By Sergio Ferrarini, partner and head of technology at private equity firm Inflexion
Driven by a stable increase in the volume of practising lawyers, the legal services market is growing steadily, whether law firms or specialist services providers – yet the sector itself is grappling with the pressures of modernisation. One key change is the growing adoption of technology within legal service providers, and this is transforming the way firms operate and deliver value to clients.
Today, the global legal tech market is valued at around £20 billion and has been growing at an annual rate of 6-10%. This is driven by several factors and creating real opportunity for businesses that leverage technology to enhance the offerings.
Firstly, the increasing complexity of regulatory and compliance requirements on a global scale is pushing firms to seek more efficient ways to manage processes. Clients seek not only compliance but also transparency and cost efficiency. This is encouraging professionals to streamline workflows, moving from doing everything in-house to accessing sophisticated data off the shelf. This is ultimately more cost-efficient.
Secondly, growing competition necessitates differentiation. This is driving some legal services providers to innovate through technology to enhance client engagement and service. For example, Inflexion portfolio company Movera is a B2B tech‐enabled provider of property and remortgage conveyancing services which aims to enhance transparency, reduce administrative burdens, and create a faster, more customer-friendly transaction process by using innovative technology.
Thirdly, the rise of artificial intelligence (AI) and automation is impacting practices. From document review and contract analysis to case management and due diligence, AI tools can significantly reduce the time and cost associated with simple repetitive tasks. Aosphere is a case in point. The legal and compliance data subscription business is focusing on generative AI as a major area of investment following its carve-out from A&O Shearman at the end of 2023. That carve out was led by Inflexion in partnership with A&O Shearman and with US financial sponsor Endicott. The CEO of aosphere calls generative AI a “no-brainer” as it enhances its clients’ experience and improves internal efficiency.
As just one example of how GenAI is being used in practice, the marketing team of a consumer company which needs to comply with global data privacy obligations can ask aosphere’s AI tool if they can send direct marketing to existing customers in Singapore. The AI tool allows them to ask a natural-language question and receive an instant, clear answer, backed by data and references.
M&A has been another focus for aosphere, with the strategic acquisition of BRP helping broaden aosphere’s offering and grow its client base by around 50%.
DWF, a global law firm and alternative legal services provider operating across 30 offices in 18 countries, is also pursuing M&A following its take-private by Inflexion in 2024. It has acquired Proclaim in Australia, a claims management business, and later recruited 62 professionals from Hall & Wilcox, strengthening its insurance litigation offering. In Canada, DWF joined forces with the insurance and civil litigation team of Bélanger Sauvé, establishing a presence in Montreal and expanding its national footprint. Meanwhile, in Poland, 12 professionals, including three partners, joined the Warsaw office, reinforcing DWF’s commercial services capabilities.
DWF’s focus on expanding its offering comes alongside a focus on modernising its service delivery: in May 2024 DWF became one of the first UK-headquartered legal businesses to roll out Microsoft Copilot globally, a step its CEO Sir Nigel Knowles described as improving its colleague and client experience. In fact, in the six months to October 2024, DWF reported an 8% increase in revenues year-on-year, fostered by deeper client relationships and operational enhancements.
How private equity can accelerate tech adoption in legal services providers
Firms often face challenges in modernising their practices, partly because of the significant investment required to implement new technologies. Private equity (PE) firms can help legal services businesses to integrate tech-driven solutions by providing both capital and strategic guidance:
Providing capital for tech investments: Modernising legal services often involves substantial upfront costs, whether implementing AI-driven case management systems or transitioning to cloud-based platforms. PE investment can fund these initiatives, allowing legal services firms to adopt tools without straining their financial stability.
Strategic expertise: Beyond capital, PE firms can offer strategic insights on technology adoption and integration. They can work with portfolio companies to help identify the most effective tech solutions tailored to specific operational challenges, and then offer hands-on support to execute.
Supporting talent acquisition and training: Technology requires building the right team to manage and optimise these tools. PE firms support legal services businesses by recruiting technology-focused roles and investing in training to upskill existing teams.
Fostering collaboration and knowledge sharing: With many firms in the legal services space operating in silos, technology adoption can vary significantly across areas. The networking effect of sitting within a sizeable PE portfolio encourages valuable collaboration, enabling legal services firms to share best practices and learn from peers who have successfully implemented similar technologies.
Encouraging a tech-first culture: One of the biggest obstacles to adopting new technology in many firms is cultural resistance. PE firms can promote a tech-first mindset by embedding digital strategies within the firm’s overarching business plan. This cultural shift ensures that technology forms a core component of service.
Leveraging data for growth: Effectively augmented tech solutions generate valuable data insights that can be leveraged for selling new data-led client solutions, as well driving internal operational efficiency. PE firms support legal services practices by introducing data analytics tools that provide actionable insights, helping firms make more informed decisions and better serve their clients.
The legal services sector’s digital transformation is gaining momentum, driven both by client expectations as well as the potential for operational efficiency. With the right support, legal firms can innovate through tech adoption and remain competitive to deliver strong client outcomes and long-term growth.
Sergio Ferrarini is a partner and head of technology at Inflexion, which is a leading European mid-market private equity firm. In 2023 Inflexion completed a ‘take private’ acquisition of DWF and acquired A&O Shearman’s legal tech unit aopshere. It has owned tech-enabled conveyancing group Movera since 2019.