In a recent lecture on law and technology at Harvard, British jurist Richard Susskind cited the Brazilian legal market as a global reference for innovative practices. Similarly, during a recent visit to an event on the subject in São Paulo, American jurist Joshua Walker reiterated Susskind’s words and went further, stating that Brazil is now the primary actor in the legal market.
But what is the reason behind this Brazilian appeal? Three factors stand out.
The first reason may seem obvious but is not. Brazil currently has a procedural backlog of over eighty million active legal actions, placing the country among the largest in the world in absolute numbers, competing with India, for example. However, there isn’t necessarily a direct association between a large number of legal cases and the innovative practices that justify making the country a reference. What exists is a consequence of this fact.
A fundamental right guaranteed by the Brazilian Federal Constitution is the principle of access to justice. Filing legal actions for matters involving consumer relations, for example, is free, even for claims limited to around ten thousand euros. Additionally, for claims up to five thousand euros, there is no need for a lawyer. Moreover, in the case of an unsuccessful judgment, there is no monetary penalty for the losing party. In summary, this creates a favorable environment for the encouragement of filing numerous legal actions. There are even lawyers specializing in this business model, where scale is their key advantage.
Coupled with this fertile ground, there is another explosive factor: the quantity of lawyers. Currently, there are over one million two hundred thousand professionals registered with the bar association, corresponding to a lawyer-to-citizen ratio that leads globally. This abundance creates a true natural selection, as part of this social pyramid of jurists concentrates at its base, suppressing fee charges, leading to a race to the bottom. It is not imprudent to state that a genuine reverse auction has been established, in the sense of who offers less to attract clients.
It doesn’t take much contemplation to conclude that (i) easy access to justice; (ii) the absence of disincentives; and (iii) high competition, hence, low fee charges, form the classic triple of the more legal proceedings, the better, in a long-term path of perpetuating this system, which feeds itself, for better or for worse.
The second motivation is that there is indeed a robust and important public policy of the Brazilian Judiciary to make all data related to judicial protection public, open, and, above all, structured. According to jurists Daniel Becker and Erik Navarro Wolkart, with the world’s largest legal datalake, Brazilian courts have an invaluable wealth of data that, when structured and properly analyzed, bring numerous benefits to society. For example, understanding the likelihood of success for various types of claims, knowing when it is worthwhile to propose a settlement, determining the best offer value, or even deciding whether it is worth filing a particular action.
For Becker and Navarro, three important aspects of the idea of open justice are crucial when it comes to the legibility of power data. The first concerns access to legal information, a development of the ideal of access to justice mentioned above. The right to access legal information requires that the legal system be easily navigable. The second deals with the automatic readability (machine-readable) of data, i.e., the possibility of reading structured or unstructured data for the application of artificial intelligence and legal analytics techniques (as discussed in another article on this blog). The third aspect relates to the much-discussed adoption of ESG principles, as only with open data can we ensure accountability in the Judiciary.
As a consequence, this policy leads to three other rich and crucial factors for the existence and proliferation of legaltechs in the country, namely, (i) robust big data; (ii) “raw material” to feed legal analytics platforms; and (iii) abundant solutions in this hyper-legalization environment, as the high volume of legal actions invariably results in delays and a lack of effective resolution for the conflicts under the jurisdiction of the courts.
Not surprisingly, the map of legaltechs in the country, as disclosed by the Brazilian Association of Lawtechs and Legaltechs (AB2L), has already surpassed more than one hundred and fifty associated companies, not counting the countless others that are not registered, tripling this map. The menu is as diverse as possible, with different solutions for all profiles and interests.
Finally, the third reason must not be forgotten: the provision of legal services in a country of continental dimensions has a high degree of symmetry. The main legal firms in the country, whether large, medium-sized, or so-called boutiques, have a certain similarity in the provision of services. Many people doing the same thing, in a high degree of standardization, be it in style, language, or even dress. In a universe of more than twenty thousand law firms just in the city of São Paulo, a true race has emerged to offer innovative proposals, breaking away from the common, or in some way adhering to the mandate spread by Richard Susskind, consisting of creating alternative billing arrangements or the more-for-less challenge. This increasingly growing movement has created an even more competitive environment, where creativity is the driving force and a significant differentiator, especially to attract big tech companies as clients.
As seen, the Brazilian legal market is experiencing a perfect storm and rightfully captures the world’s attention. It has undoubtedly become a benchmark, whose combination of factors shows no signs of regression. On the contrary, it has become an export product.
P.S. At the time of publishing this article on the blog, the Brazilian lawtech “Inspira” was announced as the winner of the competition promoted by Web Summit Lisbon 2023. This only confirms the words above.
