AI meets Advocates: Rise of legal tech in India

Empowering MSMEs at risk of displacing jobs

Adoption of technology, notably Artificial Intelligence in legal profession is reshaping the Indian business landscape, making legal services more accessible, affordable and efficient. It is helping smaller companies including startups thrive across the country, not just in metro cities. But as with any technological disruption, it brings challenges, especially for the workforce.

As technology rapidly advances across every sector, professionals are racing to keep up. Artificial Intelligence, once limited to select industries, is now being integrated into nearly every field, including one that traditionally relied on human reasoning, intuition and experience, the legal profession.

Long seen as a sector defined by paperwork, in-person consultations, and courtroom debate, the legal world is undergoing a digital transformation. Legal technology is redefining how legal services are delivered, particularly for the small scale industries and the startups.

“We are extensively using AI Platform (Chat GPT) for initial research and training to young lawyers,” Raj Dubey, Managing Partner, Dubey & Partners, a law firm, based in Delhi, tells Media India Group.

India is currently home to over 160,000 DPIIT-recognised startups and an estimated 63 million Micro, Small and Medium Enterprises (MSMEs). For many of these early-stage businesses, navigating legal requirements can be both costly and time-consuming. Traditional legal support often comes with hefty fees and long turnaround times.

Legal tech startups are stepping in to bridge this gap. By using AI, automation and smart contract tools, these firms are offering faster and more affordable solutions from contract drafting and document review to compliance tracking and online dispute resolution.

“The legal tech industry in India is in a high-growth, early maturity stage. Over the past 5–7 years, there has been a surge in startups, legal process outsourcing (LPO) companies, Contract Lifecycle Management (CLM) companies and tech-driven law firms using AI, automation and analytics. The evolution accelerated post-Covid due to remote courts, virtual hearings and growing digital adoption across sectors,” Supin Prem, Director- Legal Operations, SpotDraft, an end-to-end contract automation supplier for companies, tells Media India Group.

According to the NASSCOM India Startup Report 2023, over 40 pc of tech startups are now emerging from beyond the metro cities. This decentralisation is due in part to legal tech, which allows entrepreneurs in Tier-II and Tier-III cities to access quality legal services without travelling to major urban centres. With a smartphone and an internet connection, startups across India can now handle company registrations, intellectual property filings and legal consultations entirely online.

Another study cited by industry observers reveals that automation has cut legal costs for early-stage startups by up to 40 pc, while dispute resolution times for consumers have dropped by over 30pc in pilot programmes. What once took weeks from negotiating Non-Disclosure Agreements (NDA) to settling small claims can now be handled in a matter of hours with the help of AI-powered platforms.

“Legal tech boosts efficiency by reducing time and cost, automating research, documentation and contract reviews. It also enhances accuracy, minimising manual errors in legal drafting and compliance tasks,” says Prem.

AI integration in legal services is no longer a novel thing, it is becoming the standard. From chatbots that provide instant legal advice to machine learning systems that analyse contracts for risk, startups are adopting these tools to streamline internal processes.

“Legal tech also improves accessibility by providing affordable services through platforms and mobile apps. It also facilitates collaboration. Cloud-based tools for law firms and clients to collaborate more easily. Through analytics on historical case outcomes, compliance risks and performance benchmarks,” she adds.

A report by NASSCOM, the lobby group representing Indian IT companies, in partnership with consulting firm Zinnov, notes that over 70 pc of Indian startups are investing in AI to scale their operations with legal tech among the top areas of adoption. The rise of Contract Lifecycle Management (CLM) platforms and AI-driven compliance checkers is helping founders ensure they meet regulatory requirements without hiring large legal teams.

The risk of job displacement

While legal tech is improving access and reducing costs, it also raises concerns about job losses. The automation of routine legal work particularly tasks handled by junior lawyers, legal assistants and paralegals could lead to a decline in demand for entry-level roles.

Recently, Microsoft announced layoffs affecting over 6,000 employees globally, as the company restructured to invest more heavily in AI and automation. Though this was not limited to legal roles, it reflects a broader trend across industries, as AI becomes more capable, companies are adjusting their workforce accordingly.

The legal profession must prepare for a similar shift. Professionals who adapt by learning legal tech tools, AI applications and data privacy regulations will be better positioned to remain competitive.

“The risk of replacement of law-related jobs by AI is completely misplaced. The invent of AI introduced the new level of efficiency in system. Things are being organised faster and better. The clerical jobs or for that matter any job will not and cannot be replaced by AI,” says Dubey.

“It will rather bring more efficiency to the systems. Our clerks are more efficient now in terms of recoding the developments in matters and follow ups. The junior lawyers are no more struggling with the initial drafts or basic structures of the strategy development. They get the foundation to start working and there is no more directionless working,’’ adds Dubey.

However, he is also quick to point out that there are several pitfalls with the use of AI.  “The risk of over dependence on AI and being guided by whatever it says is becoming bigger risk for firms like us. Junior attorneys could do critical mistakes, if they do not cross verify the contents thrown by the AI platforms. Also, if the basic understanding needed for research through the use of AI itself is wrong, then chances are that one may have misleading outcomes from the platform. We keep apprising these risks to our attorneys, especially the junior ones, so that they understand the importance of knowing first principle of law, so that they are able to understand, scrutinise and adapt the contents created with the help of AI tools,” he adds.

“Legal tech is more of an enabler than a threat. It augments lawyers’ capabilities, freeing them from repetitive tasks so they can focus on strategy, advisory and advocacy. It also creates new roles like legal technologists, legal data analysts, contract operations specialists,” explains Prem.

“Ultimately, it levels the playing field for solo practitioners and small firms to compete with larger players using efficient tools. We in Spotdraft have been able to help our customers to streamline their legal process and reduce the mandate work for lawyers. Now they focus on the actual legal advisory role,” she adds.