need Hebrew-supported solutions which are not very common, as there are less than 60K lawyers practicing in the language – not suitable enough for legal tech entrepreneurs to aim for.
  2. Costs – Israeli law firms charge lower legal fees than their European and American counterparts, ultimately leaving less margin for investment in legal tech products- although some of the largest law firms in Israel start to invest and plan legal tech solutions – but far behind their colleagues across the ocean.
  3. Importing new trends takes time – each law firm, on its own, does not have the ability to look for relevant legal tech solutions abroad, nor to reach out to companies and convince them to customize their products to fit the Israeli market and the needs of the individual law firm. This would require too much effort and resources, which Israeli law firms are not keen or able to invest.

For Conclusion

Israel’s legal tech scene has seen rapid growth in the past two years. The Israeli legal tech scene may still be young, but it is clear that by using the incredible infrastructure laid by thousands of entrepreneurs rooted in Israel and their combined years of experience, it is more than likely that the Startup Nation has a promising future on the global tech stage.

Zohar Fisher, Ambassador for Israel

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