An ecosystem perspective on the emergence of the Law Tech industry

The intersection of law and technology has witnessed a remarkable evolution in recent years, reshaping the landscape of the legal and regulatory domains. This transformation has not gone unnoticed by investors, as evidenced by the increasing venture financing in legal tech companies. According to data provided by CrunchBase, the year 2021 shattered records in terms of venture financing. During the year 2022, despite a decrease in the total and average invested amounts (in line with most sectors, especially in tech), there has been a growing number of investors in the legal tech field which signals a rise in interest. In 2022, seed funding accounted for 9% of the total legal tech funding, amounting to USD 303 million, signalling potential growth and innovation for start-ups in 2023. In parallel to the legal tech boom, the Regulatory Technology (RegTech) sector has been gaining traction, driven by the ever-increasing complexity of regulatory requirements across industries, including cross-border compliance and digital data protection. In the RegTech Global Market (2023) report, the global RegTech market, estimated at USD 13.6 billion in 2022, is projected to reach USD 46.2 billion by 2030, This master's thesis embarks on a journey to explore the multifaceted role of these new players within the legal tech and RegTech sectors. The central premise of this work is to decipher how the emergence of these law tech actors, serving as crucial supportive intermediaries, can foster and sustain entrepreneurial development and growth. Furthermore, it aims to shed light on the broader impacts and effects that the emergence of law tech has on businesses operating within diverse legal and regulatory frameworks. The significance of these supportive players within the ecosystem, especially those operating at the intersection of law and technology, has received limited attention in existing literature. Consequently, this research adopts a qualitative approach to delve into this relatively uncharted territory (Edmondson and McManus, 2007). Through in-depth qualitative research, employing an inductive approach as advocated by Gioia et al. (2013), this study analyses data derived from interviews. The analysis culminates in the formulation of second-order themes in the formulation of a set of second-order themes, which serve as foundational frameworks for articulating the diverse roles that law tech entities, encompassing both Legal and Reg Tech, can and do assume in their interactions with businesses. These roles are contingent on the nature and stage of life of these businesses, underlining the dynamic and evolving relationship between law tech and the corporate world. To illuminate these roles, this thesis bridges the insights from the conducted research with the lens of ecosystem theory, emphasizing how law tech actors shape and influence the way in which business deal with the legal and regulatory landscapes within which they operate. In doing so, this work aspires to contribute to a more comprehensive understanding of the relationship between law tech, businesses, and the ever-evolving regulatory environment.